Black Hills Corporation (BKH) | Investment Case

1. Company Snapshot

1.a. Company Description

Black 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.

Show Full description

1.b. Last Insights on BKH

The recent performance of Black Hills Corporation was negatively impacted by a rate review application filed in Kansas, seeking to recover capital infrastructure and operational costs. This development may lead to increased expenses and potentially affect the company's future earnings. Additionally, the company's request for a rate review and rider renewal in Kansas may result in regulatory scrutiny and potential delays in implementing rate increases. These factors may have contributed to the company's recent performance.

1.c. Company Highlights

Last Price	72.55
Change Percentage	-1.31%
Open	73.29
Previous Close	73.51
Market Cap ( Millions)	5476
Volume	821319
Year High	75.87
Year Low	54.92
M A 50	72.39
M A 200	64.48

FCF Yield	-2.67%
Dividend Yield	3.76%
ROE	7.85%
Debt / Equity	122.95%
Net Debt / EBIDTA	546.41%
Price To Book	1.43
Price Earnings Ratio	18.71
Price To FCF	-37.4
Price To sales	2.37
EV / EBITDA	12.09

2. Black Hills Corporation's Earnings Beat Expectations with Strong Growth Prospects

Black Hills Corporation reported an actual EPS of $1.41, beating analyst estimates of $1.37. The company's financial performance was robust, with revenues expected to grow at 3.8% next year. The company's ability to maintain its solid investment-grade credit ratings and achieve strong earnings through consistent execution of its long-term strategy is a testament to its financial health. As Kimberly Nooney, Senior Vice President and Chief Financial Officer, noted, the team delivered on the company's strategy and financial commitments for 2025, achieving the midpoint of earnings guidance.

Publication Date: Feb -18

                                    📋 Highlights
                                    Data Center Demand Pipeline::
                                                Over 3 gigawatts of pipeline with high-quality data center customers, expected to contribute >10% of consolidated EPS by 2028.
Capital Investment Plan::
                                                $4.7 billion allocated for 2025–2026, focusing on safety, reliability, and growth, including new generation and transmission projects.
2026 Earnings Guidance::
                                                Adjusted EPS of $4.25–$4.45/share, reflecting 6% growth at midpoint compared to 2025, with $50–70 million equity need reduction.
Regulatory & Rate Review Progress::
                                                Completed 3 rate reviews in 2025 ($52M new annual revenue) and filed a $147M Arkansas Gas rate review to recover investments.
Crusoe-Tallgrass Project::
                                                Supports 1.8 gigawatts of demand, with a 260-mile transmission project and Robinson substation to be funded by customers, aiming for Q1 2027 service.

                                

Data Center Demand Drives Growth

The company's data center pipeline now stands at more than 3 gigawatts, with high-quality data center companies under nondisclosure agreements. This demand is expected to contribute more than 10% of the company's growing consolidated EPS by 2028. The company is making progress in negotiations with partners to serve the remainder of its pipeline, with significant demand anticipated in the 2027 time frame from key customers like Microsoft and Meta.

Regulatory Progress and Investments

The company is advancing regulatory and growth initiatives, having completed 3 rate reviews in 2025 representing over $52 million in new annual revenue. The company is also investing in its natural gas and electric customers' core needs for safety, reliability, and growth through its $4.7 billion capital plan. The plan includes development opportunities for investment that aren't currently in the plan, such as generation and transmission bills to serve additional data center demand.

Valuation Metrics

With a P/E Ratio of 18.97 and a Dividend Yield of 3.71%, the company's valuation metrics suggest a relatively stable and income-generating investment. The ROE of 7.85% and ROIC of 4.63% indicate a decent return on equity and invested capital. The Net Debt / EBITDA ratio of 5.46 suggests a moderate level of indebtedness. Overall, the company's financial health and growth prospects are reflected in its valuation metrics, which indicate a stable and potentially attractive investment opportunity.

3. NewsRoom

These Dividend Stocks Are Almost Guaranteed to Keep Raising Their Payouts

Mar -06

Source: 247wallst.com

Black Hills Stock Up 22% This Past Year as One Fund Makes $37 Million Utility Bet

Mar -02

Source:

Dakota Gold Announces Appointment of Brian G. Iverson to Board of Directors

Feb -27

Source: newsfilecorp.com

3 Under-the-Radar AI Infrastructure Stocks Powering the Next Buildout

Feb -20

Source: marketbeat.com

Black Hills Corp. Requests Rate Review in South Dakota

Feb -19

Source: globenewswire.com

All It Takes Is $5,000 Invested in Each of These 3 Dividend Kings to Help Generate $578 in Passive Income in 2026

Feb -19

Source: fool.com

Halper Sadeh LLC is Investigating Whether NWE, LSF, BHRB, LNKB are Obtaining Fair Deals for their Shareholders

Feb -09

Source: globenewswire.com

Black Hills Q4 Earnings Call Highlights

Feb -06

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.87%)

6. Segments

Gas Utilities

Expected Growth: 4.5%

Black Hills Corporation's Gas Utilities segment growth of 4.5% is driven by increasing demand for natural gas, expansion of infrastructure in the Rocky Mountains, and strategic acquisitions. Additionally, favorable regulatory environments, rate base growth, and cost savings initiatives contribute to the segment's growth.

