Black Hills (BKH) Stock Forecast & Price Target

Black Hills is exhibiting positive financial growth indicators, like the increase in its 5-year capital plan by $800 million which forecasts a budget of $4.3 billion for the year 2024-2028 that will boost its operations. Despite a slower increase in the company's dividend compared to last year, the improvement in regulatory outcomes and robust underlying demand growth have led to increased EPS estimates, hinting at a promising financial outlook. The company strategically capitalizes on its capital-light data center and blockchain opportunities, which positions it to achieve its projected EPS growth that reaccelerates toward the peer average of approximately 6% from the year 2026 onwards.

Black Hills is facing a number of financial challenges including a sluggish earnings growth profile, which has seen compound annual growth rate (CAGR) lowered to 4%-6% from the previous 5%-7%, and resulting in an average actual EPS growth of only 2% over the past five years. Rising interest rates and volatility in the natural gas market are potential risk factors putting added pressure on interest costs and leading to a higher deferred fuel balance. Additionally, ongoing inflationary pressures and higher commodity and financing costs in recent years have added to the regulatory lag issues prevalent within Black Hills's utilities segment, further straining the company's balance sheet.