Contrasting Terna (OTCMKTS:TERRF) and Black Hills (NYSE:BKH)

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

Dividends

Terna pays an annual dividend of $0.16 per share and has a dividend yield of 1.6%. Black Hills pays an annual dividend of $2.70 per share and has a dividend yield of 4.6%. Terna pays out 61.8% of its earnings in the form of a dividend. Black Hills pays out 68.0% 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 raised 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.

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Terna	0	0	0	0	0.00
Black Hills	0	2	1	0	2.33

Black Hills has a consensus price target of $66.00, indicating a potential upside of 13.25%. Given Black Hills’ stronger consensus rating and higher probable upside, analysts clearly believe Black Hills is more favorable than Terna.

Earnings and Valuation

This table compares Terna and Black Hills”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Terna	N/A	N/A	N/A	$0.26	38.70
Black Hills	$2.13 billion	2.00	$273.10 million	$3.97	14.68

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Terna	N/A	N/A	N/A
Black Hills	12.68%	7.81%	2.85%

Insider & Institutional Ownership

20.2% of Terna shares are held by institutional investors. Comparatively, 86.7% of Black Hills shares are held by institutional investors. 0.6% of Black Hills shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Black Hills beats Terna on 12 of the 14 factors compared between the two stocks.

About Terna

Terna S.p.A., together with its subsidiaries, provides electricity transmission and dispatching services in Italy, other Euro-area countries, and internationally. It operates through Regulated, Non-Regulated, and International segments. The company is involved in the design, construction, management, development, operation, and maintenance of national transmission grid; dispatching and metering; and construction of storage systems. It also supplies transformers and cables; provides energy and connectivity services; and installs and operates interconnecting lines. In addition, the company designs, produces, commercializes, and repairs power transformers for electricity transmission and distribution grids; industrial transformers for the steel and metals industries; special transformers for convertors used in electrochemical production; produces and sells marine and terrestrial cables; develops renewable energy projects; and undertakes private interconnector projects. Terna S.p.A. was founded in 1962 and is based in Rome, Italy.

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.