As of June 14, 2025, Black Hills Corp's estimated intrinsic value ranges from $52.44 to $391.60 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $103.79 | +82.6% |
| Discounted Cash Flow (5Y) | $80.75 | +42.1% |
| Dividend Discount Model (Multi-Stage) | $65.46 | +15.2% |
| Dividend Discount Model (Stable) | $52.44 | -7.7% |
| Earnings Power Value | $391.60 | +589.1% |
Is Black Hills Corp (BKH) undervalued or overvalued?
With the current market price at $56.83, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Black Hills Corp's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.45 | 0.52 |
| Cost of equity | 5.9% | 7.8% |
| Cost of debt | 4.0% | 4.6% |
| Tax rate | 8.5% | 9.6% |
| Debt/Equity ratio | 1.06 | 1.06 |
| After-tax WACC | 4.8% | 5.9% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $81 | $10,160M | 81.0% |
| 10-Year Growth | $104 | $11,830M | 66.4% |
| 5-Year EBITDA | $55 | $8,293M | 76.7% |
| 10-Year EBITDA | $80 | $10,100M | 60.6% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $1,724M |
| Discount Rate (WACC) | 5.9% - 4.8% |
| Enterprise Value | $29,223M - $36,177M |
| Net Debt | $4,305M |
| Equity Value | $24,918M - $31,872M |
| Outstanding Shares | 73M |
| Fair Value | $344 - $440 |
| Selected Fair Value | $391.60 |
| Metric | Value |
|---|---|
| Market Capitalization | $4121M |
| Enterprise Value | $8426M |
| Trailing P/E | 14.74 |
| Forward P/E | 13.07 |
| Trailing EV/EBITDA | 5.85 |
| Current Dividend Yield | 452.59% |
| Dividend Growth Rate (5Y) | 7.72% |
| Debt-to-Equity Ratio | 1.06 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $31.14 |
| Discounted Cash Flow (5Y) | 25% | $20.19 |
| Dividend Discount Model (Multi-Stage) | 20% | $13.09 |
| Dividend Discount Model (Stable) | 15% | $7.87 |
| Earnings Power Value | 10% | $39.16 |
| Weighted Average | 100% | $111.44 |
Based on our comprehensive valuation analysis, Black Hills Corp's weighted average intrinsic value is $111.44, which is approximately 96.1% above the current market price of $56.83.
Key investment considerations:
Given these factors, we believe Black Hills Corp is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.