Financial Analysis: Black Hills Corporation (BKH) versus CMS Energy Corporation (NYSE:CMS)
CMS Energy Corporation (NYSE: CMS) and Black Hills Corporation (NYSE:BKH) are both mid-cap utilities companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, dividends, earnings, risk, valuation and profitabiliy.
This is a breakdown of current recommendations for CMS Energy Corporation and Black Hills Corporation, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|CMS Energy Corporation||0||6||3||0||2.33|
|Black Hills Corporation||0||0||6||0||3.00|
CMS Energy Corporation presently has a consensus target price of $46.38, indicating a potential upside of 1.37%. Black Hills Corporation has a consensus target price of $71.83, indicating a potential upside of 5.33%. Given Black Hills Corporation’s stronger consensus rating and higher probable upside, analysts plainly believe Black Hills Corporation is more favorable than CMS Energy Corporation.
Insider and Institutional Ownership
87.1% of CMS Energy Corporation shares are held by institutional investors. Comparatively, 94.7% of Black Hills Corporation shares are held by institutional investors. 0.7% of CMS Energy Corporation shares are held by insiders. Comparatively, 1.1% of Black Hills Corporation shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
Volatility and Risk
CMS Energy Corporation has a beta of 0.16, indicating that its stock price is 84% less volatile than the S&P 500. Comparatively, Black Hills Corporation has a beta of 0.81, indicating that its stock price is 19% less volatile than the S&P 500.
Valuation & Earnings
This table compares CMS Energy Corporation and Black Hills Corporation’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|CMS Energy Corporation||$6.43 billion||1.99||$2.08 billion||$2.11||21.68|
|Black Hills Corporation||$1.68 billion||2.17||$582.25 million||$1.99||34.27|
CMS Energy Corporation has higher revenue and earnings than Black Hills Corporation. CMS Energy 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.
CMS Energy Corporation pays an annual dividend of $1.33 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%. CMS Energy Corporation pays out 63.0% of its earnings in the form of a dividend. Black Hills Corporation pays out 89.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CMS Energy Corporation has raised its dividend for 5 consecutive years and Black Hills Corporation has raised its dividend for 47 consecutive years. CMS Energy Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.
This table compares CMS Energy Corporation and Black Hills Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|CMS Energy Corporation||9.12%||13.94%||2.83%|
|Black Hills Corporation||6.53%||10.55%||2.83%|
CMS Energy Corporation Company Profile
CMS Energy Corporation is an energy company operating primarily in Michigan. The Company operates through three segments: electric utility, which consists of regulated activities associated with the generation, transmission and distribution of electricity in Michigan; gas utility, which consists of regulated activities associated with the transportation, storage and distribution of natural gas in Michigan, and enterprises, which consists of various subsidiaries engaging primarily in domestic independent power production. The Company is the parent holding company of various subsidiaries, including Consumers Energy Company (Consumers), an electric and gas utility company, and CMS Enterprises Company (CMS Enterprises), a domestic independent power producer. Consumers serves individuals and businesses operating in the alternative energy, automotive, chemical, metal, and food products industries, as well as a group of other industries.
Black Hills Corporation Company Profile
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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