TacticScaleWhat Black Hills Does & How It Makes Money (BKH)
Updated October 2026 · reflects Black Hills's latest reported financials
Regulated electric and natural gas utility serving eight U.S. states. It earns most of its revenue from regulated rates charged to electric and gas customers for generating, transmitting and distributing energy.
How Black Hills makes money
It earns most of its revenue from regulated rates charged to electric and gas customers for generating, transmitting and distributing energy. It also earns money from selling excess power to other utilities, from non-regulated power generation and mining, and from home repair service plans and construction services.
What Black Hills does
Black Hills Corporation, founded in 1941 and based in Rapid City, South Dakota, is a regulated electric and natural gas utility. Its Gas Utilities segment serves about 1,138,000 customers in Arkansas, Colorado, Iowa, Kansas, Nebraska and Wyoming. The segment runs 4,581 miles of intrastate transmission pipelines, 44,840 miles of distribution mains and service lines, and seven natural gas storage sites. Its Electric Utilities segment serves Colorado, Montana, South Dakota and Wyoming with 1,386 MW of generating capacity from wind, natural gas and coal plants, plus 9,478 miles of transmission and distribution lines. Most of the company's earnings come from regulated utility rates. Beyond its core utility business, it sells excess power to other utilities and marketers and runs non-regulated power generation and a coal mine near Gillette, Wyoming. It also sells retail services such as Service Guard Comfort Plan appliance repair, Tech Services construction and maintenance, and HomeServe home repair plans.
Products & services
- Natural gas distribution
- Electricity generation and distribution
- Gas transmission pipelines and storage
- Service Guard Comfort Plan
- Tech Services
- Wyoming coal mining
What is Black Hills worth?
On an owner-earnings DCF, Black Hills's most-likely value is about $29 versus a recent price near $76 (62% above fair value). But TacticScale only calls a stock undervalued when the price sits below its conservative no-growth floor (~$18) with a margin of safety — so the honest verdict here is “Stretched — richly priced.” Fair value earns its keep only at the extremes, not in the wide middle.
Today's $76 is above even the optimistic Bull case ($34) — the market expects faster, longer growth than modeled here. Expensive unless that extra growth actually shows up.
⚠ High leverage — net debt is 31.3× annual cash flow. Net debt is subtracted from this fair value, but refinancing at higher rates, principal timing, and share dilution aren’t modeled — the equity can be worth far less if cash flow weakens.
⚠ Capital-intensive — this business reinvests heavily, so free cash flow runs well below its earnings. Fair value here is built on free cash flow, which understates owner earnings for reinvestment-heavy companies — read it as conservative.
Analysis, not advice. Fair value is a margin-of-safety estimate from a deterministic owner-earnings DCF, not a price target or recommendation. See the full breakdown →
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