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Black Hills Corp. (BKH)
NYSE:BKH
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Black Hills
(NYSE:BKH)
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Rating:64Neutral
Price Target:
$76.00
▲(3.61% Upside)
Action:ReiteratedDate:02/12/26
The score is driven primarily by moderate financial strength: stable utility profitability and revenue resilience are weighed down by capital-intensity that pressures free cash flow and historically high leverage. The latest earnings call adds support via solid 2026 EPS growth guidance and strong liquidity/credit targets, while technicals are mixed (longer-term trend positive but near-term momentum muted) and valuation is fair with an attractive dividend yield.
Positive Factors
Stable regulated profitability
Black Hills' regulated utility operations produce steady net margins near 11–13%, giving persistently predictable earnings. Combined with completed rate reviews that added ~ $52M of annual revenue, the regulated model underpins durable cash flows and long‑term earnings stability.
Large data‑center pipeline and capital plan
A >3GW data‑center pipeline and a $4.7B multi‑year capital plan create structural growth optionality beyond core utility volumes. Serving 600MW by 2030 and potential >10% EPS contribution by 2028 would materially diversify revenue and margins over the medium term if projects are executed.
Strong liquidity and credit discipline
Management's focus on maintaining investment‑grade metrics, substantial revolver availability and recent bond issuance supports funding for capex and reduces near‑term refinancing risk. This liquidity and stated capital targets underpin the firm's ability to execute its multi‑year plan while sustaining dividends.
Negative Factors
Historically elevated leverage
Multi‑year leverage near 1.25–1.63x equity constrains financial flexibility and raises sensitivity to higher interest rates. Elevated debt levels limit capacity for incremental investment or weathering shocks and increase the importance of meeting FFO‑to‑debt and net‑debt targets to preserve investment‑grade ratings.
Volatile, often negative free cash flow
Heavy capital spending drives frequent negative free cash flow, creating reliance on external financing or equity issuance. Persistent negative FCF during investment cycles can pressure credit metrics, increase financing costs and raise execution risk for the capital plan and dividend payout targets if capex remains elevated.
Regulatory, merger and project execution risk
The NorthWestern merger and multiple pending rate filings expose the company to prolonged regulatory review, potential conditions or delays. Combined with the need to sign complex large‑load data center contracts, these approval and execution risks could defer synergies or alter projected earnings and capital requirements over multiple quarters.
Black Hills (BKH) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$5.51B
Dividend Yield3.91%
Average Volume (3M)1.01M
Price to Earnings (P/E)18.3
Beta (1Y)0.19
Revenue Growth7.03%
EPS Growth6.64%
CountryUS
Employees2,841
SectorUtilities
Sector Strength65
IndustryDiversified Utilities
Share Statistics
EPS (TTM)1.41
Shares Outstanding75,474,846
10 Day Avg. Volume1,100,783
30 Day Avg. Volume1,010,728
Financial Highlights & Ratios
PEG Ratio8.49
Price to Book (P/B)1.33
Price to Sales (P/S)2.19
P/FCF Ratio-34.62
Enterprise Value/Market Cap1.82
Enterprise Value/Revenue4.35
Enterprise Value/Gross Profit11.31
Enterprise Value/Ebitda12.16
Forecast
1Y Price Target
$81.00Price Target Upside10.43% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
EPS Forecast (FY)4.35
Revenue Forecast (FY)$2.38B
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 utility operations, which include the sale of electricity and natural gas to consumers. The regulated utility subsidiaries earn income by providing reliable energy services, with rates set by state regulatory commissions. In addition to utility revenues, BKH has significant income from its non-utility operations, which include the generation of electricity from various sources, including coal, natural gas, and renewable energy. The company also engages in the sale of coal and the development of energy projects, which contribute to its revenue. Key partnerships with local governments and regulatory bodies facilitate infrastructure investments and energy projects, enhancing its revenue streams. Additionally, BKH's focus on expanding its renewable energy portfolio positions the company to benefit from growing demand for sustainable energy solutions.
Black Hills Earnings Call Summary
Earnings Call Date:Feb 04, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 06, 2026
Earnings Call Sentiment Positive
The call emphasized consistent execution: EPS growth (adjusted +5%), maintained credit metrics, successful completion of major projects (Ready Wyoming), a large and fast-growing data center pipeline (>3 GW) with potential meaningful EPS contribution (>10% by 2028), and constructive 2026 guidance (+6% midpoint). Offsetting these positives are higher O&M and financing costs, merger-related expenses and share issuance, increased depreciation, weather sensitivity, and material uncertainty around signing and structuring very large data center projects and obtaining regulatory approvals for the merger and multiple rate filings. Overall, the positives (steady earnings growth, strong liquidity, dividend track record, major project delivery and attractive pipeline) materially outweigh the challenges, though several execution and regulatory risks remain.Q4-2025 Updates
Positive Updates
Adjusted EPS Growth
Reported GAAP EPS of $3.98 and adjusted EPS of $4.10 for 2025, a 5% increase versus $3.91 in 2024 (adjusted for $0.12 of merger-related transaction costs).
