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Category: Black Hills Corporation (BKH)
Date: 5 May 2021 Stock Price of Black Hills Corporation (BKH): $68.65 Market Capital of Black Hills (BKH): $4.93 billion We take a look at the 1st quarter earnings report of their 2021 fiscal year of Black Hills Corporation a diversified energy company that is an electric and gas utility firm that sells power throughout the American West. For the 1st quarter of 2021 Black Hills reported net income of $93.6 million
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- The first quarter will be remembered for Winter Storm Uri and its historic impacts,said Linn Evans, president and CEO of Black Hills Corp."
About Black Hills Corporation
Black Hills Corporation is a Rapid City, South Dakota diversified energy company that is an electric and gas utility in South Dakota and Wyoming and sells power throughout the American West. It derives its name from its home in the Black Hills of South Dakota.
Overview of Black Hills Corporation 1st quarter 2021 earnings report
FIRST QUARTER 2021 HIGHLIGHTS AND UPDATES
Operating Income per Revenue stream (in $ millions)
Earnings per share
Winter Storm Uri Impacts
Operating Income per Revenue stream (in $ millions)
- Electric Utilities: 21.8
- Gas Utilities: 102.1
- Power Generation: 14.3
- Mining: 3.3
Earnings per share
- Earnings per share of $1.54 (up from $1.51 for the same quarter of the previous year)
Winter Storm Uri Impacts
- In mid-February, Black Hills’ service territories, and much of the United States, were impacted by Winter Storm Uri, which brought snow, ice and an extended period of extreme and historic cold temperatures. The breadth and extended nature of this weather event caused disruptions in energy supply chains and power generation, resulting in unforeseeable and unprecedented market prices for natural gas and electricity
- On Feb. 24, Black Hills entered into an $800 million unsecured term loan to provide additional liquidity due to the impacts from Winter Storm Uri. The term loan matures Nov. 24, 2021, and carries an interest rate based on LIBOR plus 75 basis points. The term loan was paid down by $200 million prior to quarter end.
- On Feb. 19, Colorado Electric entered into a power purchase agreement to purchase up to 200 megawatts of renewable energy upon construction of a new solar facility, which is expected to be completed by the end of 2023. This agreement extends for 15 years after construction completion. With the addition of 200 megawatts of solar energy on its system, more than half of Colorado Electric’s generation is forecasted to be sourced from renewable energy resources by 2023, leading to an estimated 70% reduction in carbon emissions by 2024 compared to a 2005 baseline.
- On Feb. 11, in the midst of Winter Storm Uri, South Dakota Electric set a new winter peak load of 326 megawatts, surpassing the previous winter peak of 320 megawatts set in February 2019.
- On Jan. 26, Nebraska Gas received approval from the Nebraska Public Service Commission to consolidate rate schedules into a new, single statewide structure and recover significant infrastructure investments in its 13,000-mile natural gas pipeline system. Final rates were effective March 1, and are expected to generate $6.5 million in new annual revenue with a capital structure of 50% equity and 50% debt and an authorized return on equity of 9.5%. The approval also includes an extension of the System Safety and Integrity Rider for five years and an expansion of this mechanism across its consolidated jurisdictions.
- On Sept. 11, 2020, Colorado Gas filed a rate review with the Colorado Public Utilities Commission, which was ultimately dismissed. Black Hills plans to file a new rate review in the second quarter of this year.
- On Sept. 11, 2020, Colorado Gas filed a system safety and integrity rider proposal with the Colorado commission that would recover safety and integrity focused investments in its system for five years. A decision from the commission is expected by mid-2021
Black Hills Corporation (BKH) management commentary on their 1st quarter 2021 earnings
RAPID CITY, S.D., May 04, 2021 (GLOBE NEWSWIRE) -- Black Hills Corp. (NYSE: BKH) today announced financial results for the first quarter of 2021
“The first quarter will be remembered for Winter Storm Uri and its historic impacts,” said Linn Evans, president and CEO of Black Hills Corp. “When Uri disrupted our industry and millions of lives across the United States, we kept our customers safe with reliable and uninterrupted service throughout the storm. Our team and infrastructure performed remarkably well to serve the extraordinary demand during dangerous and historic cold conditions. This storm highlighted the critical need for safe and reliable gas utilities and firm generation capacity, affirming our customer-focused strategy and capital plan.
“Solid financial performance during the quarter was overshadowed by a $0.15 per share adverse impact from Winter Storm Uri, resulting primarily from certain non-recoverable fuel costs related to the storm. Results benefited from new recovery on investments and colder weather, partially offset by increased share count due to equity issued in February 2020.
“We made excellent progress on our strategic initiatives, advancing our renewable energy strategy in Colorado and executing on our capital investment plan. We also received the final order for our Nebraska rate review and we’ve had constructive discussions with all of our states regarding recovery of the incremental costs related to Winter Storm Uri.
“We are reaffirming our 2021 and 2022 earnings guidance and five-year capital plan of more than $3 billion,” continued Evans. “We immediately implemented cash and expense management programs in response to the financial challenges posed by storm Uri and our business fundamentals and outlook remains strong. We remain confident in our strategy and opportunities ahead as we target 5% to 7% earnings growth beyond 2022.”
