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Black Hills Corp. (BKH)
NYSE:BKH
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Black Hills
(NYSE:BKH)
Rating:67Neutral
Price Target:
$61.00
â–²(7.19%Upside)
Positive Factors
Growth Strategy
The company has a strong balance sheet and a regulated focused growth strategy, which are expected to drive outperformance.
Valuation
Black Hills Corp. shares are excessively discounted at a 20-21% discount compared to peers, offering an attractive investment opportunity.
Negative Factors
Financing
There is a relatively large financing drag compared to the size of the company, leading to an annual dilution of 3-3.5%.
Operational Performance
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
$4.13B
Dividend Yield4.79%
Average Volume (3M)530.18K
Price to Earnings (P/E)14.5
Beta (1Y)0.35
Revenue Growth3.28%
EPS Growth-3.49%
CountryUS
Employees2,841
SectorUtilities
Sector Strength66
IndustryDiversified Utilities
Share Statistics
EPS (TTM)1.87
Shares Outstanding72,509,380
10 Day Avg. Volume714,039
30 Day Avg. Volume530,178
Financial Highlights & Ratios
PEG Ratio2.75
Price to Book (P/B)1.52
Price to Sales (P/S)0.00
P/FCF Ratio-233.19
Enterprise Value/Market Cap2.00
Enterprise Value/Revenue0.96
Enterprise Value/Gross Profit9.64
Enterprise Value/Ebitda2.64
Forecast
1Y Price Target
$63.50Price Target Upside11.58% 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 Earnings Call Summary
Earnings Call Date:May 07, 2025
(Q1-2025)
| % Change Since: -6.77%|
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 Financial Statement Overview
Summary
Black Hills Corporation shows financial stability with consistent revenue and good operational efficiency. The balance sheet is solid with moderate leverage, though high liabilities could impact flexibility. Strong cash flow generation is noted, but capital expenditures affect free cash flow, which is a concern.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 | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.21B | 2.13B | 2.33B | 2.55B | 1.95B | 1.70B |
| Gross Profit | 855.90M | 840.40M | 796.40M | 772.80M | 705.50M | 709.13M |
| EBITDA | 800.30M | 785.30M | 738.40M | 709.50M | 648.50M | 645.07M |
| Net Income | 279.60M | 273.10M | 262.20M | 258.40M | 236.70M | 227.61M |
Balance Sheet | ||||||
| Total Assets | 0.00 | 10.39B | 9.62B | 9.62B | 9.13B | 8.09B |
| Cash, Cash Equivalents and Short-Term Investments | 0.00 | 16.10M | 86.60M | 21.43M | 8.92M | 6.36M |
| Total Debt | 359.90M | 4.38B | 4.40B | 4.67B | 4.55B | 3.77B |
| Total Liabilities | 6.34B | 6.44B | 6.31B | 6.53B | 6.24B | 5.43B |
| Stockholders Equity | 3.64B | 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
Neutral
56.91
Price Trends
57.97
Negative
58.52
Negative
58.51
Negative
Market Momentum
-0.42
Negative
49.45
Neutral
69.96
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BKH, the sentiment is Neutral. The current price of 56.91 is above the 20-day moving average (MA) of 56.65, below the 50-day MA of 57.97, and below the 200-day MA of 58.51, indicating a neutral trend. The MACD of -0.42 indicates Negative momentum. The RSI at 49.45 is Neutral, neither overbought nor oversold. The STOCH value of 69.96 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 (67)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $3.34B | 11.35 | 18.38% | 2.63% | -2.68% | -3.73% | |
72 Outperform | $3.09B | 16.34 | 7.25% | 5.14% | 3.14% | -2.66% | |
69 Neutral | $3.29B | 25.49 | 10.62% | 2.02% | 6.03% | 6.15% | |
68 Neutral | $3.22B | 13.65 | 8.27% | 5.03% | 4.31% | 19.33% | |
67 Neutral | $4.13B | 14.53 | 8.02% | 4.79% | 3.28% | -3.49% | |
67 Neutral | $3.76B | 20.35 | 6.49% | 4.51% | -11.15% | -23.41% | |
67 Neutral | $16.52B | 17.14 | 4.47% | 3.56% | 4.76% | 6.13% |
* Utilities Sector Average
Performance Comparison
BKH
Black Hills
56.91
5.83
11.41%
ALE
Allete
64.86
5.20
8.72%
AVA
Avista
38.36
6.42
20.10%
MGEE
MGE Energy
90.05
15.78
21.25%
NWE
Northwestern
52.47
6.05
13.03%
OTTR
Otter Tail
79.69
-4.13
-4.93%
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
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.