# Black Hills Corporation (BKH) — Financial Analysis

**Exchange:**   
**Coverage as of:** 2026-Q2  
**Updated:** 2026-06-10  
**Tier:** Free primer (step 2 of 19)  
**Sibling pages:** /stocks/BKH/thesis · /stocks/BKH/memo

## Financial Snapshot

---
source: coverage-next-full
step: 04
ticker: BKH
company: Black Hills Corporation
created: 2026-06-10
---

### Step 04 — Financial Snapshot: Black Hills Corporation (BKH)

#### 1. Income Statement Quality Assessment

BKH's income statement is straightforward for a regulated utility. No complex revenue recognition issues; regulated tariff revenues are accrual-basis and match billing periods. Key adjustments:

**Items to watch:**
- **Adjusted vs. GAAP EPS gap:** FY2025: GAAP $3.98 vs. adjusted $4.10. The ~$0.12/share gap is primarily from merger-related transaction costs (legal, advisory fees for NWE deal). Recurring items are clean; adjustments are transparent and material only in merger years.
- **Winter Storm Uri distortion:** FY2021 CFO was -$64.6M (vs. normalized ~$500M+) due to ~$450M extraordinary gas cost outflows. Revenue and net income were only modestly distorted; the cash flow statement was severely distorted. Subsequent FY2023 CFO of $944M includes Uri recovery receipts. For normalized cash flow analysis, use FY2022 ($585M) and FY2024-2025 average ($696M) as the baseline. [S1: xbrl_summary.md]
- **Share count growth:** Shares grew from ~64M (FY2021) to 76.1M (Q1 2026) — ~19% dilution in 5 years, primarily via DRIP (Dividend Reinvestment Plan) and ATM (at-the-market equity). This dilution is structural and embedded in the business model; EPS growth understates rate base growth by ~2-3%/year. [S1]

#### 2. Balance Sheet Quality Assessment

**Asset base:** Dominated by PP&E (utility plant in service) — this is the rate base. As of FY2025, total assets ~$10.9B; utility plant likely ~$12-13B gross, ~$8-9B net of accumulated depreciation. Growing steadily with CapEx.

**Leverage assessment:**
- Total debt: $4.70B (FY2025); Debt/Total Assets: ~43%; Debt/Equity: ~120%
- Credit ratings: Moody's Baa2 stable; S&P BBB+ stable (investment grade, mid-tier)
- Interest expense: ~$215M/year estimated at current debt load
- **Leverage is high but manageable within regulated utility norms.** Utility sector median Debt/Capital ~50-60%; BKH is at the upper end but within acceptable range given stable regulated cash flows.
- **Refinancing risk:** Low; debt is long-duration (~15-20yr avg maturity typical for utility), so near-term maturities are manageable. FY2022 had $525M current LT debt maturity (large); FY2023 had $600M — both refinanced successfully. [S1: xbrl_summary.md]

**Cash position:** Minimal — utility companies run lean cash balances. FY2025 cash $182.8M (elevated; likely pre-funded for CapEx or merger-related). FY2024 cash $16.1M. This is normal for regulated utilities that rely on revolving credit facilities for working capital.

#### 3. Cash Flow Quality Assessment

**Operating cash flow (normalized):**
| Year | CFO ($M) | Note |
|------|---------|------|
| FY2021 | (65) | Uri distortion — exclude from trend |
| FY2022 | 585 | Normalized; good reference |
| FY2023 | 944 | Uri recovery receipts — elevated |
| FY2024 | 719 | Normalized; good reference |
| FY2025 | 673 | Normalized |
| Average FY2022+FY2024+FY2025 | ~659 | Best normalized baseline |

**Free cash flow:** Structurally negative for BKH — CapEx consistently exceeds CFO:
- FY2025: CFO $673M - CapEx $820M = FCF (-$147M)
- FY2024: CFO $719M - CapEx $744M = FCF (-$25M)
- FY2023: CFO $944M (Uri) - CapEx $556M = FCF +$389M (Uri distortion)

Negative FCF is the norm for high-capex growth utilities. BKH funds the gap with equity issuance (DRIP/ATM) and debt. This is not a distress signal — it is the business model. The test is whether the capex earns a positive spread to WACC, which it does via the regulatory compact. [S1: xbrl_summary.md]

