Investing№ 129NYSE: BKH

Black Hills

Black Hills is a regulated gas and electric utility with 1.37M customers in eight states and a $4.7B capital plan; its merger with NorthWestern awaits Montana’s vote on 10 November, and the shares sit near a ten-year high on a 3.3% yield against a 4.95% Treasury.

Updated Fiscal year ends 31 December40 min readPedrum Shokouhi

Can be disrupted

Research, not investment advice. Figures as of .

Key numbers

  • Revenue$2.34B (calculated)Twelve months to September 2026; $2.31B in 2025 [2][3]
  • 2026 adjusted EPS$4.25 to $4.45 (reported)Guidance reaffirmed 4 November; $2.89 for nine months [2]
  • Allowed return on equity9.3% to 9.9% (reported)State cases listed in the 10-K; earned 8.0% on book equity in 2025 [3][4]
  • Capital plan$4.7B (reported)2026 to 2030; Google adds $1.8B and Wyoming transmission $686M on top [3][2]
  • Net debt$4.4B (calculated)30 June 2026; 52.8% of capital; BBB+ and Baa2 [5]
  • Dividend$2.812 a year (reported)3.34% yield; raised 56 years in a row; payout 68% in 2025 [2][3]

(reported)Reported in a filing (calculated)Calculated from reported figures (estimate)My estimate

The answer

  1. Black Hills Corporation is a regulated gas and electric utility in Rapid City, South Dakota, with 1.37 million customers in eight states, guided to $4.25 to $4.45 of adjusted earnings a share for 2026, and its all-stock merger with NorthWestern Energy is still pending: Montana’s commission is due to vote on 10 November.267
  2. I value a share at $73, in a range of $45 to $103, assuming the merger closes, because regulators let it earn about 9.6% on a rate base growing near 6% a year, but my values carry what I cannot judge about those regulators and about who pays for data centers (estimate).32
  3. At $84.19 the price is 15% above my base value and returns 7.6% a year on my cash flows against the 8.25% I require; the market may be right if Wyoming brings more than one Google-sized contract, and my margin-of-safety price is $60 (estimate).12

Six questions, one line each

Why
It sells gas and electricity under rates that let it earn a set return on every dollar it invests, and it plans $4.7B of investment through 2030 on a rate base of about $5.7B at the merger announcement (estimate).38 →
The moat
A legal franchise: customers cannot take service from anyone else. The catch is that the same regulators set the return. In Arkansas it asked for a 10.5% return and was given 9.8%.92 →
The advantage
Eight small jurisdictions rather than one big one, and in Wyoming a tariff built for data centers. The first big test is Google: $1.8B of investment for about $150M of net income by 2030, which I value at about $10 a share if all of it is delivered (estimate).10 →
Management
The CEO earns $6.0M, owns 174,272 shares, and leaves when the merger closes; the combined company is run from NorthWestern’s side. Bonus rides 70% on adjusted EPS, and the 2023 to 2025 share-price test paid nothing.1112 →
Margin of safety
Below $60, 18% under my base value, my $45 bear value is at least three quarters of the price paid. The price is 40% above that, and within 2% of the ten-year high close (estimate).1 →
Risks
A regulator says no, data-center costs land on households, a wildfire or storm bill arrives, the merger is rejected or only mildly accretive, or refinancing old 2.5% to 3.2% debt at 6% eats a tenth of earnings.313 →

The business

Black Hills Corporation delivers natural gas and electricity. It is headquartered in Rapid City, South Dakota, and was incorporated there in 1941.3 The company serves about 227,000 electric customers in Colorado, Montana, South Dakota and Wyoming, and about 1,138,000 gas customers in Arkansas, Colorado, Iowa, Kansas, Nebraska and Wyoming.3 That is 1.37 million customers in eight states, run by 2,795 employees, a quarter of them in unions.63 It trades on the New York Stock Exchange as BKH. If the merger closes, the parent is renamed Bright Horizon Energy Corporation and trades as HZN on the same exchange.6

The model is simple to say and hard to copy. A state commission lets the company charge rates that cover its costs and a fair return on the money it has invested, called the rate base. The company then invests more, asks for higher rates, and the return grows with the rate base. The costs of fuel and purchased gas pass through to customers with no mark-up.3 So revenue mostly follows commodity prices and is not what matters. What matters is the rate base, the return allowed on it and how fast the commission lets it grow.

In 2025 the company made $2.31B of revenue, $537.5M of operating income and $291.6M of profit for common shareholders, or $3.98 a share. Adjusted for $0.12 of merger costs it earned $4.10.414 Through nine months of 2026 revenue was $1.70B, operating income $397.1M and adjusted earnings $2.89 a share, against $2.68 a year earlier. Management reaffirmed its 2026 guidance of $4.25 to $4.45 on 4 November.2

Revenue and operating income

Calendar years, US$ billions

  • Revenue $2.31B
  • Operating income $0.54B
Revenue and operating incomeRevenue and operating income by year, 2016 to 2025. Revenue went from $1.54B to $2.31B and operating income from $0.34B to $0.54B.$0$1B$2B$3B’16’18’20’22’24Revenue, 2016: $1.54BRevenue, 2017: $1.68BRevenue, 2018: $1.75BRevenue, 2019: $1.73BRevenue, 2020: $1.70BRevenue, 2021: $1.95BRevenue, 2022: $2.55BRevenue, 2023: $2.33BRevenue, 2024: $2.13BRevenue, 2025: $2.31BOperating income, 2016: $0.34BOperating income, 2017: $0.42BOperating income, 2018: $0.40BOperating income, 2019: $0.41BOperating income, 2020: $0.43BOperating income, 2021: $0.41BOperating income, 2022: $0.46BOperating income, 2023: $0.47BOperating income, 2024: $0.50BOperating income, 2025: $0.54BRevenue and operating incomeRevenue and operating income by year, 2016 to 2025. Revenue went from $1.54B to $2.31B and operating income from $0.34B to $0.54B.$0$1B$2B$3B’16’17’18’19’20’21’22’23’24’25Revenue, 2016: $1.54BRevenue, 2017: $1.68BRevenue, 2018: $1.75BRevenue, 2019: $1.73BRevenue, 2020: $1.70BRevenue, 2021: $1.95BRevenue, 2022: $2.55BRevenue, 2023: $2.33BRevenue, 2024: $2.13BRevenue, 2025: $2.31BOperating income, 2016: $0.34BOperating income, 2017: $0.42BOperating income, 2018: $0.40BOperating income, 2019: $0.41BOperating income, 2020: $0.43BOperating income, 2021: $0.41BOperating income, 2022: $0.46BOperating income, 2023: $0.47BOperating income, 2024: $0.50BOperating income, 2025: $0.54BRevenue and operating incomeRevenue and operating income by year, 2016 to 2025. Revenue went from $1.54B to $2.31B and operating income from $0.34B to $0.54B.$0$1B$2B$3B’16’17’18’19’20’21’22’23’24’25Revenue, 2016: $1.54BRevenue, 2017: $1.68BRevenue, 2018: $1.75BRevenue, 2019: $1.73BRevenue, 2020: $1.70BRevenue, 2021: $1.95BRevenue, 2022: $2.55BRevenue, 2023: $2.33BRevenue, 2024: $2.13BRevenue, 2025: $2.31BOperating income, 2016: $0.34BOperating income, 2017: $0.42BOperating income, 2018: $0.40BOperating income, 2019: $0.41BOperating income, 2020: $0.43BOperating income, 2021: $0.41BOperating income, 2022: $0.46BOperating income, 2023: $0.47BOperating income, 2024: $0.50BOperating income, 2025: $0.54B
Revenue moves with the price of gas and power, which are passed through to customers. Operating income is the steadier line: it has grown every year since 2021. Source Annual data from Forms 10-K, 2016 to 2025 [4][3]. Figures as reported.
Show the numbers
Revenue and operating income
2016201720182019202020212022202320242025
Revenue (reported)$1,539M$1,680M$1,754M$1,735M$1,697M$1,949M$2,552M$2,331M$2,128M$2,310M
Operating income (reported)$336M$417M$397M$406M$428M$409M$455M$473M$503M$538M

Gas is the larger half

Gas Utilities brought in $1.38B of 2025 revenue and $320.8M of operating income. Electric Utilities brought in $943M and $222.5M.3 So gas is 59% of operating income (calculated). That surprises people who think of Black Hills as a Wyoming power story. The gas side owns 4,581 miles of transmission pipe, 44,840 miles of mains and service lines, seven storage sites and 494 miles of gathering lines. The electric side owns 1,386 MW of generation and 9,478 miles of lines.3

