Black Hills (BKH) AI Stock Analysis

Compare

606 Followers

Top Page

Black Hills

(NYSE:BKH)

Rating:68Neutral

Price Target:

$63.00

▲( 8.19% Upside)

Black Hills Corporation demonstrates financial stability and a positive strategic outlook, underpinned by strong customer growth and robust dividend yield. However, technical indicators suggest a bearish trend, and high liabilities could impact financial flexibility. Operational cost increases and regulatory challenges are notable risks.

Positive Factors

EPS Growth

Continued execution of the plan is expected to drive multiple expansion and better align EPS growth with the group average.

Growth Strategy

The company has a strong balance sheet and a regulated focused growth strategy, which are expected to drive outperformance.

Investment Opportunity

Black Hills Corp. shares are excessively discounted at a 20-21% discount compared to peers, offering an attractive investment opportunity.

Negative Factors

Financing Costs

There is a relatively large financing drag compared to the size of the company, leading to an annual dilution of 3-3.5%.

Interest Expenses

Higher interest expenses negatively impacted the company's year-over-year financial performance.

Operational Challenges

Electric Utilities' operating income decreased due to higher operational expenses and unplanned generation outages.

Black Hills (BKH) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$4.27B

Dividend Yield4.43%

Average Volume (3M)423.35K

Price to Earnings (P/E)15.0

Beta (1Y)0.37

Revenue Growth3.28%

EPS Growth-3.49%

CountryUS

Employees2,841

SectorUtilities

Sector Strength83

IndustryDiversified Utilities

Share Statistics

EPS (TTM)1.87

Shares Outstanding72,509,380

10 Day Avg. Volume480,023

30 Day Avg. Volume423,347

Financial Highlights & Ratios

PEG Ratio-52.46

Price to Book (P/B)1.15

Price to Sales (P/S)0.00

P/FCF Ratio-589.04

Enterprise Value/Market Cap1.08

Enterprise Value/Revenue0.54

Enterprise Value/Gross Profit5.38

Enterprise Value/Ebitda1.48

Forecast

1Y Price Target

$63.50

Price Target Upside9.05% Upside

Rating ConsensusHold

Number of Analyst Covering2

Black Hills Business Overview & Revenue Model

Company DescriptionBlack Hills Corporation (BKH) is a diversified energy company based in the United States. It operates in the utility and non-regulated energy sectors, primarily focusing on electric and natural gas utility services. The company serves over 1.3 million customers across several states, including Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota, and Wyoming. Black Hills Corporation's core services include electricity generation, transmission, and distribution, as well as natural gas distribution, transmission, and storage.

How the Company Makes MoneyBlack Hills Corporation generates revenue primarily through its utility operations. The company's main revenue streams include electric utility services and natural gas utility services. In the electric utility segment, BKH makes money by generating, transmitting, and distributing electricity to residential, commercial, and industrial customers. Revenue is primarily derived from customer usage, which is regulated by state public utility commissions that approve the rates charged to customers. In the natural gas utility segment, the company earns revenue by distributing natural gas to its customers and through its natural gas transmission and storage services. Like its electric services, the rates and services are regulated, ensuring a stable revenue stream. Additionally, Black Hills Corporation engages in non-regulated energy services, including power generation from renewable sources and energy marketing, which provide supplementary income. Strategic partnerships and investments in infrastructure also contribute to the company's financial performance by enhancing operational efficiency and expanding its service capabilities.

Black Hills Financial Statement Overview

Summary

Black Hills exhibits financial stability with consistent revenue growth and operational efficiency. The balance sheet shows solid equity but high liabilities, which may impact flexibility. Strong cash flow generation is noted, though capital expenditures affect free cash flow.

Income Statement

Positive

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.

Balance Sheet

Positive

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.

Cash Flow

Positive

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.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
2.21B	2.13B	2.33B	458.50M	413.90M	1.70B
	Gross Profit
855.90M	840.40M	796.40M	-1.32B	-829.72M	652.70M
	EBIT
514.70M	503.10M	472.70M	206.09M	174.95M	428.30M
	EBITDA
800.30M	785.30M	735.50M	706.61M	645.64M	649.81M
	Net Income Common Stockholders
279.60M	273.10M	262.20M	258.40M	236.70M	227.61M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
129.70M	16.10M	86.60M	21.43M	8.92M	6.36M
	Total Assets
9.68B	10.39B	9.62B	9.62B	9.13B	8.09B
	Total Debt
4.40B	4.38B	4.40B	4.67B	4.55B	3.77B
	Net Debt
4.27B	4.37B	4.31B	4.65B	4.54B	3.76B
	Total Liabilities
6.25B	6.44B	6.31B	6.53B	6.24B	5.43B
	Stockholders Equity
3.33B	3.50B	3.22B	2.99B	2.79B	2.56B
Cash Flow		Free Cash Flow
-7.20M	-24.90M	388.80M	-19.56M	-742.06M	-225.54M
	Operating Cash Flow
713.70M	719.30M	944.40M	584.80M	-64.56M	541.86M
	Investing Cash Flow
-724.30M	-746.00M	-536.70M	-603.88M	-664.23M	-761.66M
	Financing Cash Flow
-105.00M	-42.90M	-341.70M	32.25M	731.87M	216.88M

