Black Hills (NYSE:BKH) vs. NiSource (NYSE:NI) Head to Head Comparison

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Black Hills	13.49%	8.19%	2.99%
NiSource	13.56%	8.16%	2.60%

Insider & Institutional Ownership

86.7% of Black Hills shares are owned by institutional investors. Comparatively, 91.6% of NiSource shares are owned by institutional investors. 0.6% of Black Hills shares are owned by insiders. Comparatively, 0.4% of NiSource shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Dividends

Black Hills pays an annual dividend of $2.81 per share and has a dividend yield of 3.3%. NiSource pays an annual dividend of $1.20 per share and has a dividend yield of 2.7%. Black Hills pays out 67.5% of its earnings in the form of a dividend. NiSource pays out 61.5% 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. Black Hills has raised its dividend for 55 consecutive years and NiSource has raised its dividend for 14 consecutive years. Black Hills is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Black Hills	$2.31 billion	2.85	$291.60 million	$4.16	20.77
NiSource	$6.64 billion	3.25	$929.50 million	$1.95	23.10

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.

Risk and Volatility

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

Analyst Ratings

This is a summary of current recommendations and price targets for Black Hills and NiSource, as provided by MarketBeat.com.

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

Black Hills currently has a consensus target price of $85.00, suggesting a potential downside of 1.61%. NiSource has a consensus target price of $48.58, suggesting a potential upside of 7.85%. Given NiSource’s higher probable upside, analysts plainly believe NiSource is more favorable than Black Hills.

About Black Hills

Black Hills Corporation, through its subsidiaries, operates as an electric and natural gas utility company in the United States. The company operates in two segments: Electric Utilities and Gas Utilities. The Electric Utilities segment generates, transmits, and distributes electricity to approximately 222,000 electric utility customers in Colorado, Montana, South Dakota, and Wyoming; and owns and operates 1,394 megawatts of generation capacity and 9,106 miles of electric transmission and distribution lines. The Gas Utilities segment distributes natural gas to approximately 1,116,000 natural gas utility customers in Arkansas, Colorado, Iowa, Kansas, Nebraska, and Wyoming; owns and operates 4,663 miles of intrastate gas transmission pipelines; 42,514 miles of gas distribution mains and service lines; seven natural gas storage sites; and approximately 50,000 horsepower of compression and 516 miles of gathering lines. It also constructs and maintains customer owned gas infrastructure facilities for gas transportation customers; and provides appliance repair services to residential utility customers, as well as electrical system construction services to large industrial customers. In addition, the company produces electric power through wind, natural gas, and coal-fired generating plants; and coal at its coal mine located near Gillette, Wyoming. Black Hills Corporation was incorporated in 1941 and is headquartered in Rapid City, South Dakota.

About NiSource

NiSource Inc., an energy holding company, operates as a regulated natural gas and electric utility company in the United States. It operates in two segments, Gas Distribution Operations and Electric Operations. The company distributes natural gas to approximately 3.3 million customers through approximately 55,000 miles of distribution main pipeline and the associated individual customer service lines; and 1,000 miles of transmission main pipeline in northern Indiana, Ohio, Pennsylvania, Virginia, Kentucky, and Maryland. It also generates, transmits, and distributes electricity to approximately 0.5 million customers in various counties in the northern part of Indiana, as well as engages in wholesale electric and transmission transactions. It owns and operates coal-fired electric generating stations in Wheatfield and Michigan City; combined cycle gas turbine in West Terre Haute; natural gas generating units in Wheatfield; hydro generating plants in Carroll County and White County; wind generating units in White County, Indiana; and solar generating units in Jasper County and White County. The company was formerly known as NIPSCO Industries, Inc. and changed its name to NiSource Inc. in April 1999. NiSource Inc. was founded in 1847 and is headquartered in Merrillville, Indiana.