Gas also carries the larger share of the capital plan. Of $4.67B planned for 2026 to 2030, gas is $2.50B and electric $2.04B (calculated).3 Most of the gas money goes to replacing old pipe. The company says it has removed all cast and wrought iron from its systems and keeps replacing aging pipe under programs that regulators let it recover between rate cases.3

Where the growth is

The growth that gets attention is electric load in Wyoming. Wyoming Electric set four peak records this year. The latest, 439 MW on 20 July 2026, was 16% above the 2025 peak.2 In the third quarter the electric utilities sold 20% more industrial power than a year earlier (calculated), which the release attributes mainly to Wyoming’s large-load customers.2 In February management said its pipeline of data center requests had tripled during 2025 to more than three gigawatts, with Meta ramping up and Microsoft growing, together about 600 MW to be served by 2030.9

On 30 September it signed definitive agreements to serve a Google data center in Cheyenne. The company will invest $1.8B in 564 MW of new gas generation, between 2027 and 2029, and manage the output of about 2.1 GW of third-party resources. It expects about $150M of net income from the project in 2030, and $2.4B of free cash flow after the $1.8B of investment, through 2048.10 Google has already advanced $399M, which the company expects to repay by 30 June 2027.10 I value this in Section VI. What matters here is that it sits in a non-regulated affiliate, with one customer, under a contract.10

What changed in the last month

Three things. On 6 October the Google contract was announced, and the stock rose from $70.74 to $75.84 the next day.101 On 22 October the companies named the merged company and said that every approval except Montana’s was in.6 And after the close on 4 November the company reported its third quarter, with adjusted earnings of $0.57 a share against $0.45, helped by $0.15 of new rates and $0.06 of favourable weather. It also received the South Dakota approval of a rate settlement the same day.2 The stock had closed that day at $84.19, up 2.4%, before the report, so that rise was not a reaction to it.1

The NorthWestern merger

The merger has not closed. It is pending, and the one condition left is a vote of the Montana Public Service Commission. The companies expect to close by the end of 2026.26 The companies announced it on 19 August 2025 as an all-stock merger of equals. Each NorthWestern share becomes 0.98 Black Hills shares, and Black Hills shareholders end up with about 56% of the combined company, NorthWestern holders 44%.8 NorthWestern had 61,517,850 shares at 24 July 2026, so about 60.3 million new Black Hills shares would be issued, on top of 76.25 million today (calculated).155

Where the merger stands

What has happened and what has not, in Q4 2026.

Merger status
StepStatusDate
Both shareholder votesApprovedApril 202616
Hart-Scott-Rodino waiting periodExpiredApril 202616
Federal Energy Regulatory CommissionApprovedMay 202616
Nebraska Public Service CommissionApprovedMay 202616
South Dakota Public Utilities CommissionApprovedJune 202616
Montana Public Service CommissionStaff recommend approval; vote moved to 10 November; legal deadline 12 November137Pending
End date in the agreementWas 18 August 2026; extends automatically to 18 November 2026, then 18 February 2027, if only regulatory conditions are open17Pending
Name and ticker after closingBright Horizon Energy Corporation, NYSE: HZN; BKH and NWE trade until then6On completion
Each side owes the other a $100M fee only in specific cases in Section 8.02 of the agreement, for example a board changing its recommendation. Source Press releases of 22 October 2026 and 19 August 2025; merger agreement; Daily Montanan [6][8][17][13][7].

Here is what it does to the share and the price. First, the share count rises 79%, from 76.3 million to about 136.5 million (calculated).515 A Black Hills holder keeps every share. But the share is now a smaller piece of a bigger company: 56% of the whole, where before it was 100% of Black Hills. Second, the price. At today’s closes, 0.98 of a Black Hills share is worth $82.51 and a NorthWestern share trades at $82.00, a gap of 0.6% (calculated).118 So the market prices the two stocks almost exactly at the exchange ratio, which fits a high chance of closing. It does not tell me what either stock would be worth alone. The $84.19 therefore holds three things I cannot separate: the Black Hills business, the Google news, and a deal the market expects to close. Third, the numbers per share. NorthWestern guides to $3.68 to $3.83 of adjusted earnings and pays $2.68 a year.16 Black Hills guides to $4.25 to $4.45 and pays $2.812.2 Adding the earnings, I get about $4.13 a share for the combined company before any savings, against $4.35 for Black Hills alone (calculated). The companies say it will be accretive in the first year.8 I can only reproduce that if the savings are kept, and Montana’s draft order puts them at $48M to $70M.13 I come back to this in Section VI.

The capital plan, 2026 to 2030

US$ millions. 2025 actual, 2026 to 2030 plan from the 2025 10-K

  • Electric $2.0B plan
  • Gas $2.5B plan
  • Corporate $0.1B plan
The capital plan, 2026 to 2030Capital spending by segment. 2025 was $890M. The plan is $906M in 2026, $844M in 2027, $983M in 2028, $969M in 2029 and $968M in 2030, $4.67B in all. Gas takes a growing share.$0$200M$400M$600M202520262027202820292030Electric, 2025: $481MElectric, 2026: $471MElectric, 2027: $367MElectric, 2028: $455MElectric, 2029: $356MElectric, 2030: $391MGas, 2025: $397MGas, 2026: $396MGas, 2027: $455MGas, 2028: $507MGas, 2029: $591MGas, 2030: $552MCorporate, 2025: $11MCorporate, 2026: $39MCorporate, 2027: $22MCorporate, 2028: $21MCorporate, 2029: $22MCorporate, 2030: $25MThe capital plan, 2026 to 2030Capital spending by segment. 2025 was $890M. The plan is $906M in 2026, $844M in 2027, $983M in 2028, $969M in 2029 and $968M in 2030, $4.67B in all. Gas takes a growing share.$0$200M$400M$600M202520262027202820292030Electric, 2025: $481MElectric, 2026: $471MElectric, 2027: $367MElectric, 2028: $455MElectric, 2029: $356MElectric, 2030: $391MGas, 2025: $397MGas, 2026: $396MGas, 2027: $455MGas, 2028: $507MGas, 2029: $591MGas, 2030: $552MCorporate, 2025: $11MCorporate, 2026: $39MCorporate, 2027: $22MCorporate, 2028: $21MCorporate, 2029: $22MCorporate, 2030: $25MThe capital plan, 2026 to 2030Capital spending by segment. 2025 was $890M. The plan is $906M in 2026, $844M in 2027, $983M in 2028, $969M in 2029 and $968M in 2030, $4.67B in all. Gas takes a growing share.$0$200M$400M$600M202520262027202820292030Electric, 2025: $481MElectric, 2026: $471MElectric, 2027: $367MElectric, 2028: $455MElectric, 2029: $356MElectric, 2030: $391MGas, 2025: $397MGas, 2026: $396MGas, 2027: $455MGas, 2028: $507MGas, 2029: $591MGas, 2030: $552MCorporate, 2025: $11MCorporate, 2026: $39MCorporate, 2027: $22MCorporate, 2028: $21MCorporate, 2029: $22MCorporate, 2030: $25M
The plan holds only a small amount for data centers. The $1.8B Google generation and $686M of Wyoming transmission would come on top. Source Form 10-K 2025, capital requirements; Q3 2026 release [3][2]. Plan figures are the company’s.
Show the numbers
The capital plan, 2026 to 2030
202520262027202820292030
Electric (reported)$481M$471M$367M$455M$356M$391M
Gas (reported)$397M$396M$455M$507M$591M$552M
Corporate and other (reported)$11M$39M$22M$21M$22M$25M

The moat

The protection here is a legal one. Black Hills holds exclusive franchises to deliver gas and electricity in its territories, and a new competitor cannot lay pipe next to it. That is strong, in the sense of how hard it is to compete away. It gives no pricing power. The same commissions that protect the franchise set the price, and the company cannot raise rates without asking.3 So the question is not whether Black Hills keeps its customers. It is whether the return it is allowed stays above what investors need.

What regulators allow

The 10-K lists the authorized return on equity for each unit. They run from 9.3% to 9.9% where they are stated, with equity of 46% to 53% of the capital structure in the state cases.3 Three jurisdictions use black-box settlements, which fix a total revenue number and do not state a return. South Dakota Electric, Iowa Gas and Kansas Gas are on that basis.3 That hides the return, so I cannot check it.

What each commission allows

Authorized return on equity, share of equity in the capital structure and rate base, as listed in the 10-K, with decisions since.