Black Hills Technical Analysis

Technical Analysis Sentiment

Negative

Last Price58.23

Price Trends

50DMA

59.06

Negative

100DMA

58.45

Negative

200DMA

58.39

Negative

Market Momentum

MACD

-0.26

Positive

RSI

46.07

Neutral

STOCH

52.11

Neutral

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 58.23 is below the 20-day moving average (MA) of 59.15, below the 50-day MA of 59.06, and below the 200-day MA of 58.39, indicating a bearish trend. The MACD of -0.26 indicates Positive momentum. The RSI at 46.07 is Neutral, neither overbought nor oversold. The STOCH value of 52.11 is Neutral, 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 (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NWE	71 Outperform	$3.46B	14.65	7.94%	4.63%	4.31%	19.33%
OTTR	69 Neutral	$3.34B	11.36	18.38%	2.42%	-2.68%	-3.73%
BKH	68 Neutral	$4.27B	15.05	8.02%	4.43%	3.28%	-3.49%
ALE	67 Neutral	$3.78B	20.44	6.49%	4.37%	-11.15%	-23.41%
AVA	67 Neutral	$3.15B	16.66	7.25%	4.89%	3.14%	-2.66%
MGEE	67 Neutral	$3.42B	26.47	10.62%	1.90%	6.03%	6.15%
Sector *	63 Neutral	$8.63B	10.24	4.67%	4.35%	3.78%	-12.74%

* Utilities Sector Average

Performance Comparison

BKH

Black Hills

58.23

5.03

9.45%

ALE

Allete

65.01

4.77

7.92%

AVA

Avista

38.52

2.78

7.78%

MGEE

MGE Energy

90.49

11.77

14.95%

NWE

Northwestern

55.34

5.52

11.08%

OTTR

Otter Tail

77.33

-11.81

-13.25%

Black Hills Earnings Call Summary

Earnings Call Date:May 07, 2025

(Q1-2025)

% Change Since: -4.60%|

Next Earnings Date:Jul 30, 2025

Earnings Call Sentiment Positive

Black Hills Corporation is making significant progress toward its strategic objectives, with strong customer growth and successful regulatory execution. However, increased operational costs and challenges in equity issuance and regulatory decisions in Colorado present concerns. The overall outlook remains positive, driven by robust data center demand and strategic capital investments.

Q1-2025 Updates

Positive Updates

Strategic Objectives and Growth

Black Hills Corporation is achieving its strategic objectives, including a 5% year-over-year earnings growth, executing regulatory initiatives, and a $1 billion capital plan. They have implemented new rates through five rate reviews since 2024, reflecting the recovery of more than $1.3 billion of new system investments.

Customer Growth and Demand

The company is experiencing strong customer growth with two new all-time customer peak loads at Wyoming Electric. This reflects a 10% increase over the prior peak and marks 19 consecutive years of increasing demand, driven largely by data center and blockchain growth.

Data Center Expansion

Black Hills Corporation forecasts approximately 500 megawatts of data center demand by the end of 2029, with an expected EPS contribution to double to more than 10% by 2028. They have successfully served Microsoft and Meta, with Meta expected to start service in 2026.

Financial and Dividend Stability

The company reaffirmed its 2025 earnings guidance range of $4 to $4.20, with a 5% growth rate. They have a strong balance sheet, maintaining a 55% to 65% dividend payout ratio, and 55 consecutive years of dividend increases.

Ready Wyoming Electric Transmission Expansion

The largest capital project in the company's history, a $350 million project, will be completed by year-end, enhancing system resiliency and reducing dependence on third-party transmission systems.

Negative Updates

Increased Operational Costs

O&M expenses increased by $0.24 due to higher employee costs, outside services, and insurance costs. Efforts to offset mild weather impacts in 2024 adversely affected year-over-year comparisons.

Equity Issuance and Capital Needs

Black Hills Corporation issued less equity in Q1 2025 ($46 million) compared to their annual target ($215 million to $235 million). This was attributed to timing of capital projects and cash flow needs.

Regulatory Challenges in Colorado

The Colorado electric rate case resulted in a lower equity ratio (48% vs. requested 52.4%), which could impact financial performance. The company is reviewing this and considering future steps.

Potential Data Center Delays

There are headlines regarding Microsoft's potential delays in data center expansion plans, although the company remains confident in its 5-year outlook based on historical engagements.

Company Guidance

During the Q1 2025 earnings call for Black Hills Corporation, the company reaffirmed its 2025 earnings guidance range of $4 to $4.20 per share, indicating a 5% growth rate at the midpoint compared to 2024 EPS. The call highlighted several key metrics driving growth, including a successful execution of regulatory initiatives with seven rate reviews reflecting more than $1.3 billion in new system investments. The company's $1 billion capital plan for 2025 is focused on infrastructure expansion to support strong customer growth, notably in Wyoming, where new all-time customer peak loads increased by nearly 10%. Black Hills Corporation also noted its strategic progress with the $350 million Ready Wyoming transmission expansion project, which is on schedule, and emphasized its industry-leading dividend track record of 55 consecutive years, targeting a payout ratio of 55% to 65%. Additionally, the company anticipates investing $4.7 billion over a five-year period through 2029 and is confident in achieving long-term EPS growth of 4% to 6%, supported by a robust balance sheet and increasing demand from data center clients.

Black Hills Corporate Events

Private Placements and FinancingBusiness Operations and Strategy

Black Hills Amends Equity Distribution Agreement

Neutral

May 8, 2025

On May 8, 2025, Black Hills Corporation amended its Equity Distribution Sales Agreement to continue its at-the-market equity offering program, maintaining an aggregate gross sales price of up to $400 million. This amendment allows the company to utilize its existing shelf registration statement, ensuring the continuation of its strategic financial operations and potentially impacting its financial advisory and investment banking relationships.

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.