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

Earnings & Valuation

This table compares Ameren Corporation and Black Hills Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Ameren Corporation $6.06 billion 2.39 $2.44 billion $2.86 20.90
Black Hills Corporation $1.70 billion 2.14 $588.78 million $2.38 28.57

Ameren Corporation has higher revenue and earnings than Black Hills Corporation. Ameren 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.

Dividends

Ameren Corporation pays an annual dividend of $1.76 per share and has a dividend yield of 2.9%. Black Hills Corporation pays an annual dividend of $1.78 per share and has a dividend yield of 2.6%. Ameren Corporation pays out 61.5% 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. Ameren Corporation has raised its dividend for 3 consecutive years and Black Hills Corporation has raised its dividend for 47 consecutive years. Ameren Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

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

Net Margins Return on Equity Return on Assets
Ameren Corporation 11.11% 9.57% 2.82%
Black Hills Corporation 7.71% 10.48% 2.84%

Volatility & Risk

Ameren Corporation has a beta of 0.36, indicating that its share price is 64% less volatile than the S&P 500. Comparatively, Black Hills Corporation has a beta of 0.79, indicating that its share price is 21% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Ameren Corporation and Black Hills Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ameren Corporation 1 3 0 0 1.75
Black Hills Corporation 0 1 5 0 2.83

Ameren Corporation currently has a consensus target price of $55.33, indicating a potential downside of 7.44%. Black Hills Corporation has a consensus target price of $74.33, indicating a potential upside of 9.31%. Given Black Hills Corporation’s stronger consensus rating and higher possible upside, analysts clearly believe Black Hills Corporation is more favorable than Ameren Corporation.

Institutional and Insider Ownership

69.8% of Ameren Corporation shares are held by institutional investors. Comparatively, 93.8% of Black Hills Corporation shares are held by institutional investors. 0.4% of Ameren 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 large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

Black Hills Corporation beats Ameren Corporation on 9 of the 17 factors compared between the two stocks.

About Ameren Corporation

Ameren Corporation is a utility holding company. The Company’s subsidiaries include Ameren Missouri, Ameren Illinois and Ameren Transmission Company (ATXI). It operates through four segments. The Ameren Missouri segment includes all of the operations of Ameren Missouri. The Ameren Illinois Electric Distribution segment consists of the electric distribution business of Ameren Illinois. The Ameren Illinois Natural Gas segment consists of the natural gas business of Ameren Illinois. The ATXI segment consists of the aggregated electric transmission businesses of Ameren Illinois and ATXI. Ameren Missouri operates a rate-regulated electric generation, transmission, and distribution business and a rate-regulated natural gas distribution business in Missouri. Ameren Illinois operates rate-regulated electric distribution, electric transmission and natural gas distribution businesses in Illinois. ATXI operates a Federal Energy Regulatory Commission rate-regulated electric transmission business.

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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