Critical Comparison: NextEra Energy Partners (NEP) versus Black Hills (NYSE:BKH)

NextEra Energy Partners (NYSE: NEP) and Black Hills (NYSE:BKH) are both mid-cap oils/energy companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, dividends, risk, profitability, institutional ownership and earnings.

Analyst Recommendations

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This is a summary of current ratings and recommmendations for NextEra Energy Partners and Black Hills, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NextEra Energy Partners 0 3 8 0 2.73
Black Hills 0 4 4 0 2.50



NextEra Energy Partners currently has a consensus price target of $42.18, suggesting a potential upside of 4.49%. Black Hills has a consensus price target of $64.13, suggesting a potential upside of 17.96%. Given Black Hills’ higher possible upside, analysts plainly believe Black Hills is more favorable than NextEra Energy Partners.

Profitability

This table compares NextEra Energy Partners and Black Hills’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NextEra Energy Partners -8.63% 1.80% 0.47%
Black Hills 10.83% 10.10% 2.78%

Institutional & Insider Ownership

83.2% of NextEra Energy Partners shares are held by institutional investors. Comparatively, 98.2% of Black Hills shares are held by institutional investors. 0.5% of NextEra Energy Partners shares are held by company insiders. Comparatively, 1.1% of Black Hills shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Dividends

NextEra Energy Partners pays an annual dividend of $1.62 per share and has a dividend yield of 4.0%. Black Hills pays an annual dividend of $1.90 per share and has a dividend yield of 3.5%. NextEra Energy Partners pays out 245.5% 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 pays out 56.5% of its earnings in the form of a dividend. NextEra Energy Partners has raised its dividend for 2 consecutive years and Black Hills has raised its dividend for 48 consecutive years.

Risk & Volatility

NextEra Energy Partners has a beta of 1.2, meaning that its stock price is 20% more volatile than the S&P 500. Comparatively, Black Hills has a beta of 0.52, meaning that its stock price is 48% less volatile than the S&P 500.

Valuation & Earnings

This table compares NextEra Energy Partners and Black Hills’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
NextEra Energy Partners $807.00 million 2.71 -$62.00 million $0.66 61.17
Black Hills $1.68 billion 1.73 $177.03 million $3.36 16.18

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

Summary

Black Hills beats NextEra Energy Partners on 11 of the 17 factors compared between the two stocks.

NextEra Energy Partners Company Profile

NextEra Energy Partners, LP acquires, owns, and operates contracted clean energy projects in the United States and Canada. It owns a portfolio of contracted renewable generation assets consisting of wind and solar projects with approximately 3,867 megawatts of capacity, as well as seven contracted natural gas pipeline assets. The company was founded in 2014 and is based in Juno Beach, Florida.

Black Hills Company Profile

Black Hills Corporation, through its subsidiaries, operates as a vertically-integrated utility company in the United States. The company's Electric Utilities segment generates, transmits, and distributes electricity to approximately 210,000 electric customers in South Dakota, Wyoming, Colorado, and Montana. This segment owns 941 megawatts of generation capacity and 8,839 miles of electric transmission and distribution lines. Its Gas Utilities segment distributes natural gas to approximately 1,042,000 natural gas utility customers in Arkansas, Colorado, Iowa, Nebraska, Kansas, and Wyoming. This segment owns 4,656 miles of intrastate gas transmission pipelines and 40,455 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 company's Power Generation segment produces electric power and sells the electric capacity and energy primarily to its utilities under long-term contracts. Its Mining segment produces coal at its coal mine located near Gillette, Wyoming and sells the coal to electric generation facilities. The company also provides appliance repair services to approximately 63,000 residential customers; and constructs and maintains gas infrastructure facilities and electrical systems for gas transportation and electric utilities customers. Black Hills Corporation was founded in 1941 and is headquartered in Rapid City, South Dakota.

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