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

Institutional & Insider Ownership

88.0% of Black Hills shares are held by institutional investors. Comparatively, 46.1% of Atlantica Yield shares are held by institutional investors. 1.0% of Black Hills shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Risk and Volatility

Black Hills has a beta of 0.3, meaning that its stock price is 70% less volatile than the S&P 500. Comparatively, Atlantica Yield has a beta of 0.54, meaning that its stock price is 46% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations and price targets for Black Hills and Atlantica Yield, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Black Hills 0 5 0 0 2.00
Atlantica Yield 0 0 3 0 3.00

Black Hills presently has a consensus target price of $69.00, suggesting a potential downside of 10.59%. Atlantica Yield has a consensus target price of $27.00, suggesting a potential upside of 14.55%. Given Atlantica Yield’s stronger consensus rating and higher probable upside, analysts plainly believe Atlantica Yield is more favorable than Black Hills.

Profitability

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

Net Margins Return on Equity Return on Assets
Black Hills 12.65% 8.99% 2.92%
Atlantica Yield -0.68% -0.40% -0.07%

Dividends

Black Hills pays an annual dividend of $2.02 per share and has a dividend yield of 2.6%. Atlantica Yield pays an annual dividend of $1.56 per share and has a dividend yield of 6.6%. Black Hills pays out 57.1% of its earnings in the form of a dividend. Atlantica Yield pays out 371.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Black Hills has raised its dividend for 49 consecutive years.

Earnings and Valuation

This table compares Black Hills and Atlantica Yield’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Black Hills $1.75 billion 2.69 $258.44 million $3.54 21.80
Atlantica Yield $1.04 billion 2.26 $41.60 million $0.42 56.12

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

Summary

Black Hills beats Atlantica Yield on 11 of the 17 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. It operates through Electric Utilities, Gas Utilities, Power Generation, and Mining segments. The Electric Utilities segment generates, transmits, and distributes electricity to approximately 212,000 electric customers in Colorado, Montana, South Dakota, and Wyoming, as well as provides electrical system construction services to large industrial customers. This segment owns 939 megawatts of generation capacity and 8,858 miles of electric transmission and distribution lines. The Gas Utilities segment distributes natural gas to approximately 1,054,000 natural gas utility customers in Arkansas, Colorado, Iowa, Kansas, Nebraska, and Wyoming. It also provides appliance repair services to residential customers through company technicians and third-party service providers; and constructs and maintains gas infrastructure facilities for gas transportation customers. This segment owns and operates approximately 4,700 miles of intrastate gas transmission pipelines; 41,158 miles of gas distribution mains and service lines; 7 natural gas storage sites; and approximately 45,000 horsepower of compression and 600 miles of gathering lines. The Power Generation segment produces electric power through wind, natural gas, and coal generating plants; and sells the electric capacity and energy primarily to utilities under long-term contracts. The Mining segment produces coal at its coal mine located near Gillette, Wyoming; and sells the coal to electric generation facilities. Black Hills Corporation was founded in 1941 and is headquartered in Rapid City, South Dakota.

About Atlantica Yield

Atlantica Yield plc acquires, owns, and manages renewable energy, natural gas power, electric transmission lines, and water assets in the United States, Mexico, Peru, Chile, Uruguay, Spain, Algeria, and South Africa. As of December 31, 2018, it had 24 assets, including 1,496 megawatts (MW) of renewable energy generation assets comprising solar power and wind plants; 300 MW of natural gas power generation assets that produce electricity and steam from natural gas; 1,152 miles of electric transmission lines; and water desalination plants with an aggregate capacity of 10.5 million cubic feet per day. The company was formerly known as Abengoa Yield plc and changed its name to Atlantica Yield plc in May 2016. Atlantica Yield plc was founded in 2013 and is based in Brentford, the United Kingdom.

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