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

Profitability

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

Net Margins Return on Equity Return on Assets
Black Hills Corporation 7.71% 10.48% 2.84%
Sempra Energy 15.51% 9.11% 2.84%

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Black Hills Corporation and Sempra Energy, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Black Hills Corporation 0 0 5 0 3.00
Sempra Energy 0 2 4 0 2.67

Black Hills Corporation currently has a consensus target price of $73.40, indicating a potential upside of 4.53%. Sempra Energy has a consensus target price of $121.60, indicating a potential upside of 2.05%. Given Black Hills Corporation’s stronger consensus rating and higher probable upside, analysts plainly believe Black Hills Corporation is more favorable than Sempra Energy.

Dividends

Black Hills Corporation pays an annual dividend of $1.78 per share and has a dividend yield of 2.5%. Sempra Energy pays an annual dividend of $3.29 per share and has a dividend yield of 2.8%. Black Hills Corporation pays out 74.8% of its earnings in the form of a dividend. Sempra Energy pays out 48.7% 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 Corporation has increased its dividend for 6 consecutive years and Sempra Energy has increased its dividend for 47 consecutive years. Sempra Energy 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 Corporation and Sempra Energy’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Black Hills Corporation $1.70 billion 2.21 $588.78 million $2.38 29.50
Sempra Energy $10.97 billion 2.73 $3.71 billion $6.75 17.65

Sempra Energy has higher revenue and earnings than Black Hills Corporation. Sempra Energy 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.

Institutional & Insider Ownership

94.0% of Black Hills Corporation shares are held by institutional investors. Comparatively, 81.2% of Sempra Energy shares are held by institutional investors. 1.1% of Black Hills Corporation shares are held by insiders. Comparatively, 0.2% of Sempra Energy shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Risk and Volatility

Black Hills Corporation has a beta of 0.8, suggesting that its stock price is 20% less volatile than the S&P 500. Comparatively, Sempra Energy has a beta of 0.55, suggesting that its stock price is 45% less volatile than the S&P 500.

Summary

Sempra Energy beats Black Hills Corporation on 9 of the 16 factors compared between the two stocks.

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.

About Sempra Energy

Sempra Energy is a holding company. The Company’s principal operating units are Sempra Utilities, which includes its San Diego Gas & Electric Company (SDG&E), Southern California Gas Company (SoCalGas) and Sempra South American Utilities segments, and Sempra Infrastructure, which includes its Sempra Mexico, Sempra Renewables and Sempra LNG & Midstream segments. As of December 31, 2016, SDG&E’s service area covered 4,100 square miles. Sempra South American Utilities operates Chilquinta Energia, which serves customers in the region of Valparaiso in central Chile. As of December 31, 2016, SoCalGas had natural gas franchises with the 12 counties and the 223 cities in its service territory. Sempra LNG & Midstream owns land in Simpson County, Mississippi Hub. Sempra LNG & Midstream owns land in Port Arthur, Texas. Sempra Renewables has operations, investments or development projects in the various United States markets.

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