Electric Services
Black Hills Corporation, through its subsidiaries, operates as an electric and natural gas utility company in the United States. It operates in two segments, Electric Utilities and Gas Utilities. The Electric Utilities segment generates, transmits, and distributes electricity to approximately 220,000 electric utility customers in Colorado, Montana, South Dakota, and Wyoming; and owns and operates 1,482 megawatts of generation capacity and 9,024 miles of electric transmission and distribution lines. The Gas Utilities segment distributes natural gas to approximately 1,107,000 natural gas utility customers in Arkansas, Colorado, Iowa, Kansas, Nebraska, and Wyoming; owns and operates 4,713 miles of intrastate gas transmission pipelines; 42,222 miles of gas distribution mains and service lines; seven natural gas storage sites; and approximately 50,000 horsepower of compression and 515 miles of gathering lines. The company also constructs and maintains gas infrastructure facilities for gas transportation customers; and provides appliance repair services to residential utility customers, as well as electrical system construction services to large industrial customers. In addition, it produces electric power through wind, natural gas, and coal-fired generating plants; and coal at its coal mine located near Gillette, Wyoming. The company was incorporated in 1941 and is headquartered in Rapid City, South Dakota.
Discounted Cash Flow Valuation of Black Hills Corp
Growth
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%
Discount
%
%
Multiple
g\r | +10% | +11% | +12% | +13% | +14% |
---|---|---|---|---|---|
0% | 10 | 9 | 8 | 8 | 7 |
+1% | 11 | 10 | 9 | 8 | 8 |
+2% | 13 | 11 | 10 | 9 | 8 |
+3% | 14 | 13 | 11 | 10 | 9 |
+4% | 17 | 14 | 12 | 11 | 10 |
Years | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | TV |
---|---|---|---|---|---|---|---|---|---|---|---|---|
FCF | $236.4M | $285.9M | $340.8M | $400.1M | $462.7M | $526.9M | $590.6M | $651.6M | $707.2M | $755.2M | $792.9M | $7.929B |
DCF | $248.6M | $257.7M | $263.1M | $264.6M | $261.9M | $255.3M | $244.9M | $231.2M | $214.7M | $196M | $1.96B | |
Value | $4.398B |
In the chart Earnings are multiplied by this value.
High margins render the company resilient under dire circumstances, hence able to drive competitors out or acquire them. ROE and ROA measure the average flow generated by each invested dollar. Their marginal value is a forecast of future growth, and it is considered by Buffett and Munger the most important single indicator.
Years | 12-2015 | 12-2016 | 12-2017 | 12-2018 | 12-2019 | 12-2020 | 12-2021 | 12-2022 | 12-2023 | TTM |
---|---|---|---|---|---|---|---|---|---|---|
Net Margin | -2.5% | 4.7% | 11% | 15% | 11% | 13% | 12% | 10% | 11% | 13% |
ROA | 0.73% | 3.5% | 6.3% | 5.7% | 5.4% | 5.3% | 4.5% | 4.7% | 4.9% | 5.1% |
ROE | -2.2% | 4.2% | 9.7% | 11% | 8.1% | 8.5% | 8.2% | 8.4% | 7.9% | 8.1% |
The average Net Margin over the past 5 years is +12.19%.
The trend of Net Margin over the past 5 years is -0.65%.
The average ROA over the past 5 years is +5.08%.
The trend of ROA over the past 5 years is -0.19%.
The average ROE over the past 5 years is +8.74%.
The trend of ROE over the past 5 years is -0.47%.
Being debt the number one cause of investment losses and company death, the ratio Debt/FCF is of utmost importance to guarantee safety. On the other hand the Graham’s stability measures the drawdown of earnings, hence indicating the reliability of the flow generated by the company.
Years | 12-2015 | 12-2016 | 12-2017 | 12-2018 | 12-2019 | 12-2020 | 12-2021 | 12-2022 | 12-2023 | TTM |
---|---|---|---|---|---|---|---|---|---|---|
Debt FCF | -70.74 | -21.43 | 32.48 | 85.22 | -11.15 | -16.68 | -6.13 | -211.76 | 11.32 | 18.63 |
Debt Equity | 1.33 | 1.91 | 1.82 | 1.37 | 1.42 | 1.41 | 1.57 | 1.34 | 1.33 | 1.29 |
MIN | ||||||||||
Graham Stability | - | - | 100% | 100% | 100% | 100% | 100% | 100% | 100% | 100% |
The Debt/FCF trailing twelve month is 18.63.
The trend of Debt/FCF over the past 5 years is -27.45.
Graham’s Stability measure stands at 1.00.
Growth can be dangerous when forecasting, simply projecting the current growth is in general wrong. A company passes through multiple phases, from being young and unprofitable, to the first periods of profitability and high growth, until it arrives at a period of regime with limited growth. Identifying in which phase the company is in may help forecasting.
Years | 12-2016 | 12-2018 | 12-2020 | 12-2022 | Trend |
---|---|---|---|---|---|
Revenue | 6.1% | 5.9% | 11% | -8.6% | 0.58% |
Net Income | 20% | 0.29% | 4.8% | 1.5% | -17% |
Stockholders Equity | 9.7% | 7.6% | 7.5% | 7% | -0.71% |
FCF | - | 60% | - | - | - |
The Revenue CAGR over the past 5 years is +5.85%.
The trend of Revenue growth rate over the past 5 years is +0.58%.
The Earnings CAGR over the past 5 years is +0.29%.
The trend of Earnings growth rate over the past 5 years is -16.79%.
The Equity CAGR over the past 5 years is +7.64%.
The trend of Equity growth rate over the past 5 years is -0.71%.
The FCF CAGR over the past 5 years is +60.24%.
The trend of FCF growth rate over the past 5 years is -.