Financial Comparison: Black Hills (NYSE:BKH) versus NiSource (NYSE:NI)

NiSource (NYSE:NI) and Black Hills (NYSE:BKH) are both utilities companies, but which is the better business? We will compare the two companies based on the strength of their dividends, analyst recommendations, risk, profitability, institutional ownership, valuation and earnings.

Earnings & Valuation

This table compares NiSource and Black Hills”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NiSource	$6.64 billion	3.29	$929.50 million	$1.95	23.35
Black Hills	$2.34 billion	2.85	$291.60 million	$4.16	20.87

NiSource has higher revenue and earnings than Black Hills. Black Hills is trading at a lower price-to-earnings ratio than NiSource, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares NiSource and Black Hills’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NiSource	13.56%	8.16%	2.60%
Black Hills	13.49%	8.17%	2.98%

Dividends

NiSource pays an annual dividend of $1.20 per share and has a dividend yield of 2.6%. Black Hills pays an annual dividend of $2.81 per share and has a dividend yield of 3.2%. NiSource pays out 61.5% of its earnings in the form of a dividend. Black Hills pays out 67.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. NiSource has raised its dividend for 14 consecutive years and Black Hills has raised its dividend for 55 consecutive years. Black Hills is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

91.6% of NiSource shares are held by institutional investors. Comparatively, 86.7% of Black Hills shares are held by institutional investors. 0.4% of NiSource shares are held by company insiders. Comparatively, 0.6% of Black Hills shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations for NiSource and Black Hills, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NiSource	0	1	12	0	2.92
Black Hills	0	1	6	1	3.00

NiSource presently has a consensus price target of $48.58, suggesting a potential upside of 6.68%. Black Hills has a consensus price target of $85.00, suggesting a potential downside of 2.12%. Given NiSource’s higher probable upside, research analysts clearly believe NiSource is more favorable than Black Hills.

Volatility & Risk

NiSource has a beta of 0.53, meaning that its share price is 47% less volatile than the S&P 500. Comparatively, Black Hills has a beta of 0.64, meaning that its share price is 36% less volatile than the S&P 500.

About NiSource

NiSource Inc. is a regulated energy holding company that delivers natural gas and electricity through its local utility subsidiaries. Its businesses focus on operating and maintaining energy infrastructure and providing service to residential, commercial and industrial customers. The company’s natural gas utilities serve customers in Indiana, Kentucky, Maryland, Ohio, Pennsylvania and Virginia. Its electric utility, Northern Indiana Public Service Company (NIPSCO), serves customers in northern Indiana.

About Black Hills

Black Hills Corporation is an energy company headquartered in Rapid City, South Dakota. Through its utility operations, it provides electric and natural gas service to communities across Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota and Wyoming. The company’s businesses include generating, transmitting and distributing electricity, as well as distributing natural gas. Its energy operations use a mix of resources, including natural gas, coal and renewable sources, to support electric service.