Allowed returns
UnitAllowed ROEEquity shareRate base, $MEffective
Colorado Electric9.30% to 9.50%47% to 49%663.83/2025
Wyoming Electric9.75%52%551.23/2023
South Dakota Electric, South DakotaBlack-box settlementNot stated543.910/2014; new rates 12/2026
South Dakota Electric, Wyoming9.90%; 9.60% from 12/202653%46.810/2014; 10/2026 decision
Arkansas Gas9.85%; 9.80% from 10/202646%; 47.5% from 10/2026823.410/2024; 10/2026 decision
Colorado Gas9.30%51%378.45/2024
Rocky Mountain Natural Gas9.50% to 9.70%50% to 52%209.37/2023
Iowa GasBlack-box settlementNot stated393.81/2025
Kansas GasBlack-box settlementNot statedNot stated8/2025
Nebraska Gas9.85%51%781.31/2026
Wyoming Gas9.85%51%450.82/2024
Rate bases are the figure at each unit’s last case, so they are older than today’s true rate bases. FERC-regulated transmission pieces are left out. Source Form 10-K 2025, Item 1, regulatory tables; Q3 2026 release [3][2]. Reported.

The regulators have not given the company what it asked. In Arkansas the company asked for $29.4M of new revenue and a 10.5% return, and received $17.9M and 9.8%, 61% of the dollars and 0.7 points less on the return.92 In Wyoming, South Dakota Electric got $4.0M at 9.60%. In South Dakota it got $27.4M on a 7.58% weighted cost of capital, with a four-year pause in base rates until August 2030.2 The pause is the part I would watch: it fixes revenue while costs rise. Colorado Electric has asked for $26.7M at 10.5% on a 51% equity share, with a decision expected in the first quarter of 2027.2 The Arkansas outcome says Colorado will probably be lower than 10.5% (estimate).

Earned against allowed

In 2025 Black Hills earned $291.6M on average common equity of $3.66B, or 8.0% (calculated).4 That is below every allowed return in the table. One reason is plain. Goodwill of $1.30B, 34% of year-end equity, comes mainly from the 2016 purchase of SourceGas, and regulators do not let the company earn a return on it.3419 So the equity that earns is smaller than the equity on the balance sheet. The combined release says the merger doubles each company’s rate base to a total of $11.4B, which puts Black Hills near $5.7B (estimate).8 Half of that is $2.85B of equity, and 9.6% on it is $274M, close to the $292M the company earned (calculated). That ties out, which is why I use $5.7B and half equity.

Evidence it is holding

The record is of a business that gets most of what it asks for, a little late. Operating income grew every year since 2021, from $409M to $538M.4 New rates and rider recovery added $0.95 a share in 2025 and $0.63 in the first nine months of 2026.142 The dividend has risen for 56 consecutive years, the second-longest streak in the industry, the company says.2 Wyoming passed wildfire liability protection in March 2025, the 10-K cites Montana too, and South Dakota followed in early 2026. Each protects a utility that follows an approved wildfire plan.32 I found nothing equivalent for Colorado in the filings, and Colorado Electric has the most electric customers, 102,152 at year end.3

Evidence it is narrowing

Three things. First, affordability. Montana’s commission heard nearly 30 members of the public ask it to reject the merger, citing data centers and bills.7 Affordability is the live issue in the one state still to rule. Second, earnings have not kept pace with investment. Adjusted EPS rose from $3.74 in 2021 to $4.10 in 2025, 2.3% a year, while capital spending ran well above depreciation.114 Third, the legacy cost of money is running out. Three notes of $400M each, due in 2027, 2029 and 2030, carry coupons of 3.15%, 3.05% and 2.50%.3 Replaced with debt at 6%, they would cost about $37M more a year in interest, or $0.42 a share after tax (estimate). That is 10% of 2026 earnings, and regulators will pay it back through rates only with a lag.

The competitive advantage

Utilities do not compete with each other in a territory. They compete for capital, and they compete for permission. On those two things Black Hills has some advantages and some weaknesses, and I try to be plain about which are which.

Advantage one: spread across regulators

The company reports in eight states and many commissions. No single commission can make or break the company. The combined firm would be even more spread: the announcement says no one jurisdiction would be more than 33% of the business.8 That is real protection. It also means the company has to win many separate rate cases in different political settings, and a bad one in a small state costs little.

Advantage two: a data center tariff that avoids the usual trap

The usual risk of building for a data center is stranded cost: the plant is built and the customer leaves. Wyoming Electric offers large customers a tariff, called Large Power Contract Service, under which the customer carries the cost. For the Google project, Mr. Evans says the arrangements are structured so that Google bears all costs of serving the data center for the life of the project.10 The company also holds $399M of Google’s money in advance.10 This is a good design. It also means the return is a contract return, not a regulated one, and the project is held in a non-regulated affiliate.10 If Google or its partners fail, the protection is the contract, not the commission.

Advantage three: the cost of the next project

Because Black Hills already has the Cheyenne Prairie generating site and a 260-mile transmission line between South Dakota and Wyoming called Ready Wyoming, built in three years, it can move faster than a company starting from nothing.910 Management says its tariff provides speed to market. That matters when buyers of power are racing to be connected.9

Where it is weaker

Scale. Black Hills has about $5.7B of rate base (estimate) and a market value of $6.4B. The merged firm would have about $11.4B of rate base and about $11.5B of market value at today’s prices (calculated).8 Larger utilities can often fund a $2.5B data center build with less new equity as a share of the total. Black Hills is a price taker for capital: its notes due 2034 and 2035 carry 6.15% and 6.00%, and the five-year note it sold in October 2025 carries 4.55%.3

This company next to the other regulated holding company in the deal

Latest reported figures. NorthWestern is the company Black Hills would merge with. Not the same fiscal basis in every line.

Two companies
Black HillsNorthWestern
Customers1.37 million6About 850,3006
2026 adjusted EPS guidance$4.25 to $4.452$3.68 to $3.8316
Long-term EPS growth target4% to 6%, upper half24% to 6%16
Dividend per share, annual rate$2.8122$2.6816
Share price, Q4 2026$84.191$82.0018
Price over 2026 guidance midpoint19.4 times (calculated)21.8 times (calculated)
Dividend yield3.34% (calculated)3.27% (calculated)
Capital plan 2026 to 2030$4.7B3$3.2B16
Data centersGoogle, Meta and Microsoft in Wyoming109Sabey, Atlas, Quantica in Montana; 150 MW from late 2027, up to about 1,500 MW16
NorthWestern is smaller, pays a higher share of earnings and has a longer list of unsigned data center agreements. Source Q3 2026 release; NorthWestern Q2 2026 release; Nasdaq closes [2][16][1][18][6].

This table shows why I credit NorthWestern’s own pipeline before I say Black Hills holders lose in the swap. NorthWestern has signed development agreements for 150 MW of data center load from late 2027, with a possible 1,500 MW or more, and it has asked Montana’s commission for a large-new-load rule, which is pending.16 That is a real option, and it is not in the guidance. My bull case lets NorthWestern grow at the top of its range, 6%, and my base uses 5%.

The other regulated utilities on this site

None of them is a close match. Enbridge, a pipeline and utility company, has a price that asks 9.4% a year on my cash flows against the 9.0% I require.20 Black Hills asks 7.6% against 8.25%. The two required rates differ because the risks differ, and I do not claim that one is better value. The point is only that a reader who wants a dividend-paying infrastructure name has other places to look on this site.

Management

Linn Evans was president and chief executive in every year from 2021 to 2025, and Kimberly Nooney is chief financial officer.11 They run the company through the merger, and then they step aside. The agreement says Brian Bird, NorthWestern’s chief executive, becomes chief executive of the combined company, with Marne Jones, now Black Hills’ chief utility officer, as chief operating officer, NorthWestern’s Crystal Lail as chief financial officer, and Ms. Nooney as chief integration officer.12 Mr. Evans stays through the close and then leaves.11 So the people I am judging are mostly the people who will not run the company.

Who runs it, and who runs it after the merger

2025 pay from the proxy statements; shares from the Black Hills proxy at 27 February 2026.

Management
Role nowRole after the merger2025 payShares owned
Linn EvansPresident and CEOLeaves at closing11$5.99M11174,272, including 36,578 restricted11
Kimberly NooneyCFOChief integration officer12$3.19M1138,69611
Marne JonesChief utility officerChief operating officer12$2.74M1138,66711
Brian BirdCEO of NorthWestern since January 2023; its CFO from 2003 to 202121CEO of the combined company12$5.02M21Not checked
Crystal LailNorthWestern officer12CFO of the combined company12Not checkedNot checked
Mr. Bird’s figures are from NorthWestern’s proxy. I did not open the merger proxy that gives the combined company’s pay. Source Black Hills and NorthWestern proxy statements; merger 8-K [11][21][12].

How they are paid, and what that pays them to do

The annual bonus rests 70% on adjusted earnings per share. The rest is safety, reliability and customer measures.11 For 2025 earnings of $4.10 paid out at 107% of target, and the whole bonus at 118.4% of target.11 The adjusted figure leaves out merger costs, so the team is not penalized for the deal.11 Longer-term pay is restricted stock and performance units. For 2025 to 2027 the units depend 40% on how the stock does against a group of peers, 30% on average adjusted EPS, 20% on non-fuel operating cost per customer and 10% on emissions cuts.11

What does that pay them to do? To grow earnings per share, and in a utility the way to grow earnings is to grow the rate base. Every dollar invested earns an allowed return, so a bonus on EPS rewards investing more, as long as the commission allows it. The cost-per-customer measure is the check. It pays them to restrain operating cost, though not the amount invested. I do not say that is wrong. It is how a regulated company grows. It means the pay plan is neutral on whether a given project is a good use of shareholders’ money, and the commissions have to be the check.

The share-price test has been poor. For 2023 to 2025 the stock ranked at the 20th percentile of peers, and that part of the award paid nothing. The whole performance award paid 29.97% of target.11 The weight on that test was then cut from 70% to 40% for the 2025 to 2027 plan.11 The 2025 to 2027 plan was set before the 2023 to 2025 results were known, so I do not read motive into it.

Mr. Evans’ 2025 pay was $5.99M against a median employee at $129,748, a ratio of 46 to 1.11

How much of their own money is in

Mr. Evans owns 174,272 shares, worth $14.7M at $84.19, including 36,578 restricted shares (calculated).111 The company requires its chief executive to own six times salary. At a $1.0M salary that is $6M, so he owns about 2.4 times the rule.11 Ms. Nooney and Ms. Jones own about 38,700 shares each, $3.3M each (calculated). All directors and officers together own 427,823 shares, including 95,370 of equity awards, less than 1% of the company.11 The two largest holders are index managers, BlackRock at 14.6% and Vanguard at 12.0% by their last filings, which are dated 2024 and 2025.11 That is real skin, though not enough to dominate how he thinks. The more important part of his wealth is what happens at closing: his package on a closing, valued at $60.16 a share in the proxy, was $11.5M, of which $8.4M is vesting equity.11 At $84.19 the equity is worth more (estimate). Performance units from before August 2025 convert at the greater of target or actual.11 So the deal pays the team to complete it. I do not think that is corrupt. I do think it means the board, not management, has to decide whether the exchange ratio was right.

What they did with capital over a full cycle

The largest decision of the decade was the 2016 purchase of SourceGas, closed on 12 February for about $1.89B including $760M of assumed debt.19 Goodwill rose from $360M to $1.30B that year, the company raised $1.77B of new long-term debt, and total assets went from $4.6B to $6.5B.4 The filings I opened do not split out what the purchase contributes today. It also left $1.30B of goodwill that regulators do not let the company earn on.

Since then capital has gone into regulated assets at regulated returns, which is a safe use. The cost is in the per-share figures. From 2017 to 2025 diluted shares rose 33%, earnings per share rose 24% and the dividend per share rose 49% (calculated).4 So the payout went from 55% of earnings to 68% (calculated). Over ten years the company sold $1.36B of stock and paid $1.40B of dividends.4 A holder who took the dividend in cash was, in effect, paid with other holders’ new money. That is how a growing utility works, and it is why growth in the share price has been slow: a share bought in early November 2016 for $60.26 is worth $84.19 now, plus about $23 of dividends, or about 6% a year without reinvesting (calculated).142

The decade in per-share terms

Calendar years. Return on equity is net income over average equity.

Per share
20172019202120232025
Diluted shares, M55.260.863.367.173.3
Earnings per share, GAAP$3.21$3.28$3.74$3.91$3.98
Dividend per share$1.81$2.05$2.29$2.50$2.70
Dividends over net income55%63%61%64%68%
Return on average equity10.7%8.8%8.9%8.4%8.0%
Book equity per share (year end)$30.99$38.87$44.04$47.95$52.19
Book equity per share uses diluted shares, so it is approximate. 2017 and 2018 were helped by tax changes. Source Annual data from Forms 10-K [4]. Calculated from reported figures.

The pattern is steady, not poor. Book equity per share rose faster than earnings per share, which is another way of saying that return on equity slipped. Management’s stated aim is 4% to 6% growth in EPS from a 2023 base of $3.75, with the 2026 guidance at 6% over 2025.14 If it delivers the middle of 2026 guidance, EPS will be 5.1% a year above that base (calculated). From the $3.93 it earned in 2023 it is 3.4% a year.11

Financials

Ten years of reported figures. Revenue includes the gas and power that customers pay for and the company passes through, so I lean on operating income and earnings.

Earnings per share against dividend per share

US$ per share, calendar years

  • Earnings per share $3.98
  • Dividend per share $2.70
Earnings per share against dividend per shareDiluted earnings per share and dividend per share, 2016 to 2025. Earnings per share went from $1.37 to $3.98 and the dividend from $1.68 to $2.70. The dividend rose every year.$0$2$4$6’16’18’20’22’24Earnings per share, 2016: $1.37Earnings per share, 2017: $3.21Earnings per share, 2018: $4.66Earnings per share, 2019: $3.28Earnings per share, 2020: $3.65Earnings per share, 2021: $3.74Earnings per share, 2022: $3.97Earnings per share, 2023: $3.91Earnings per share, 2024: $3.91Earnings per share, 2025: $3.98Dividend per share, 2016: $1.68Dividend per share, 2017: $1.81Dividend per share, 2018: $1.93Dividend per share, 2019: $2.05Dividend per share, 2020: $2.17Dividend per share, 2021: $2.29Dividend per share, 2022: $2.41Dividend per share, 2023: $2.50Dividend per share, 2024: $2.60Dividend per share, 2025: $2.70Earnings per share against dividend per shareDiluted earnings per share and dividend per share, 2016 to 2025. Earnings per share went from $1.37 to $3.98 and the dividend from $1.68 to $2.70. The dividend rose every year.$0$2$4$6’16’17’18’19’20’21’22’23’24’25Earnings per share, 2016: $1.37Earnings per share, 2017: $3.21Earnings per share, 2018: $4.66Earnings per share, 2019: $3.28Earnings per share, 2020: $3.65Earnings per share, 2021: $3.74Earnings per share, 2022: $3.97Earnings per share, 2023: $3.91Earnings per share, 2024: $3.91Earnings per share, 2025: $3.98Dividend per share, 2016: $1.68Dividend per share, 2017: $1.81Dividend per share, 2018: $1.93Dividend per share, 2019: $2.05Dividend per share, 2020: $2.17Dividend per share, 2021: $2.29Dividend per share, 2022: $2.41Dividend per share, 2023: $2.50Dividend per share, 2024: $2.60Dividend per share, 2025: $2.70Earnings per share against dividend per shareDiluted earnings per share and dividend per share, 2016 to 2025. Earnings per share went from $1.37 to $3.98 and the dividend from $1.68 to $2.70. The dividend rose every year.$0$2$4$6’16’17’18’19’20’21’22’23’24’25Earnings per share, 2016: $1.37Earnings per share, 2017: $3.21Earnings per share, 2018: $4.66Earnings per share, 2019: $3.28Earnings per share, 2020: $3.65Earnings per share, 2021: $3.74Earnings per share, 2022: $3.97Earnings per share, 2023: $3.91Earnings per share, 2024: $3.91Earnings per share, 2025: $3.98Dividend per share, 2016: $1.68Dividend per share, 2017: $1.81Dividend per share, 2018: $1.93Dividend per share, 2019: $2.05Dividend per share, 2020: $2.17Dividend per share, 2021: $2.29Dividend per share, 2022: $2.41Dividend per share, 2023: $2.50Dividend per share, 2024: $2.60Dividend per share, 2025: $2.70
Two years are not clean. 2016 includes about $67M of after-tax oil and gas impairments and about $30M of after-tax costs of buying SourceGas, and 2018 had a $23.7M income tax benefit. The dividend never missed a step. Source Annual data from Forms 10-K, including the 2016 10-K for the 2016 items [4][3][19]. Calculated from reported figures. Earnings are GAAP diluted; adjusted figures exist only from 2021 in the proxy.
Show the numbers
Earnings per share against dividend per share
2016201720182019202020212022202320242025
Earnings per share (reported)$1.37$3.21$4.66$3.28$3.65$3.74$3.97$3.91$3.91$3.98
Dividend per share (reported)$1.68$1.81$1.93$2.05$2.17$2.29$2.41$2.50$2.60$2.70
Diluted shares, M (calculated)53.355.255.560.862.463.365.167.169.873.3

Ten years, as reported

US$ millions except per share. Calendar years.

Ten years
2016201720182019202020212022202320242025
Revenue (reported)1,5391,6801,7541,7351,6971,9492,5522,3312,1282,310
Operating income (reported)336417397406428409455473503538
Operating margin (calculated)21.8%24.8%22.6%23.4%25.2%21.0%17.8%20.3%23.6%23.3%
Interest expense, net (reported)136137140138143152161168182200
Net income for common (reported)73177258199228237258262273292
Diluted EPS (reported)1.373.214.663.283.653.743.973.913.913.98
Adjusted EPS (reported)·····3.743.973.933.914.10
Dividend per share (reported)1.681.811.932.052.172.292.412.502.602.70
Cash from operations (reported)320428489506542−65585944719673
Capital spending (reported)455326458818767678604556744820
Depreciation (reported)176188196209224236251257270284
Long-term debt (reported)3,2173,1152,9573,1463,5374,1274,1324,4014,2504,701
Common equity (reported)1,6151,7092,1822,3622,5612,7872,9953,2153,5023,824
Adjusted EPS is the company’s figure from the proxy, only for 2021 to 2025. Long-term debt includes current maturities and excludes short-term borrowings. Source Annual data from Forms 10-K; proxy statement 2026 [4][3][11]. Reported; margins calculated.

What an owner could really take out

This is the number I care about most, and it is the hardest to pin. Reported profit in 2025 was $291.6M. The cash an owner could take out is what is left after the money needed just to keep the system running, and after stock pay of $11.8M.4 The company gives no figure for maintenance against growth spending, so I show a range. If replacing worn assets costs the same as depreciation, $283.8M, then 2025 owner cash was $377.8M, 30% above profit. If replacing at today’s prices costs 1.5 times depreciation, it was $235.9M, 19% below (estimate).4 The truth is probably between those, and the range includes reported profit. What the company paid out, $197.9M, was covered either way.4

Cash from operations, capital spending and dividends

Calendar years, US$ millions

  • Operations, ten-year total $5.14B
  • Capital spending $6.23B
  • Dividends $1.40B
Cash from operations, capital spending and dividendsCash from operations, capital spending and dividends, 2016 to 2025. Over the ten years operations brought in $5.14B, capital spending took $6.23B and dividends $1.40B, leaving a gap of $2.48B.−$200M$0$300M$600M$900M’16’18’20’22’24Cash from operations, 2016: $320MCash from operations, 2017: $428MCash from operations, 2018: $489MCash from operations, 2019: $506MCash from operations, 2020: $542MCash from operations, 2021: −$65MCash from operations, 2022: $585MCash from operations, 2023: $944MCash from operations, 2024: $719MCash from operations, 2025: $673MCapital spending, 2016: $455MCapital spending, 2017: $326MCapital spending, 2018: $458MCapital spending, 2019: $818MCapital spending, 2020: $767MCapital spending, 2021: $678MCapital spending, 2022: $604MCapital spending, 2023: $556MCapital spending, 2024: $744MCapital spending, 2025: $820MDividends, 2016: $88MDividends, 2017: $97MDividends, 2018: $107MDividends, 2019: $125MDividends, 2020: $135MDividends, 2021: $145MDividends, 2022: $157MDividends, 2023: $168MDividends, 2024: $182MDividends, 2025: $198MCash from operations, capital spending and dividendsCash from operations, capital spending and dividends, 2016 to 2025. Over the ten years operations brought in $5.14B, capital spending took $6.23B and dividends $1.40B, leaving a gap of $2.48B.−$200M$0$300M$600M$900M’16’17’18’19’20’21’22’23’24’25Cash from operations, 2016: $320MCash from operations, 2017: $428MCash from operations, 2018: $489MCash from operations, 2019: $506MCash from operations, 2020: $542MCash from operations, 2021: −$65MCash from operations, 2022: $585MCash from operations, 2023: $944MCash from operations, 2024: $719MCash from operations, 2025: $673MCapital spending, 2016: $455MCapital spending, 2017: $326MCapital spending, 2018: $458MCapital spending, 2019: $818MCapital spending, 2020: $767MCapital spending, 2021: $678MCapital spending, 2022: $604MCapital spending, 2023: $556MCapital spending, 2024: $744MCapital spending, 2025: $820MDividends, 2016: $88MDividends, 2017: $97MDividends, 2018: $107MDividends, 2019: $125MDividends, 2020: $135MDividends, 2021: $145MDividends, 2022: $157MDividends, 2023: $168MDividends, 2024: $182MDividends, 2025: $198MCash from operations, capital spending and dividendsCash from operations, capital spending and dividends, 2016 to 2025. Over the ten years operations brought in $5.14B, capital spending took $6.23B and dividends $1.40B, leaving a gap of $2.48B.−$200M$0$300M$600M$900M’16’17’18’19’20’21’22’23’24’25Cash from operations, 2016: $320MCash from operations, 2017: $428MCash from operations, 2018: $489MCash from operations, 2019: $506MCash from operations, 2020: $542MCash from operations, 2021: −$65MCash from operations, 2022: $585MCash from operations, 2023: $944MCash from operations, 2024: $719MCash from operations, 2025: $673MCapital spending, 2016: $455MCapital spending, 2017: $326MCapital spending, 2018: $458MCapital spending, 2019: $818MCapital spending, 2020: $767MCapital spending, 2021: $678MCapital spending, 2022: $604MCapital spending, 2023: $556MCapital spending, 2024: $744MCapital spending, 2025: $820MDividends, 2016: $88MDividends, 2017: $97MDividends, 2018: $107MDividends, 2019: $125MDividends, 2020: $135MDividends, 2021: $145MDividends, 2022: $157MDividends, 2023: $168MDividends, 2024: $182MDividends, 2025: $198M
Operations covered capital spending and dividends together in only two of ten years, 2017 and 2023. The gap, $2.48B over ten years, was filled by debt and by $1.36B of new shares. 2021 shows Winter Storm Uri: the company paid for gas before it could bill for it. Source Annual data from Forms 10-K [4][3]. Calculated from reported figures.
Show the numbers
Cash from operations, capital spending and dividends
2016201720182019202020212022202320242025
Cash from operations (reported)$320M$428M$489M$506M$542M−$65M$585M$944M$719M$673M
Capital spending (reported)$455M$326M$458M$818M$767M$678M$604M$556M$744M$820M
Dividends paid (reported)$88M$97M$107M$125M$135M$145M$157M$168M$182M$198M
Left over or (needed) (calculated)−$222M$6M−$75M−$438M−$361M−$887M−$176M$221M−$207M−$344M
New shares sold (reported)$122M$4M$301M$101M$99M$119M$90M$118M$181M$219M

But there is a second way to read the cash. The company spent $819.8M in 2025 against $673.4M from operations, and paid $197.9M in dividends. The $344M shortfall, plus $219.2M of share sales, paid for the rest.4 Over ten years the gap after dividends was $2.48B. An owner who wants cash today gets the dividend, 3.3% of the price. An owner who wants growth lets the company keep reinvesting at about 9.6% on regulated equity, and funds part of it with fresh shares. Both are ways of saying the same thing: the free cash flow is negative, and the return comes from the rate base growing.

Quality of earnings

Four items I would not take at face value. Weather: mild weather cost $0.12 a share over nine months, even after a $0.06 gain in the third quarter.2 Tax: the company guides to an effective rate of about 14% for 2026, below the 21% federal rate, mostly from wind tax credits.2 At 21% the 2025 pretax income of $343.5M would have paid $72M of tax instead of $43.7M, a drop of $0.39 a share (calculated).4 Regulatory assets: $378M at 30 June, of which the Winter Storm Uri balance was $50.7M at year end and shrinking.53 Goodwill: $1.30B, 34% of equity, unchanged since 2016, and the pro forma balance sheet adds $1.44B more on a preliminary estimate.322

The earnings are real cash. The Uri episode shows how: in 2021 operating cash flow was −$64.6M, the company funded the gas and the commissions let it recover over time.43 It is a reminder that earnings here depend on regulators repaying what a storm costs.

The balance sheet

At 30 June 2026, the latest balance sheet, because the third-quarter filing is not out, long-term debt was $3,993.9M, current maturities $410.0M and notes payable $90.0M, a total of $4,493.9M against $71.5M of cash.5 Debt over capital was 52.8% by my arithmetic, and the credit agreement’s version was 0.53 against a limit of 0.65.5 S&P rates the company BBB+ and Moody’s Baa2, both stable.5 Management targets funds from operations of 14% to 15% of debt, 100 basis points above its downgrade threshold of 13%.9 The filings do not give the exact figure.

