Critical Contrast: E.On (OTCMKTS:ENAKF) & Black Hills (NYSE:BKH)

E.On (OTCMKTS:ENAKF) and Black Hills (NYSE:BKH) are both utilities companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, profitability, analyst recommendations, valuation, institutional ownership, risk and dividends.

Dividends

E.On pays an annual dividend of $0.60 per share and has a dividend yield of 3.0%. Black Hills pays an annual dividend of $2.81 per share and has a dividend yield of 3.8%. E.On pays out -238.1% of its earnings in the form of a dividend. Black Hills pays out 71.0% 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. Black Hills has increased its dividend for 55 consecutive years. Black Hills is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

25.1% of E.On shares are owned by institutional investors. Comparatively, 86.7% of Black Hills shares are owned by institutional investors. 0.6% of Black Hills shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares E.On and Black Hills”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
E.On	N/A	N/A	N/A	($0.25)	-78.61
Black Hills	$2.31 billion	2.45	$291.60 million	$3.96	18.77

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

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for E.On and Black Hills, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
E.On	0	0	0	0	0.00
Black Hills	0	0	6	0	3.00

Black Hills has a consensus target price of $81.67, indicating a potential upside of 9.86%. Given Black Hills’ stronger consensus rating and higher probable upside, analysts plainly believe Black Hills is more favorable than E.On.

Profitability

This table compares E.On and Black Hills’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
E.On	N/A	N/A	N/A
Black Hills	13.01%	7.98%	2.93%

Summary

Black Hills beats E.On on 13 of the 14 factors compared between the two stocks.

About E.On

E.ON SE operates as an energy company in Germany, the United Kingdom, Sweden, the Netherlands, rest of Europe, and internationally. It operates through two segments, Energy Networks and Customer Solutions. The Energy Networks segment operates power and gas distribution networks, as well as provides maintenance, repairs, and related services. The Customer Solutions segment supplies power, gas, and heat, as well as with products and services that enhance energy efficiency to residential, small and medium-sized enterprises, large commercial and industrial, sales partners, and public entities. Additionally, it provides SmartSim, a software solution that allows renewable gases to be fed into gas grids; gas quality tracking solutions; GasPro, a mobile gas sample collector; metering solutions; and GasCalc, a software that calculates natural gases, LNG, and biogases properties. The company was founded in 1923 and is headquartered in Essen, Germany.

About Black Hills

Black Hills Corporation, through its subsidiaries, operates as an electric and natural gas utility company in the United States. The company operates in two segments: Electric Utilities and Gas Utilities. The Electric Utilities segment generates, transmits, and distributes electricity to approximately 222,000 electric utility customers in Colorado, Montana, South Dakota, and Wyoming; and owns and operates 1,394 megawatts of generation capacity and 9,106 miles of electric transmission and distribution lines. The Gas Utilities segment distributes natural gas to approximately 1,116,000 natural gas utility customers in Arkansas, Colorado, Iowa, Kansas, Nebraska, and Wyoming; owns and operates 4,663 miles of intrastate gas transmission pipelines; 42,514 miles of gas distribution mains and service lines; seven natural gas storage sites; and approximately 50,000 horsepower of compression and 516 miles of gathering lines. It also constructs and maintains customer owned gas infrastructure facilities for gas transportation customers; and provides appliance repair services to residential utility customers, as well as electrical system construction services to large industrial customers. In addition, the company produces electric power through wind, natural gas, and coal-fired generating plants; and coal at its coal mine located near Gillette, Wyoming. Black Hills Corporation was incorporated in 1941 and is headquartered in Rapid City, South Dakota.