Analyzing Iberdrola (OTCMKTS:IBDSF) & Black Hills (NYSE:BKH)

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

Insider and Institutional Ownership

86.7% of Black Hills shares are owned by institutional investors. Comparatively, 16.5% of Iberdrola shares are owned by institutional investors. 0.6% of Black Hills shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Black Hills	13.01%	7.98%	2.93%
Iberdrola	N/A	N/A	N/A

Dividends

Black Hills pays an annual dividend of $2.81 per share and has a dividend yield of 3.8%. Iberdrola pays an annual dividend of $0.02 per share and has a dividend yield of 0.1%. Black Hills pays out 71.0% of its earnings in the form of a dividend. Iberdrola pays out 7.1% 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. Black Hills is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current ratings and target prices for Black Hills and Iberdrola, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Black Hills	0	0	6	0	3.00
Iberdrola	0	0	0	0	0.00

Black Hills currently has a consensus target price of $81.67, suggesting a potential upside of 9.86%. Given Black Hills’ stronger consensus rating and higher possible upside, research analysts clearly believe Black Hills is more favorable than Iberdrola.

Valuation & Earnings

This table compares Black Hills and Iberdrola”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	2.45	$291.60 million	$3.96	18.77
Iberdrola	N/A	N/A	N/A	$0.33	70.68

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

Summary

Black Hills beats Iberdrola on 12 of the 14 factors compared between the two stocks.

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 Iberdrola

Iberdrola, S.A. engages in the generation, transmission, distribution, and supply of electricity in Spain, the United Kingdom, the United States, Mexico, Brazil, Germany, France, and Australia. It generates electricity from renewable sources, such as onshore and offshore wind, hydro, photovoltaic, combined cycle gas, and conventional nuclear, as well as through batteries. The company is also involved in the purchase and sale of electricity and gas on wholesale markets; energy retail supply activities, such as gas and electricity, and other products and services, including hydrogen, as well as non-renewable generation; and production of green hydrogen. It has a total installed capacity of 62,871 MW. In addition, the company offers heat pumps, self-consumption, electric mobility, solar, etc. services to residential customers; and management of energy facilities, as well as supplies green H2, industrial heat, etc. to industrial customers. Iberdrola, S.A. was founded in 1840 and is based in Bilbao, Spain.