Electric Utilities

Expected Growth: 5.5%

Black Hills Corporation's Electric Utilities segment growth of 5.5% is driven by increasing demand for electricity in its service territories, rate base growth from infrastructure investments, and favorable regulatory environments. Additionally, the company's focus on renewable energy and grid modernization initiatives contributes to its growth momentum.

7. Detailed Products

Electricity

Generation, transmission, and distribution of electricity to residential, commercial, and industrial customers

Natural Gas

Distribution of natural gas to residential, commercial, and industrial customers

Oil and Gas Production

Exploration, production, and marketing of crude oil and natural gas

Coal Mining

Mining and marketing of coal to generate electricity and produce steel

Municipal and Cooperative Utilities

Ownership and operation of municipal and cooperative utilities

8. Black Hills Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Black Hills Corporation operates in the utility industry, which has a moderate threat of substitutes. While there are alternative energy sources available, the cost and convenience of traditional energy sources make them a preferred choice for many customers.

Bargaining Power Of Customers

Black Hills Corporation's customers have limited bargaining power due to the lack of alternative energy providers in the region. This gives the company an upper hand in negotiating prices and contracts.

Bargaining Power Of Suppliers

Black Hills Corporation relies on a diverse range of suppliers for fuel, equipment, and services. While suppliers have some bargaining power, the company's scale and diversification of suppliers mitigate this risk.

Threat Of New Entrants

The utility industry has high barriers to entry, including significant capital requirements and regulatory hurdles. This makes it difficult for new entrants to challenge Black Hills Corporation's market position.

Intensity Of Rivalry

Black Hills Corporation operates in a moderately competitive market, with a few large players competing for market share. While there is some rivalry, the company's strong brand and diversified operations help to mitigate this risk.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	57.79%
Debt Cost	4.40%
Equity Weight	42.21%
Equity Cost	7.10%
WACC	5.54%
Leverage	136.88%

11. Quality Control: Black Hills Corporation passed 3 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Avista

A-Score: 6.9/10

Value: 7.1

Growth: 4.2

Quality: 4.6

Yield: 8.0

Momentum: 7.5

Volatility: 10.0

1-Year Total Return ->

NorthWestern

A-Score: 6.8/10

Value: 6.3

Growth: 3.3

Quality: 5.3

Yield: 8.0

Momentum: 8.5

Volatility: 9.7

1-Year Total Return ->

Otter Tail

A-Score: 6.7/10

Value: 5.1

Growth: 7.0

Quality: 6.5

Yield: 6.0

Momentum: 7.0

Volatility: 8.7

1-Year Total Return ->

Black Hills

A-Score: 6.7/10

Value: 5.3

Growth: 4.2

Quality: 4.4

Yield: 8.0

Momentum: 8.0

Volatility: 10.0

1-Year Total Return ->

ALLETE

A-Score: 6.5/10

Value: 5.7

Growth: 3.9

Quality: 4.4

Yield: 8.0

Momentum: 7.0

Volatility: 10.0

1-Year Total Return ->

AES

A-Score: 6.0/10

Value: 7.2

Growth: 5.4

Quality: 3.8

Yield: 8.0

Momentum: 7.0

Volatility: 4.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

32.50%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

5.54%

Black Hills Corporation - US0921131092

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on BKH

1.c. Company Highlights

Average Yield

Medium Volatility

Stable Momentum

Earnings Beats

Fairly Valued

Revenues Miss

Average Growth

Earnings Miss

Revenues Beats

Average Quality

Cheaper

Better Quality

2. Black Hills Corporation's Earnings Beat Expectations with Strong Growth Prospects

Data Center Demand Drives Growth

Regulatory Progress and Investments

Valuation Metrics

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.87%)

6. Segments

Gas Utilities

Expected Growth: 4.5%

Electric Utilities

Expected Growth: 5.5%

7. Detailed Products

Electricity

Natural Gas

Oil and Gas Production

Coal Mining

Municipal and Cooperative Utilities

8. Black Hills Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Black Hills Corporation passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

72.55$

Current Price

72.55$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA