Black Hills Corporation’s (NYSE:BKH) latest earnings announcement in December 2018 revealed that the company benefited from a strong tailwind, leading to a double-digit earnings growth of 37%. Below, I’ve laid out key numbers on how market analysts perceive Black Hills’s earnings growth trajectory over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Market analysts’ consensus outlook for next year seems pessimistic, with earnings decreasing by a double-digit -22%. In the next couple of years, earnings should continue to be below today’s level, with a decline of -16% in 2021, eventually reaching US$223m in 2022.
Although it’s helpful to be aware of the growth year by year relative to today’s level, it may be more valuable gauging the rate at which the earnings are moving every year, on average. The benefit of this technique is that we can get a bigger picture of the direction of Black Hills’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I’ve appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is -3.4%. This means that, we can expect Black Hills will chip away at a rate of -3.4% every year for the next couple of years.
For Black Hills, I’ve put together three pertinent aspects you should further examine:
- 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 BKH 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 BKH is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of BKH? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.