In September 2018, Black Hills Corporation (NYSE:BKH) released its earnings update. Generally, analyst forecasts seem bearish, with earnings expected to decline by -17% in the upcoming year relative to the past 5-year average growth rate of 20%. Presently, with latest-twelve-month earnings at US$194m, we should see this fall to US$161m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
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How will Black Hills perform in the near future?
The view from 5 analysts over the next three years is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To understand the overall trajectory of BKH’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
This results in an annual growth rate of 4.5% based on the most recent earnings level of US$194m to the final forecast of US$186m by 2022. EPS reaches $3.85 in the final year of forecast compared to the current $3.65 EPS today. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 12% to 9.3% by the end of 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Black Hills, I’ve compiled three essential aspects you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Black Hills worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Black Hills is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Black Hills? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.