How much borrowing sits on the equity

30 June 2026 unless stated. Pro forma is as if the merger had closed on that date.

Leverage
Black HillsPro forma combined
Debt, $M4,493.958,08122
Equity, $M4,023.758,42722
Debt over capital52.8% (calculated)49.0% (calculated)
Net debt over TTM EBITDA5.1 times (calculated)Not computed
Operating income over interest, TTM2.8 times (calculated)Not computed
Goodwill, $M1,299.553,11122
Credit ratingsS&P BBB+, Moody’s Baa2, stable5Not stated
Fixed-rate share of debt99.8% at December 20253Not stated
Debt due 2027 to 2030$1.55B3Not stated
TTM figures are the twelve months to 30 September 2026 for operating income ($568.5M) and interest ($204.2M), and EBITDA adds $299.6M of depreciation. $285M of refundable advances from the data center customer sits outside debt in the covenant test. Source Form 10-Q for the quarter to 30 June 2026; Form 10-K 2025; Q3 2026 release; pro forma 8-K [5][3][2][22].

Here is how leverage works on the shareholder. Net debt is $4.4B against a market value of equity of $6.42B, so debt is 40% of enterprise value (calculated). A utility is meant to run like this, because stable earnings can carry debt. But the cost of that debt resets. About $1.55B comes due in 2027 to 2030, and I estimated above that refinancing the three low-coupon notes at 6% costs $0.42 a share. And $4.2B of the $4.735B of long-term debt sits at the parent, not at the utilities.3 The parent is paid from the dividends the utilities send up, which is why the rating agencies watch the parent’s cash flow.

The data center work adds more. The company says the $1.8B Google generation and $686M of Wyoming transmission come on top of the $4.7B plan, $2.5B in all.2 It plans to fund the generation with project cash flow, debt and other financing, and has not said how much equity.10 In 2025 it sold $219M of stock, and for 2026 it guided to $50M to $70M, and sold $69M through the third quarter.42 If it funds half of $2.5B with stock at today’s price, that is about 15 million shares, or 19% more than today (estimate). I do not know the plan. I know that it exists and that it moves the answer, which is why I value the contract as cash and not as earnings.

Valuation

First, how this goes badly wrong

Before any number, I ask what would most likely ruin this as an investment. For a utility the dangers are few and they are not about competition. There are three.

The return stops following the investment. The company invests about $900M a year and earns an allowed return only if commissions agree the spending was prudent and let rates move. If they pull back, rate base grows and earnings do not. Earned return on book equity was already 8.0% in 2025 against 9.3% to 9.9% allowed.43 Each half point of return on $2.85B of regulated equity is about $14M, or $0.19 a share, 4% of earnings (estimate). A run of Colorado-style cuts, a South Dakota-style freeze until 2030, or a ruling that shifts data center costs to households would do it.2

A large uninsured loss. The 10-K says insurance may not cover wildfire, gas explosion, cyber or storm losses, or may not pay in time.3 Wyoming, Montana and South Dakota have liability protections for utilities that follow approved wildfire plans. I found none for Colorado, where the company has 102,152 electric customers.3 I cannot size this. One event could cost more than a year of earnings, and the odds in any year are small.

Paying too much for growth and funding it badly. The merger, the Google build and $4.7B of base investment all need new capital. $1.55B of debt due in 2027 to 2030 rolls from low coupons to about 6%, a cost of about $0.42 a share after tax (estimate). If equity is sold at a lower price than today’s, existing holders carry that. And the price itself is a risk: a 19.4 times multiple on a utility, with a dividend yield 1.6 points below the 10-year Treasury.123 If rates stay near 5% and the multiple settles at the 17.4 median of the last nine year-ends, the price would be about $76, with no change in earnings (estimate).41

All three together are my bear case: earned return slips, growth runs at 3% and I require 9%. That gives $45, below the October 2023 low close of $47.93.1

What the price implies

Now the reverse question. What has to be true for $84.19? I solve for each piece alone, holding the others at my base.

What the price asks

Each line asks a different question of the same price. Base figures are mine.

Reverse valuation
QuestionAnswerCompare with
Return the price offers on my base cash flows7.6% a year (estimate)I require 8.25%; the 10-year Treasury pays 4.95%23
Growth in EPS for five years that the price needs at 8.25%8.1% a year (estimate)Company aim 4% to 6%, upper half; I use 5.5%2
EPS in 2031 that growth would reach$6.42 (estimate)$5.69 in my base (estimate)
Price over 2026 guidance midpoint19.4 times (calculated)17.4 times, median of year-end trailing GAAP ratios, 2017 to 2025 (calculated)
Dividend yield3.34% (calculated)2.6% to 4.6% at the ten year ends (calculated)
Price over book equity per share1.63 times (calculated)Book value per share about $51.7 at 30 June5
Price over my estimate of regulated equity2.25 times (estimate)$5.7B rate base, half equity (estimate)
The growth line includes 70% of the Google contract and the merger effect in my base, so it asks for 8.1% on top of those. Source Nasdaq; FRED; Q3 2026 release; Q2 10-Q; my model [1][23][2][5].

The price asks for about 8.1% a year in earnings growth for five years, or $6.42 of EPS in 2031. The company's own plan is 4% to 6%. So the price is not a plan price. It assumes the plan plus a good deal more, which means Google delivered in full and at least some of the 3 GW pipeline turning into contracts like it. Management points the same way: its latest release says large-load opportunities bring significant upside to the current five-year plan.2 The price has risen $13.45 since 6 October, which at 76.25 million shares is $1.03B, and $389M of that came on 7 October, the day after the announcement.15 I value the whole Google contract at $766M at 7.5%, or $536M at the 70% weight in my base (estimate). The market has paid more than that.

Dividend yield against the 10-year Treasury

Percent, last trading day of each year; the last point is Q4 2026

  • Dividend yield, now 3.34%
  • 10-year Treasury, now 4.95%
Dividend yield against the 10-year TreasuryDividend yield and 10-year Treasury yield at each year end from 2016, and now. The yield is 3.34% and the Treasury 4.95%, a gap of 1.6 points, the widest in the series.0%2%4%6%’16’18’20’22’24NowDividend yield, 2016: 2.74%Dividend yield, 2017: 3.01%Dividend yield, 2018: 3.07%Dividend yield, 2019: 2.61%Dividend yield, 2020: 3.53%Dividend yield, 2021: 3.25%Dividend yield, 2022: 3.43%Dividend yield, 2023: 4.63%Dividend yield, 2024: 4.44%Dividend yield, 2025: 3.90%Dividend yield, Now: 3.34%10-year Treasury, 2016: 2.45%10-year Treasury, 2017: 2.40%10-year Treasury, 2018: 2.69%10-year Treasury, 2019: 1.92%10-year Treasury, 2020: 0.93%10-year Treasury, 2021: 1.52%10-year Treasury, 2022: 3.88%10-year Treasury, 2023: 3.88%10-year Treasury, 2024: 4.58%10-year Treasury, 2025: 4.18%10-year Treasury, Now: 4.95%Dividend yield against the 10-year TreasuryDividend yield and 10-year Treasury yield at each year end from 2016, and now. The yield is 3.34% and the Treasury 4.95%, a gap of 1.6 points, the widest in the series.0%2%4%6%’16’17’18’19’20’21’22’23’24’25NowDividend yield, 2016: 2.74%Dividend yield, 2017: 3.01%Dividend yield, 2018: 3.07%Dividend yield, 2019: 2.61%Dividend yield, 2020: 3.53%Dividend yield, 2021: 3.25%Dividend yield, 2022: 3.43%Dividend yield, 2023: 4.63%Dividend yield, 2024: 4.44%Dividend yield, 2025: 3.90%Dividend yield, Now: 3.34%10-year Treasury, 2016: 2.45%10-year Treasury, 2017: 2.40%10-year Treasury, 2018: 2.69%10-year Treasury, 2019: 1.92%10-year Treasury, 2020: 0.93%10-year Treasury, 2021: 1.52%10-year Treasury, 2022: 3.88%10-year Treasury, 2023: 3.88%10-year Treasury, 2024: 4.58%10-year Treasury, 2025: 4.18%10-year Treasury, Now: 4.95%Dividend yield against the 10-year TreasuryDividend yield and 10-year Treasury yield at each year end from 2016, and now. The yield is 3.34% and the Treasury 4.95%, a gap of 1.6 points, the widest in the series.0%2%4%6%’16’17’18’19’20’21’22’23’24’25NowDividend yield, 2016: 2.74%Dividend yield, 2017: 3.01%Dividend yield, 2018: 3.07%Dividend yield, 2019: 2.61%Dividend yield, 2020: 3.53%Dividend yield, 2021: 3.25%Dividend yield, 2022: 3.43%Dividend yield, 2023: 4.63%Dividend yield, 2024: 4.44%Dividend yield, 2025: 3.90%Dividend yield, Now: 3.34%10-year Treasury, 2016: 2.45%10-year Treasury, 2017: 2.40%10-year Treasury, 2018: 2.69%10-year Treasury, 2019: 1.92%10-year Treasury, 2020: 0.93%10-year Treasury, 2021: 1.52%10-year Treasury, 2022: 3.88%10-year Treasury, 2023: 3.88%10-year Treasury, 2024: 4.58%10-year Treasury, 2025: 4.18%10-year Treasury, Now: 4.95%
In 2016 an investor got more than the Treasury paid, from the dividend alone. Today the dividend pays about two thirds of it, so the rest has to come from growth. Source Nasdaq closes; FRED DGS10; annual dividends from Forms 10-K; dividend now is the $2.812 annual rate [1][23][4][3]. Calculated.
Show the numbers
Dividend yield against the 10-year Treasury
2016201720182019202020212022202320242025Now
Dividend yield (calculated)2.74%3.01%3.07%2.61%3.53%3.25%3.43%4.63%4.44%3.90%3.34%
10-year Treasury (reported)2.45%2.40%2.69%1.92%0.93%1.52%3.88%3.88%4.58%4.18%4.95%

