Critical Comparison: Black Hills (NYSE:BKH) vs. Public Service Enterprise Group (NYSE:PEG)

Public Service Enterprise Group (NYSE:PEG) and Black Hills (NYSE:BKH) are both utilities companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, risk, valuation, dividends, profitability, analyst recommendations and institutional ownership.

Dividends

Public Service Enterprise Group pays an annual dividend of $2.68 per share and has a dividend yield of 3.5%. Black Hills pays an annual dividend of $2.81 per share and has a dividend yield of 3.8%. Public Service Enterprise Group pays out 66.7% of its earnings in the form of a dividend. Black Hills pays out 71.0% 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. Public Service Enterprise Group has increased its dividend for 14 consecutive years and Black Hills has increased 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.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Public Service Enterprise Group and Black Hills, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Public Service Enterprise Group	0	10	6	1	2.47
Black Hills	0	0	6	0	3.00

Public Service Enterprise Group presently has a consensus price target of $90.23, indicating a potential upside of 18.57%. Black Hills has a consensus price target of $81.67, indicating a potential upside of 10.18%. Given Public Service Enterprise Group’s higher possible upside, research analysts plainly believe Public Service Enterprise Group is more favorable than Black Hills.

Risk & Volatility

Public Service Enterprise Group has a beta of 0.51, suggesting that its share price is 49% less volatile than the S&P 500. Comparatively, Black Hills has a beta of 0.71, suggesting that its share price is 29% less volatile than the S&P 500.

Profitability

This table compares Public Service Enterprise Group and Black Hills’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Public Service Enterprise Group	16.04%	12.42%	3.68%
Black Hills	13.01%	7.98%	2.93%

Earnings & Valuation

This table compares Public Service Enterprise Group and Black Hills”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Public Service Enterprise Group	$12.17 billion	3.12	$2.11 billion	$4.02	18.93
Black Hills	$2.31 billion	2.45	$291.60 million	$3.96	18.72

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

Institutional and Insider Ownership

73.3% of Public Service Enterprise Group shares are held by institutional investors. Comparatively, 86.7% of Black Hills shares are held by institutional investors. 0.2% of Public Service Enterprise Group 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 hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Public Service Enterprise Group beats Black Hills on 11 of the 17 factors compared between the two stocks.

About Public Service Enterprise Group

Public Service Enterprise Group Incorporated, through its subsidiaries, operates in electric and gas utility business in the United States. It operates through PSE&G and PSEG Power segments. The PSE&G segment transmits electricity; distributes electricity and natural gas to residential, commercial, and industrial customers; and appliance services and repairs to customers through its service territory, as well as invests in solar generation projects, and energy efficiency and related programs. The PSEG Power segment engages in nuclear generation businesses; and supplies power and natural gas to nuclear power plants and gas storage facilities activities. As of December 31, 2023, it had electric transmission and distribution system of 25,000 circuit miles and 866,600 poles; 56 switching stations with an installed capacity of 39,953 megavolt-amperes (MVA), and 235 substations with an installed capacity of 10,382 MVA; 109 MVA aggregate installed capacity for substations; four electric distribution headquarters and five electric sub-headquarters; 18,000 miles of gas mains, 12 gas distribution headquarters, two sub-headquarters, and one meter shop, as well as 56 natural gas metering and regulating stations; and 158 MegaWatts defined conditions of installed PV solar capacity. Public Service Enterprise Group Incorporated was founded in 1903 and is based in Newark, New Jersey.

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.