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Black Hills Corp. (BKH)
NYSE:BKH
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Black Hills
(NYSE:BKH)
72Outperform
Positive Factors
Clean Energy Plan
The CO PUC authorized 100MW of utility-owned solar, 50MW of utility-owned battery storage, and a 200MW solar PPA in BKH's CO Clean Energy Plan.
Data Center Growth
The data center growth thesis remains intact, with expectations that data center customer-derived EPS will rise to 10%+ by 2028.
Regulatory Strategy
BKH continues to execute on its regulatory strategy, reaching settlements in both its AR Gas and IA Gas rate cases this year.
Negative Factors
Financing Costs
Financing costs still pose a headwind, with potential pressure to BKH’s EPS CAGR from incremental equity issuance and debt refinancing.
Growth Rate Concerns
The prescribed growth rate is below-average relative to peers and likely relies on regulatory execution across several jurisdictions where customer bill affordability remains a key consideration.
Market Perception
Despite delivering higher than anticipated FY’24 EPS and in-line FY’25 EPS guidance, BKH shares initially declined due to investor misunderstanding over long-term data center guidance.
Black Hills (BKH) vs. S&P 500 (SPY)
Market Cap
$4.26B
Dividend Yield4.43%
Average Volume (3M)487.81K
Price to Earnings (P/E)15.2
Beta (1Y)0.50
Revenue Growth-8.73%
EPS Growth0.14%
CountryUS
Employees2,841
SectorUtilities
Sector Strength76
IndustryDiversified Utilities
Share Statistics
EPS (TTM)3.92
Shares Outstanding71,617,490
10 Day Avg. Volume525,577
30 Day Avg. Volume487,814
Financial Highlights & Ratios
PEG Ratio106.12
Price to Book (P/B)N/A
Price to Sales (P/S)1.99
Price to Cash Flow (P/CF)6.90
P/FCF Ratio3.40
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$62.33Price Target Upside5.97% Upside
Rating ConsensusHold
Number of Analyst Covering4
Black Hills Business Overview & Revenue Model
Company DescriptionBlack Hills Corporation, through its subsidiaries, operates as an electric and natural gas utility company in the United States. It operates in two segments, Electric Utilities and Gas Utilities. The Electric Utilities segment generates, transmits, and distributes electricity to approximately 218,000 electric utility customers in Colorado, Montana, South Dakota, and Wyoming; and owns and operates 1,481.5 megawatts of generation capacity and 8,892 miles of electric transmission and distribution lines. The Gas Utilities segment distributes natural gas to approximately 1,094,000 natural gas utility customers in Arkansas, Colorado, Iowa, Kansas, Nebraska, and Wyoming; owns and operates 4,732 miles of intrastate gas transmission pipelines; 41,644 miles of gas distribution mains and service lines; six natural gas storage sites; and approximately 50,000 horsepower of compression and 515 miles of gathering lines. The company also constructs and maintains 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, it produces electric power through wind, natural gas, and coal-fired generating plants; and coal at its coal mine located near Gillette, Wyoming. The company was incorporated in 1941 and is headquartered in Rapid City, South Dakota.
How the Company Makes MoneyBlack Hills Corporation generates revenue primarily through its regulated utility operations. The company earns money by providing electricity and natural gas services to residential, commercial, industrial, and municipal customers. Revenue is derived from the rates set by regulatory commissions, which allow for the recovery of costs and a return on investment. The company also benefits from infrastructure investments, such as the expansion and maintenance of its transmission and distribution networks, which are typically approved by regulators and incorporated into customer rates. Additionally, Black Hills may engage in non-regulated energy services, although these activities represent a smaller portion of its overall earnings. Strategic partnerships, regulatory relationships, and a focus on operational efficiency further support its financial performance.
Black Hills Financial Statement Overview
Summary
Black Hills demonstrates financial stability with consistent revenue growth and operational efficiency. However, the high liabilities on the balance sheet and negative free cash flow due to capital expenditures pose some risks.Income Statement
The income statement shows a stable revenue base with a modest revenue growth from $2.127 billion to $2.331 billion. The gross profit margin remains high, reflecting the regulated nature of the industry, but net profit margin is relatively lower. The EBIT margin is healthy and the EBITDA margin is robust, indicating good operational efficiency. However, the net income has seen fluctuations, indicating some volatility in earnings.72
Positive
Balance Sheet
The balance sheet reflects a solid equity base with a consistent increase in stockholders' equity over the years. The debt-to-equity ratio is moderate, showing a balanced use of leverage, but the high total liabilities compared to equity could be a concern. The equity ratio is relatively stable, indicating a decent proportion of assets financed by equity.65
Positive
Cash Flow
Cash flow analysis indicates strong operating cash flow with consistent generation over the years. However, free cash flow has been negative at times due to high capital expenditures, typical for the utilities industry. The operating cash flow to net income ratio suggests good cash conversion efficiency, but the free cash flow to net income ratio is a concern due to negative free cash flows.68
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 2.13B | 2.33B | 458.50M | 413.90M | 1.70B | Gross Profit |
| 2.13B | 796.40M | -1.32B | -829.72M | 652.70M | EBIT |
| 503.10M | 472.70M | 206.09M | 174.95M | 428.30M | EBITDA |
| 785.30M | 735.50M | 706.61M | 645.64M | 649.81M | Net Income Common Stockholders |
| 273.10M | 262.20M | 258.40M | 236.70M | 227.61M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 16.10M | 86.60M | 21.43M | 8.92M | 6.36M | Total Assets |
| 10.02B | 9.62B | 9.62B | 9.13B | 8.09B | Total Debt |
| 133.80M | 4.40B | 4.67B | 4.55B | 3.77B | Net Debt |
| 133.80M | 4.31B | 4.65B | 4.54B | 3.76B | Total Liabilities |
| 6.44B | 6.31B | 6.53B | 6.24B | 5.43B | Stockholders Equity |
| 3.50B | 3.22B | 2.99B | 2.79B | 2.56B |
| Cash Flow | Free Cash Flow | |||
| -24.90M | 388.80M | -19.56M | -742.06M | -225.54M | Operating Cash Flow |
| 719.30M | 944.40M | 584.80M | -64.56M | 541.86M | Investing Cash Flow |
| -746.00M | -536.70M | -603.88M | -664.23M | -761.66M | Financing Cash Flow |
| -42.90M | -341.70M | 32.25M | 731.87M | 216.88M |
Black Hills Technical Analysis
Negative
58.82
Price Trends
59.13
Negative
59.38
Negative
57.87
Positive
Market Momentum
0.07
Positive
43.34
Neutral
13.87
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BKH, the sentiment is Negative. The current price of 58.82 is below the 20-day moving average (MA) of 60.23, below the 50-day MA of 59.13, and above the 200-day MA of 57.87, indicating a neutral trend. The MACD of 0.07 indicates Positive momentum. The RSI at 43.34 is Neutral, neither overbought nor oversold. The STOCH value of 13.87 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for BKH.
