Critical Review: Black Hills Corporation (BKH) versus National Grid Transco, PLC (NGG)
Black Hills Corporation (NYSE: BKH) and National Grid Transco, PLC (NYSE:NGG) are both mid-cap utilities companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, institutional ownership, earnings, risk, dividends and valuation.
Volatility & Risk
Black Hills Corporation has a beta of 0.82, suggesting that its share price is 18% less volatile than the S&P 500. Comparatively, National Grid Transco, PLC has a beta of 0.45, suggesting that its share price is 55% less volatile than the S&P 500.
This is a breakdown of recent ratings and target prices for Black Hills Corporation and National Grid Transco, PLC, 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|
|National Grid Transco, PLC||2||6||7||0||2.33|
Black Hills Corporation currently has a consensus target price of $73.40, indicating a potential upside of 4.13%. National Grid Transco, PLC has a consensus target price of $69.00, indicating a potential upside of 9.14%. Given National Grid Transco, PLC’s higher probable upside, analysts clearly believe National Grid Transco, PLC is more favorable than Black Hills Corporation.
Black Hills Corporation pays an annual dividend of $1.78 per share and has a dividend yield of 2.5%. National Grid Transco, PLC pays an annual dividend of $2.89 per share and has a dividend yield of 4.6%. Black Hills Corporation pays out 74.8% of its earnings in the form of a dividend. Black Hills Corporation has increased its dividend for 47 consecutive years.
Insider and Institutional Ownership
94.0% of Black Hills Corporation shares are owned by institutional investors. Comparatively, 5.1% of National Grid Transco, PLC shares are owned by institutional investors. 1.1% of Black Hills Corporation shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
Earnings and Valuation
This table compares Black Hills Corporation and National Grid Transco, PLC’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Black Hills Corporation||$1.70 billion||2.22||$588.78 million||$2.38||29.62|
|National Grid Transco, PLC||$19.56 billion||2.22||$6.62 billion||N/A||N/A|
National Grid Transco, PLC has higher revenue and earnings than Black Hills Corporation.
This table compares Black Hills Corporation and National Grid Transco, PLC’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%|
|National Grid Transco, PLC||N/A||N/A||N/A|
Black Hills Corporation beats National Grid Transco, PLC on 8 of the 15 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 National Grid Transco, PLC
National Grid plc is an electricity and gas utility company focused on transmission and distribution activities in electricity and gas in both the United Kingdom and the United States. The Company’s segments include UK Electricity Transmission, which is engaged in high voltage electricity transmission networks in Great Britain; UK Gas Transmission, which is the gas transmission network in Great Britain and United Kingdom liquefied natural gas (LNG) storage activities; UK Gas Distribution, which includes approximately four of the eight regional networks of Great Britain’s gas distribution system, and US Regulated, which includes gas distribution networks, electricity distribution networks and high voltage electricity transmission networks in New York, and New England and electricity generation facilities in New York. Its other activities relate to non-regulated businesses and other commercial operations not included within the above segments.
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