#### 4. Key Financial Ratios

| Metric | FY2023 | FY2024 | FY2025 | Peer Range |
|--------|--------|--------|--------|------------|
| P/E (trailing) | — | — | 17.0x | 15-22x for peers |
| Forward P/E (FY2026E) | — | — | 15.6x | 14-18x |
| EV/EBITDA | — | — | ~12.0x | 10-14x |
| Dividend Yield | — | — | 4.15% | 3.0-5.5% |
| Payout Ratio (adj.) | ~66% | ~67% | 68% | 60-75% |
| Debt/Equity | — | ~122% | ~120% | 80-150% |
| Net Income Margin | 11.2% | 12.8% | 12.6% | 10-16% |
| ROE | ~9-10% | ~9-10% | ~9-10% | 8-12% |

[S2: stockanalysis_summary.md] [S3: consensus.md]

#### 5. Adversarial Research Sweep

*Note: No earnings transcripts available (coverage-next-full path). Adversarial review based on SEC filings, regulatory proceedings, news search, and proxy.*

##### Short Interest / Bear Cases (Known)
- **Short interest:** ~3-5% of float estimated (moderate-low for a utility; no activist short noted)
- **High leverage concern:** Multiple bear notes cite BKH's elevated Debt/Capital limiting financial flexibility and making it more rate-sensitive than peers
- **Colorado regulatory risk:** Contested rate cases, clean energy mandates, and environmental group interventions in CO have resulted in lower-than-requested ROEs; ongoing friction
- **NWE merger execution risk:** Large utility mergers have historically faced 12-24+ month approval timelines and integration costs; NWE's Montana jurisdiction adds regulatory complexity

##### Regulatory / Legal
- **No material ongoing litigation identified** beyond ordinary course rate cases and regulatory proceedings
- **Colorado rate cases:** BKH has received some adverse outcomes on specific rate case elements in CO (lower allowed ROE, disallowance of certain costs) — ongoing risk, not acute
- **No SEC enforcement actions, restatements, or material fraud allegations found** in EDGAR filings review

##### ESG / Environmental
- **Coal fleet transition:** BKH operates some coal generation; Colorado's clean energy mandates push for earlier retirement. This creates stranded asset risk (regulators may not allow full cost recovery on coal plants retired before end of useful life)
- **Wildfire:** BKH's exposure is low relative to peers; Montana/Wyoming territory is lower-risk than California/Pacific Northwest
- **Ready Wyoming transmission:** Environmental review underway; project was energized in December 2024 (first segment), suggesting regulatory clearance received

##### Winter Storm Uri (Historical)
- **Fully resolved:** BKH received regulatory authority to securitize ~$450M of Uri costs across multiple states; recovery process completed through FY2023. No residual exposure. [S4: 10K_FY2021_summary.md]

##### Findings Summary
- No material adversarial findings that would impair the investment thesis
- Colorado regulatory friction and NWE merger execution are the two legitimate ongoing risks
- Accounting quality is high; no restatements, no material adjustments beyond routine regulatory accounting

#### Source Index
| Ref | Source |
|-----|--------|
| S1 | BKH_financials/xbrl/xbrl_summary.md |
| S2 | BKH_financials/other/stockanalysis_summary.md |
| S3 | BKH_financials/other/consensus.md |
| S4 | BKH_financials/sec_filings/10K_FY2021_summary.md |

## Deeper Financial Analysis

The fundamental tier ($1.00) adds 8 dimensions not included here:

- Revenue Breakdown — segment revenue, geographic mix, product-line margins
- Financial Trends — QoQ momentum, leading indicators, inflection points
- Balance Sheet — debt structure, dilution risk, working capital dynamics
- Capital Allocation — ROIC, buyback cadence, reinvestment efficiency
- Earnings Analysis — beats/misses, guidance vs actuals, transcript highlights
- Competitive Positioning — market share, pricing power, peer benchmarks
- Industry Context — TAM, sector tailwinds/headwinds, regulatory backdrop

**API endpoint:** GET /api/v1/research/BKH/fundamental

## Navigation

- Overview: /stocks/BKH
- Financials (this page): /stocks/BKH/financials
- Thesis: /stocks/BKH/thesis
- Investment Memo: /stocks/BKH/memo
- Coverage universe: /stocks