NEW YORK ( TheStreet) -- Black Hills Corporation (NYSE: BKH) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Multi-Utilities industry. The net income has decreased by 14.4% when compared to the same quarter one year ago, dropping from $31.43 million to $26.91 million.
  • The gross profit margin for BLACK HILLS CORP is rather low; currently it is at 21.80%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 6.70% trails that of the industry average.
  • BKH, with its decline in revenue, slightly underperformed the industry average of 1.2%. 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 1.11%.

Black Hills Corporation, together with its subsidiaries, operates as a diversified energy company. It operates through two groups, Utilities and Non-regulated Energy. The company has a P/E ratio of 18.5, above the average utilities industry P/E ratio of 18.4 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 0.6% 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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