Avista Corporation (NYSE: AVA) and Black Hills Corporation (NYSE:BKH) are both mid-cap utilities companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, analyst recommendations, valuation, institutional ownership, dividends and profitability.

Earnings and Valuation

This table compares Avista Corporation and Black Hills Corporation’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Avista Corporation $1.46 billion 2.28 $471.76 million $2.11 24.47
Black Hills Corporation $1.70 billion 2.21 $588.78 million $2.38 29.50

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

Risk and Volatility

Avista Corporation has a beta of 0.42, suggesting that its stock price is 58% less volatile than the S&P 500. Comparatively, Black Hills Corporation has a beta of 0.82, suggesting that its stock price is 18% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations for Avista Corporation and Black Hills Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Avista Corporation 1 3 0 0 1.75
Black Hills Corporation 0 0 5 0 3.00

Avista Corporation presently has a consensus price target of $44.00, suggesting a potential downside of 14.78%. Black Hills Corporation has a consensus price target of $73.40, suggesting a potential upside of 4.53%. Given Black Hills Corporation’s stronger consensus rating and higher possible upside, analysts plainly believe Black Hills Corporation is more favorable than Avista Corporation.

Profitability

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

Net Margins Return on Equity Return on Assets
Avista Corporation 9.35% 8.19% 2.57%
Black Hills Corporation 7.71% 10.48% 2.84%

Insider and Institutional Ownership

69.3% of Avista Corporation shares are held by institutional investors. Comparatively, 94.4% of Black Hills Corporation shares are held by institutional investors. 1.1% of Avista Corporation shares are held by company insiders. Comparatively, 1.1% of Black Hills Corporation 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.

Dividends

Avista Corporation pays an annual dividend of $1.43 per share and has a dividend yield of 2.8%. Black Hills Corporation pays an annual dividend of $1.78 per share and has a dividend yield of 2.5%. Avista Corporation pays out 67.8% of its earnings in the form of a dividend. Black Hills Corporation pays out 74.8% 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. Avista Corporation has raised its dividend for 14 consecutive years and Black Hills Corporation has raised its dividend for 47 consecutive years. Avista Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Black Hills Corporation beats Avista Corporation on 11 of the 16 factors compared between the two stocks.

About Avista Corporation

Avista Corporation is an electric and natural gas utility company. The Company operates through two segments: Avista Utilities, and Alaska Electric Light and Power Company (AEL&P). The Company’s regional services include government and higher education, medical services, retail trade and finance. The Company’s businesses also include sheet metal fabrication, venture fund investments, real estate investments, a company that explores markets that could be served with liquefied natural gas (LNG), as well as certain other investments of Avista Capital, which is a subsidiary of the Company. Avista Utilities is an operating division of the Company, which consists of its regulated utility operations in the Pacific Northwest. Avista Utilities division generates, transmits and distributes electricity, and distributes natural gas. As of December 31, 2016, AEL&P operated five hydroelectric generation facilities with 102.7 megawatts (MW) of hydroelectric generation capacity.

About Black Hills Corporation

Black Hills Corporation is a holding company. The Company is an integrated energy company, which is focused primarily on regulated utilities. The Company operates through segments, including Electric Utilities, Gas Utilities, Power Generation, Mining, Oil and Gas, and Corporate. As of December 31, 2016, the Electric Utilities segment generated, transmitted and distributed electricity to approximately 208,500 customers in South Dakota, Wyoming, Colorado and Montana. The Gas Utilities Segment includes the natural gas operations of Cheyenne Light. The Power Generation segment produces electric power from its generating plants and sells the electric capacity and energy principally to its utilities under long-term contracts. The Mining segment operates through its Wyodak Resources Development Corp. (WRDC) subsidiary. The Company’s Oil and Gas segment acquires, explores for, develops and produces natural gas and crude oil in the United States primarily in the Rocky Mountain region.

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