“The first quarter will be remembered for Winter Storm Uri and its historic impacts,” said Linn Evans, president and CEO of Black Hills Corp. “When Uri disrupted our industry and millions of lives across the United States, we kept our customers safe with reliable and uninterrupted service throughout the storm. Our team and infrastructure performed remarkably well to serve the extraordinary demand during dangerous and historic cold conditions. This storm highlighted the critical need for safe and reliable gas utilities and firm generation capacity, affirming our customer-focused strategy and capital plan.
“Solid financial performance during the quarter was overshadowed by a $0.15 per share adverse impact from Winter Storm Uri, resulting primarily from certain non-recoverable fuel costs related to the storm. Results benefited from new recovery on investments and colder weather, partially offset by increased share count due to equity issued in February 2020.
“We made excellent progress on our strategic initiatives, advancing our renewable energy strategy in Colorado and executing on our capital investment plan. We also received the final order for our Nebraska rate review and we’ve had constructive discussions with all of our states regarding recovery of the incremental costs related to Winter Storm Uri.
“We are reaffirming our 2021 and 2022 earnings guidance and five-year capital plan of more than $3 billion,” continued Evans. “We immediately implemented cash and expense management programs in response to the financial challenges posed by storm Uri and our business fundamentals and outlook remains strong. We remain confident in our strategy and opportunities ahead as we target 5% to 7% earnings growth beyond 2022.”
Corporate
Black Hills is reaffirming its guidance for 2021 earnings per share available for common stock in the range of $3.80 to $4.00, based on the following updated assumptions:
Black Hills is reaffirming its guidance for 2022 earnings per share available for common stock in a range of $3.95 to $4.15, based on the following updated assumptions:
- On April 26, Black Hills’ board of directors approved a quarterly dividend of $0.565 per share payable on June 1, 2021, to shareholders of record at the close of business on May 18, 2021.
Black Hills is reaffirming its guidance for 2021 earnings per share available for common stock in the range of $3.80 to $4.00, based on the following updated assumptions:
- Normal weather conditions within our utility service territories, including temperatures, precipitation levels and wind conditions;
- Normal operations and weather conditions for planned construction, maintenance and/or capital investment projects;
- Completion of utility regulatory dockets;
- No significant unplanned outages at any of our generating facilities;
- Production tax credits of $20 million associated with wind generation assets;
- Capital investment of $647 million in 2021
- Equity issuance of $100 million to $120 million through the at-the-market equity offering program in 2021;
- No material net impact from COVID-19; and
- Constructive regulatory outcomes related to recovery of incremental Winter Storm Uri costs.
Black Hills is reaffirming its guidance for 2022 earnings per share available for common stock in a range of $3.95 to $4.15, based on the following updated assumptions:
- Normal weather conditions within our utility service territories including temperatures, precipitation levels and wind conditions;
- Normal operations and weather conditions for planned construction, maintenance and/or capital investment projects;
- Completion of utility regulatory dockets;
- No significant unplanned outages at any of our generating facilities;
- Adjusted contract price for Wygen I power purchase agreement beginning Jan. 1, 2022;
- Production tax credits of $20 million associated with wind generation assets;
- Capital investment of $647 million in 2021 and $600 million in 2022; and
- Equity issuance of $100 million to $120 million in 2021 and $60 million to $80 million in 2022 through the at-the-market equity offering program; and
- Constructive regulatory outcomes related to recovery of incremental Winter Storm Uri costs.
Black Hills Corporation (BKH) stock price chart over the last 5 years
The image below shows the stock price history of Black Hills Corporation over the last 5 years. And its been a pretty average time for Black Hills stockholders. Over the last 5 years the stock of Black Hills increased by a mere 13.4%
The stock of Black Hills is trading at a lot closer to its 52 week high than it is to its 52 week low which to us is an indication that the short term sentiment and momentum of Black Hills stock is positive at this point in time.
The stock of Black Hills is trading at a lot closer to its 52 week high than it is to its 52 week low which to us is an indication that the short term sentiment and momentum of Black Hills stock is positive at this point in time.
Black Hills Corporation (NYSE: BKH) stock valuation
So what do we value Black Hills Corporation stock at after the release of their 1st quarter 2021 earnings and the fiscal guidance provided for the full fiscal 2021? Based on Black Hills Corporation earnings report and fiscal guidance provided our valuation models provides a target price (full value price) for Black Hills Corporation at $65 a stock. We therefore believe that the stock of Black Hills Corporation is slightly overvalued.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $65 therefore we believe a good entry point into Black Hills Corporation stock is at $58.50 or below. We expect the stock of Black Hills Corporation to pull back slightly from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is overvalued at this point in time.
We therefore rate Black Hills Corporation as a hold
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $65 therefore we believe a good entry point into Black Hills Corporation stock is at $58.50 or below. We expect the stock of Black Hills Corporation to pull back slightly from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is overvalued at this point in time.
We therefore rate Black Hills Corporation as a hold
Next earnings release of Black Hills Corporation
It is expected that Black Hills Corporation will publish their 2nd quarter 2021 earnings report in early August 2021