What I can’t judge

Several inputs matter a great deal, and I cannot know them. I list them so the range is not mistaken for precision.

  • Montana’s decision. The commission is all Republican, staff recommend approval, a 3 to 2 vote moved the decision to 10 November so that Commissioner Fielder could draft a condition on reserving Colstrip power for Montana customers, and the legal deadline is 12 November.137 I cannot tell what conditions will be attached or whether they will change the value. The share price already says approval is very likely, with a 0.6% spread.118
  • Colorado. The company asked for 10.5%. It was allowed 9.3% to 9.5% last time.32 I do not know what the commission will do in the first quarter of 2027.
  • Wyoming. The new transmission tariff, called the Large Customer Transmission Cost Adjustment Mechanism, decides who pays for $686M of lines. A decision is expected in the first quarter of 2027, and the two transmission projects in the middle of 2027.2 I cannot judge how the commission will weigh households against data centers.
  • Black-box settlements. South Dakota Electric, Iowa Gas and Kansas Gas settle on a revenue number with no return stated.3 I cannot check what return they provide.
  • Politics. Public opposition to data centers, in Montana and elsewhere, is outside my model. The draft Montana order says costs will be addressed in separate cases.13
  • Google and its partners. The contract is real and has a $399M advance behind it, but I cannot check the finances of the third-party resource owners the company will manage.10

The merger, in numbers

I value the shares as if the merger closes, since the companies and the market both expect it. I show the alternative too. To do this I value NorthWestern separately, with its own guidance: $3.755 of EPS in 2026, a 71% payout of $2.68, growth of 5.0% in my base, and the same discount rate. That gives $65 a NorthWestern share, or $66 per Black Hills share it converts into (estimate). My Black Hills value, before the merger, is $77. So on my numbers a NorthWestern share turns into 0.98 Black Hills shares worth $76, against $65 for the NorthWestern share itself: its holders gain about $11 a share, and Black Hills holders pay for it. The ratio was fixed in August 2025, before Google, so about 44% of the Google value goes to NorthWestern holders for nothing, unless NorthWestern’s own data center agreements are worth as much.816 I give those no value in the base.

The offset is savings. Montana’s draft order puts total savings at $48M to $70M, with $36M from labour, and I can’t see more because the company redacted the detail.13 Savings in a utility go to customers at the next rate case. I assume shareholders keep a part of them, with costs to get there, and value the net at +$100M in my base, −$150M in my bear and +$350M in my bull (estimate). The merger costs Black Hills holders $4 a share in my base, and the combined company is worth $73 a share (estimate).

The merger on my numbers

Base case. Per Black Hills share unless stated.

Merger on my numbers
BearBaseBull
Black Hills alone, plan business$46$70$98
Plus Google contract, weighted$0$7$10
Black Hills alone, if merger fails$46$77$108
NorthWestern alone, per share$44$65$90
NorthWestern, per Black Hills share (÷ 0.98)$45$66$92
Savings kept net of costs, $M-150+100+350
Combined company, per share$45$73$103
Shares: Black Hills 76.25 million, NorthWestern 61.52 million times 0.98 = 60.3 million new. Combined 136.5 million. Source Cover pages of the Q2 10-Q and NorthWestern’s data; exchange ratio from the merger 8-K; my model [5][15][12].

The rate base lens

A second way to check is to value the equity that regulators allow the company to earn on. It is a cross-check, not the method.

Regulated equity, return and value

2025 and mid-2026. $M unless stated.

Regulated equity
Value
Rate base, my estimate (half of the $11.4B combined figure)5,700 (estimate)
Equity share, typical authorized50% (estimate)
Regulated equity2,850 (estimate)
Allowed return, typical9.6% (estimate)
Earnings that implies274 (calculated)
Reported 2025 net income for common291.64
Goodwill, earns nothing1,299.55
Book equity, 30 June 20263,943.45
Market value of equity6,420 (calculated)
Market value over regulated equity2.25 times (calculated)
Steady-state value of regulated equity: (9.6% − 3.5%) ÷ (8.25% − 3.5%)1.28 times book, $3,660M, $48 a share (estimate)
Rate base is derived from the merger announcement, which says the merger doubles each company’s rate base to $11.4B in total; it is not a Black Hills filing. The reconciliation to reported income is the reason I use it. Source Merger announcement; Q2 10-Q; Form 10-K 2025 [8][5][3].

It shows the gap in plain figures. If the company earned its allowed return on this equity for ever, growing at 3.5%, regulated equity would be worth about $3.7B, or $48 a share. The market pays $6.4B. My DDM says $77 for Black Hills alone. What fills the gap is the plan: rate base growing about 6% a year, for years, while commissions allow 9.6% against a cost of equity that I put at 8.25%. And the Google contract, which does not come from the regulated base at all. I cannot make this reconcile to the dollar, because rate base is my estimate. It is the reason I keep the range wide.

The growth in rate base is also my estimate. The plan invests $4.67B over five years. Depreciation, at the 2025 level of $284M growing 5% a year, takes about $1.65B. That adds about $3.0B to net plant of $8.23B, or 6.4% a year before deferred taxes.35 NorthWestern says 4% to 6% rate base growth on a $3.2B plan.16 So I say near 6%, and the 5.5% I use for earnings is that less the dilution from new shares (estimate).

The discount rate

I use 8.25% for the base. The basis is the 10-year Treasury at 4.95% plus 3.3 points.23 The 3.3 is my judgement of the extra return an owner of a stable regulated utility needs over a government bond. Regulators allow 9.3% to 9.9%, which is 4.4 to 5.0 points over the Treasury, and I take a haircut because commissions usually lag. For the bear I use 9.0% and for the bull 7.5%. The bull rate is close to the price’s own implied rate on my base cash flows, 7.6%, so the bull assumes the market is right about the rate and I am wrong about growth. I use the same rate for the dividend stream and the terminal value, and I discount dividends from mid-year timing to today.

Value per share across rates and growth

Base case with 70% of the Google contract, and the merger effect. Rows are the discount rate; columns are EPS growth for 2027 to 2031.

Sensitivity
Discount rate3.5%4.5%5.5%6.5%7.5%
7.25%$82$86$92$97$103
7.75%$72$77$81$86$91
8.25%$65$69$73$77$82
8.75%$59$63$66$70$74
9.25%$55$58$61$64$68
The price is $84.19. The grid reaches it only at a rate of 7.75% with growth of 6.5% or more, or at 7.25% with growth of 4.5% or more. Source My model [2][1]. All values are my estimates.

The grid is the honest statement. A one point move in the discount rate changes the value by roughly $12 to $19, about as much as the whole distance from base to the margin-of-safety price. Utilities trade on the rate more than on any forecast of earnings.

Three cases

The cases

Standalone values per share, then the merger. All figures mine except where marked.

Cases
BearBaseBull
2026 EPS$4.25$4.35$4.45
EPS growth 2027 to 2031, plan business3.0%5.5%6.0%
Terminal growth2.5%3.5%4.0%
Dividend payout66%65%65%
Discount rate9.00%8.25%7.50%
Value, plan business$46$70$98
Google contract counted0%70%100%
Value with Google contract$46$77$108
Value if the merger closes$45$73$103
The base 5.5% sits in the upper half of the company’s 4% to 6%. The terminal value is 52% to 71% of each plan value. Source My model, Section VI [2].