2026 Earnings Guidance
Initiated 2026 adjusted EPS guidance of $4.25 to $4.45, representing approximately 6% year-over-year growth at the midpoint versus 2025.
Large Data Center Pipeline and Expected Contribution
Tripled data center pipeline to more than 3 GW; expect to serve ~600 MW by 2030 (from Microsoft and Meta) and anticipate this demand contributing more than 10% of consolidated EPS beginning in 2028 under current assumptions.
Major Project Execution — Ready Wyoming & Lange II
Completed the 260-mile Ready Wyoming transmission project on schedule (transformational reliability and market access); broke ground on Lange II, a 99 MW generation project expected in service Q4 2026.
Regulatory and Revenue Progress
Completed 3 rate reviews in 2025 delivering over $52 million of new annual revenue and secured deferred-accounting trackers and a weather normalization pilot that reduce future earnings volatility.
Strong Financial Position and Liquidity
Maintained investment-grade credit metrics (target ~55% net debt to total capitalization; FFO to debt ~14%–15%), issued $450M of notes (4.55%) and held >$700M of revolver availability at year-end.
Capital Plan and Dividend Track Record
Maintaining a $4.7 billion capital plan with $900 million funded in 2025; increased the dividend for the 56th consecutive year and target payout ratio of 55%–65%.
Negative Updates
Rising Operating and Financing Costs
O&M increased by $0.36 per share (including $0.12 merger costs); excluding merger costs O&M rose $0.24 per share driven by higher employee/outside services (+$0.13), insurance (+$0.08) and unplanned outages (+$0.05). Financing costs increased $0.33 per share (including $0.25 higher interest expense and $0.19 dilution offset by $0.12 AFUDC).
Merger-Related Costs and Share Dilution
Incurred $0.12 per share of merger-related transaction costs in 2025 and issued $220 million of equity during 2025 (expect reduced equity need of $50–$70 million in 2026), indicating some dilution and near-term transaction expense impact.
Depreciation and Asset-Related Charges
Depreciation increased $0.15 per share reflecting new assets placed in service, adding near-term pressure to reported earnings metrics.
Weather Variability
Weather effects were favorable by $0.09 versus 2024 but represented a $0.11 headwind relative to normal, highlighting sensitivity to weather-driven variance.
Uncertainty Around Large Data Center Projects
Significant commercial uncertainty remains: major pipeline customers and projects (e.g., Crusoe/Tallgrass ~1.8 GW potential, third-party fuel cell or PPA investments) are still under negotiation and not yet signed, meaning potential large-scale investments and earnings upside are not guaranteed.
Regulatory and Integration Risks Related to Merger
Merger with NorthWestern Energy is in regulator discovery in multiple states (Montana, Nebraska, South Dakota); approvals are required and could pose timing or outcome risk despite S-4 filing and planned shareholder meetings.
Pending Rate Filings and Potential Customer Impacts
Upcoming rate review filings (South Dakota after a decade without base rate changes; Arkansas gas request for $29.4M at 10.5% ROE) create regulatory execution risk and potential rate volatility for customers and earnings timing.
Company Guidance
Black Hills provided 2026 adjusted EPS guidance of $4.25–$4.45 (midpoint = $4.35), which represents roughly 6% year‑over‑year growth from 2025 adjusted EPS of $4.10 (GAAP $3.98, including $0.12 of merger costs); management said it expects to deliver in the upper half of its long‑term 4%–6% EPS growth target (2023 base year). Key financial and operating metrics underpinning the guidance include a $4.7 billion five‑year capital plan (with $900 million invested in 2025), expected 2026 equity need of $50–$70 million (vs. $220 million issued in 2025), maintenance of investment‑grade ratings with target ~55% net debt to total capitalization and 14%–15% FFO-to-debt (100 bps above a 13% downgrade threshold), over $700 million of revolver availability, and recently issued $450 million of 4.55% notes (next maturity $400 million at 3.15% in Jan 2027). Management cited $0.95 of 2025 EPS benefit from new rates/rider recovery, weather impacts (+$0.09 vs 2024; –$0.11 vs normal), O&M headwinds of $0.36 per share (including $0.12 merger costs; ex‑merger +$0.24 with +$0.13 employee/outside services, +$0.08 insurance, +$0.05 outages), financing cost increases of $0.33 (incl. $0.25 higher interest, $0.19 share dilution, +$0.12 AFUDC), and +$0.15 depreciation, while reaffirming a 55%–65% dividend payout target after 56 consecutive years of increases. They also highlighted a >3 GW data‑center pipeline (600 MW expected to be served by 2030 and expected to contribute >10% of consolidated EPS beginning in 2028 under current plans), and noted potential upside from additional contracted or utility‑owned generation and transmission.Black Hills Financial Statement Overview