Black Hills Risk Analysis
Black Hills disclosed 20 risk factors in its most recent earnings report. Black Hills reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Black Hills Peers Comparison
Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $9.08B | 20.50 | 9.65% | 3.72% | 11.63% | 5.61% | |
72 Outperform | $4.26B | 15.16 | 8.13% | 4.43% | -8.73% | 0.14% | |
72 Outperform | $16.18B | 23.47 | 10.01% | 3.09% | -1.12% | -3.22% | |
70 Neutral | $11.18B | 17.90 | 9.42% | 3.79% | 9.13% | 21.11% | |
68 Neutral | $3.41B | 15.15 | 7.94% | 4.68% | 6.45% | 13.95% | |
65 Neutral | $11.94B | 15.66 | 7.09% | 4.31% | 5.53% | -2.84% | |
56 Neutral | $3.18B | 17.38 | 7.09% | 4.82% | 10.64% | 2.28% |
* Utilities Sector Average
Performance Comparison
BKH
Black Hills
58.82
8.88
17.78%
LNT
Alliant Energy
62.10
15.50
33.26%
AVA
Avista
39.65
7.58
23.64%
NWE
Northwestern
54.65
8.02
17.20%
OGE
OGE Energy
44.34
12.43
38.95%
PNW
Pinnacle West Capital
91.51
22.55
32.70%
Black Hills Earnings Call Summary
Earnings Call Date: Feb 5, 2025 | % Change Since: -0.96% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance, significant investment and growth plans, and regulatory successes. However, the company faced challenges due to mild weather, unplanned outages, and increased costs. Despite these challenges, the overall sentiment remains positive due to the company's growth potential and strategic initiatives.Highlights
EPS Growth and Financial Stability
EPS growth was 4.3% in 2024, with expectations to deliver approximately 5% EPS growth in 2025. The company achieved its capitalization target and maintained solid investment-grade credit ratings.
Significant Investment and Growth Plans
Invested over $800 million in 2024 and outlined a five-year capital investment plan of $4.7 billion, an increase of approximately 10% compared to the prior plan.
Data Center Demand and Growth
Announced service for Meta's new AI data center and projected a pipeline of over one gigawatt of data center demand within the next ten years, expecting EPS contribution from data centers to more than double by 2029.
Dividend Increase
Increased dividend by 4%, marking 55 consecutive years of dividend increases.
Regulatory Success
Implemented constructive settlements for Arkansas Gas and Iowa Gas rate reviews in 2024.
Lowlights
Challenges Due to Mild Weather and Outages
Mild weather and unplanned generation outages impacted earnings, reducing EPS by $0.20 compared to normal weather conditions.
Higher Costs and Expenses
Faced higher insurance costs and increased expenses related to financing and depreciation due to capital investments.
Delay in Clean Energy Projects
Slight delay in the timeline for the Colorado Clean Energy Plan projects, now expected to be completed between 2027 and 2028.
Company Guidance
During the call, Black Hills Corporation provided detailed guidance for their financial and operational outlook. The company reported an EPS growth of 4.3% in 2024, meeting their guidance midpoint of $3.75, and projected an EPS growth of approximately 5% for 2025 with an earnings range of $4.00 to $4.20. They maintained solid investment-grade credit ratings and targeted a 55% to 65% dividend payout ratio, marking 55 consecutive years of increases. Their five-year capital plan, increased by over $400 million to $4.7 billion, focuses on customer-focused opportunities, including the Ready Wyoming transmission project and clean energy initiatives in Colorado. They also highlighted a pipeline of over one gigawatt of data center demand, expecting EPS contribution from data centers to more than double to 10% or more by 2029. The company aims for a long-term EPS growth target of 4% to 6% and plans to issue $215 to $235 million in equity to support their $1 billion capital investment plan for 2025.Black Hills Corporate Events
Executive/Board Changes
Black Hills CIO Erik Keller Resigns
Neutral
Feb 7, 2025
On January 31, 2025, Erik Keller announced his resignation as Senior Vice President and Chief Information Officer of Black Hills Corporation, a South Dakota-based company, effective February 28, 2025. This announcement may impact Black Hills Corporation’s leadership structure and future strategic direction, but specific implications for stakeholders are not detailed in the release.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.