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Black Hills Corporation Stock Upgraded (BKH)

NEW YORK ( TheStreet) -- Black Hills Corporation (NYSE: BKH) has been upgraded by TheStreet Ratings from hold to buy. Among the primary strengths of the company is its generally strong cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:

  • BLACK HILLS CORP's earnings per share declined by 16.0% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, BLACK HILLS CORP reported lower earnings of $1.76 versus $2.04 in the prior year. For the next year, the market is expecting a contraction of 0.6% in earnings ($1.75 versus $1.76).
  • In its most recent trading session, BKH has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • Even though the current debt-to-equity ratio is 1.33, it is still below the industry average, suggesting that this level of debt is acceptable within the Multi-Utilities industry. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.47 is very low and demonstrates very weak liquidity.
  • BKH, with its decline in revenue, slightly underperformed the industry average of 1.3%. Since the same quarter one year prior, revenues slightly dropped by 5.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Net operating cash flow has increased to $111.27 million or 25.13% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 0.64%.

Black Hills Corporation, together with its subsidiaries, operates as a diversified energy company primarily in the United States. The company operates through six segments: Electric Utilities, Gas Utilities, Oil and Gas, Coal Mining, Energy Marketing, and Power Generation. The company has a P/E ratio of 18.8, above the average utilities industry P/E ratio of 18.7 and above the S&P 500 P/E ratio of 17.7. Black Hills has a market cap of $1.2 billion and is part of the utilities sector and utilities industry. Shares are up 2.5% year to date as of the close of trading on Thursday.

You can view the full Black Hills Ratings Report or get investment ideas from our investment research center.

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