Summary
Profitability is steady for a regulated utility (net margins ~11–13%) and revenue returned to modest growth in 2025, but the profile is constrained by historically elevated leverage and persistently volatile/often negative free cash flow due to high capex needs. The apparent anomaly in 2025 balance-sheet figures also reduces confidence in latest-year comparability.Income Statement
Revenue has been broadly stable with a return to growth in 2025 (annual revenue up ~1.7%) after declines in 2023–2024. Profitability is solid for a regulated utility profile, with net margins holding near ~11–13% across the period and EBITDA margins generally strong. A key watch-out is volatility in gross profit margin (notably lower in 2025 versus 2024), suggesting cost pressure or mix shifts even as bottom-line profit remains steady.71
Positive
Balance Sheet
Returns on equity are consistent (~7.6–8.9%), indicating steady earnings power. However, leverage has been high in most years (debt running ~1.25–1.63x equity from 2021–2024), which can limit flexibility if rates stay elevated. The 2025 snapshot shows zero debt and zero total assets, which appears inconsistent versus prior years and reduces confidence in the latest-year balance sheet comparability; based on the multi-year trend, leverage remains the primary balance-sheet risk.58
Neutral
Cash Flow
Operating cash flow is generally healthy in most years (strongly positive in 2022–2025), but free cash flow is volatile and often negative (negative in 2020–2022 and 2024–2025), consistent with heavy capital spending needs. 2023 was a standout positive free-cash-flow year, but the reversal back to negative in 2024–2025 and the sharp decline in free cash flow growth in 2025 highlight funding pressure and a higher reliance on external financing during investment cycles.45
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 2.31B | 2.13B | 2.33B | 2.55B | 1.95B |
| Gross Profit | 888.70M | 840.40M | 796.40M | 772.80M | 705.50M |
| EBITDA | 827.40M | 785.30M | 738.40M | 709.50M | 648.50M |
| Net Income | 291.60M | 273.10M | 262.20M | 258.40M | 236.70M |
Balance Sheet | |||||
| Total Assets | 10.87B | 10.02B | 9.62B | 9.62B | 9.13B |
| Cash, Cash Equivalents and Short-Term Investments | 182.80M | 16.10M | 86.60M | 21.40M | 8.92M |
| Total Debt | 4.70B | 4.38B | 4.40B | 4.67B | 4.55B |
| Total Liabilities | 6.96B | 6.44B | 6.31B | 6.53B | 6.24B |
| Stockholders Equity | 3.82B | 3.50B | 3.22B | 2.99B | 2.79B |
Cash Flow | |||||
| Free Cash Flow | -146.40M | -24.90M | 388.80M | -19.60M | -742.06M |
| Operating Cash Flow | 673.40M | 719.30M | 944.40M | 584.80M | -64.56M |
| Investing Cash Flow | -828.20M | -746.00M | -536.70M | -603.90M | -664.23M |
| Financing Cash Flow | 321.80M | -42.90M | -341.70M | 32.30M | 731.87M |
Black Hills Technical Analysis
Positive
73.35
Price Trends
71.01
Positive
68.14
Positive
62.44
Positive
Market Momentum
0.61
Negative
57.53
Neutral
53.16
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BKH, the sentiment is Positive. The current price of 73.35 is above the 20-day moving average (MA) of 72.43, above the 50-day MA of 71.01, and above the 200-day MA of 62.44, indicating a bullish trend. The MACD of 0.61 indicates Negative momentum. The RSI at 57.53 is Neutral, neither overbought nor oversold. The STOCH value of 53.16 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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
UnderperformOutperform
Sector (66)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $3.43B | 17.92 | 7.31% | 5.10% | 2.14% | -6.51% | |
72 Outperform | $3.63B | 13.24 | 16.10% | 2.54% | -3.18% | -8.62% | |
69 Neutral | $2.92B | 21.71 | 10.80% | 2.36% | 8.26% | 12.47% | |
66 Neutral | $17.65B | 18.10 | 5.60% | 3.62% | 6.62% | 11.55% | |
64 Neutral | $5.51B | 18.34 | 7.96% | 3.91% | 7.03% | 6.64% | |
64 Neutral | $4.21B | 23.27 | ― | 4.09% | 4.90% | -4.42% |
* Utilities Sector Average
BKH
Black Hills
73.35
16.01
27.93%
AVA
Avista
42.33
5.97
16.42%
MGEE
MGE Energy
80.90
-10.15
-11.15%
NWE
Northwestern
68.93
17.05
32.86%
OTTR
Otter Tail
84.95
5.49
6.91%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.