Earnings per share in my three cases

US$ per share: bear to bull, with the base marked

  • Bear to bull, 2036 $5.63 to $7.53
  • Base, 2036 $7.02
Earnings per share in my three casesBase earnings per share reach $7.02 in 2036, bear $5.63 and bull $7.53, from $4.35 at the middle of 2026 guidance. These exclude the Google contract and the merger, which I value separately.$0$2$4$6$8’26’28’30’32’34’36Base, 2026: $4.35Base, 2027: $4.59Base, 2028: $4.84Base, 2029: $5.11Base, 2030: $5.39Base, 2031: $5.69Base, 2032: $5.98Base, 2033: $6.26Base, 2034: $6.53Base, 2035: $6.78Base, 2036: $7.02Earnings per share in my three casesBase earnings per share reach $7.02 in 2036, bear $5.63 and bull $7.53, from $4.35 at the middle of 2026 guidance. These exclude the Google contract and the merger, which I value separately.$0$2$4$6$8’26’27’28’29’30’31’32’33’34’35’36Base, 2026: $4.35Base, 2027: $4.59Base, 2028: $4.84Base, 2029: $5.11Base, 2030: $5.39Base, 2031: $5.69Base, 2032: $5.98Base, 2033: $6.26Base, 2034: $6.53Base, 2035: $6.78Base, 2036: $7.02Earnings per share in my three casesBase earnings per share reach $7.02 in 2036, bear $5.63 and bull $7.53, from $4.35 at the middle of 2026 guidance. These exclude the Google contract and the merger, which I value separately.$0$2$4$6$8’26’27’28’29’30’31’32’33’34’35’36Base, 2026: $4.35Base, 2027: $4.59Base, 2028: $4.84Base, 2029: $5.11Base, 2030: $5.39Base, 2031: $5.69Base, 2032: $5.98Base, 2033: $6.26Base, 2034: $6.53Base, 2035: $6.78Base, 2036: $7.02
2026 is the middle of the company’s guidance. Everything after it is my estimate. Source Q3 2026 release [2]. Assumptions and values are my estimates.
Show the numbers
Earnings per share in my three cases
20262027202820292030203120322033203420352036
Bear (estimate)$4.25$4.38$4.51$4.64$4.78$4.93$5.07$5.21$5.35$5.49$5.63
Base (estimate)$4.35$4.59$4.84$5.11$5.39$5.69$5.98$6.26$6.53$6.78$7.02
Bull (estimate)$4.45$4.72$5.00$5.30$5.62$5.96$6.29$6.62$6.93$7.24$7.53

The Google contract as cash, net of what it costs

US$ millions a year, 2027 to 2048. The shape is mine; the totals are the company’s.

  • Net cash, total $2.4B
The Google contract as cash, net of what it costsNet cash from the contract by year, my shape: negative while the plant is built in 2027 to 2029, then peaking in 2030 near $373M and fading to 2048. The total is $2.4B, as the company states.−$400M−$200M$0$200M$400M’27’29’31’33’35’37’39’41’43’45’47Net cash, 2027: −$410MNet cash, 2028: −$600MNet cash, 2029: −$320MNet cash, 2030: $373MNet cash, 2031: $353MNet cash, 2032: $334MNet cash, 2033: $314MNet cash, 2034: $294MNet cash, 2035: $275MNet cash, 2036: $255MNet cash, 2037: $236MNet cash, 2038: $216MNet cash, 2039: $196MNet cash, 2040: $177MNet cash, 2041: $157MNet cash, 2042: $137MNet cash, 2043: $118MNet cash, 2044: $98MNet cash, 2045: $79MNet cash, 2046: $59MNet cash, 2047: $39MNet cash, 2048: $20MThe Google contract as cash, net of what it costsNet cash from the contract by year, my shape: negative while the plant is built in 2027 to 2029, then peaking in 2030 near $373M and fading to 2048. The total is $2.4B, as the company states.−$400M−$200M$0$200M$400M’27’28’29’30’31’32’33’34’35’36’37’38’39’40’41’42’43’44’45’46’47’48Net cash, 2027: −$410MNet cash, 2028: −$600MNet cash, 2029: −$320MNet cash, 2030: $373MNet cash, 2031: $353MNet cash, 2032: $334MNet cash, 2033: $314MNet cash, 2034: $294MNet cash, 2035: $275MNet cash, 2036: $255MNet cash, 2037: $236MNet cash, 2038: $216MNet cash, 2039: $196MNet cash, 2040: $177MNet cash, 2041: $157MNet cash, 2042: $137MNet cash, 2043: $118MNet cash, 2044: $98MNet cash, 2045: $79MNet cash, 2046: $59MNet cash, 2047: $39MNet cash, 2048: $20MThe Google contract as cash, net of what it costsNet cash from the contract by year, my shape: negative while the plant is built in 2027 to 2029, then peaking in 2030 near $373M and fading to 2048. The total is $2.4B, as the company states.−$400M−$200M$0$200M$400M’27’28’29’30’31’32’33’34’35’36’37’38’39’40’41’42’43’44’45’46’47’48Net cash, 2027: −$410MNet cash, 2028: −$600MNet cash, 2029: −$320MNet cash, 2030: $373MNet cash, 2031: $353MNet cash, 2032: $334MNet cash, 2033: $314MNet cash, 2034: $294MNet cash, 2035: $275MNet cash, 2036: $255MNet cash, 2037: $236MNet cash, 2038: $216MNet cash, 2039: $196MNet cash, 2040: $177MNet cash, 2041: $157MNet cash, 2042: $137MNet cash, 2043: $118MNet cash, 2044: $98MNet cash, 2045: $79MNet cash, 2046: $59MNet cash, 2047: $39MNet cash, 2048: $20M
At 7.5% the present value is about $766M, or $10.04 a share. The company’s net income figure of $150M in 2030 is about 45% of 2026 earnings, but the contract also costs $1.8B and ends in 2048. Source Black Hills release of 6 October 2026 [10]. Shape, discount rate and present value are my estimates.
Show the numbers
The Google contract as cash, net of what it costs
2027202820292030203520402048
Net cash (estimate)−$410M−$600M−$320M$373M$275M$177M$20M

The Google line needs a word. The company says $150M of net income in 2030, about 45% of 2026 earnings (calculated).102 Taken at 19 times that would be a $2.9B gain, or $37 a share, and that is how it feels. But it costs $1.8B of capital and the plant is fully depreciated in 2048. The company puts the cash after the investment at $2.4B over the life.10 At 7.5% that is worth $10.04 a share. At 6.5% it is $11.90 and at 8.5% $8.39 (estimate). The difference between earnings and value is the capital. I weight 70% in the base, because I cannot tell whether every approval comes in time, and 0 in the bear.

The cases are not equal bets. I weight them 25%, 50% and 25%, giving $73.

What it is worth, against the price

Value per share if the merger closes; my estimates, against the close in Q4 2026

  • Bear to bull $45 to $103
  • Base $73
  • Price $84.19
  • Margin of safety below $60
What it is worth, against the priceValue per share: bear $45, base $73, bull $103. Price in Q4 2026: $84.19, 15% above the base value. Margin-of-safety price $60.BEAR$45BASE$73BULL$103Price $84.19What it is worth, against the priceValue per share: bear $45, base $73, bull $103. Price in Q4 2026: $84.19, 15% above the base value. Margin-of-safety price $60.BEAR$45BASE$73BULL$103Price $84.19What it is worth, against the priceValue per share: bear $45, base $73, bull $103. Price in Q4 2026: $84.19, 15% above the base value. Margin-of-safety price $60.Margin-of-safety zone: below $60$0$40$80$120Bear to bull: $45 to $103Bear case: $45 per shareBEAR$45Base case: $73 per shareBASE$73Bull case: $103 per shareBULL$103Price in Q4 2026: $84.19Price $84.19Close, Q4 2026
If Montana says no, my values are $46, $77 and $108. Both sets are in Section VI. Source Nasdaq historical; Q3 2026 release [1][2]. Values are my estimates.

Other uses of the same dollar

What else the dollar could do

Returns are what the thing offers on my numbers, not predictions.

Alternatives
UseOffersBasis
10-year US Treasury4.95% a yearYield in Q4 202623
Black Hills at today’s price7.6% a year (estimate)My base cash flows, merger included
Black Hills at my margin-of-safety price9.3% a year (estimate)At $60
NorthWestern at today’s price21.8 times earnings; 3.27% yield (calculated)A similar business, smaller1618
Enbridge on this sitePrice asks 9.4% on my cash flows; I ask 9.0%Pipelines and gas utility20
The Treasury has no growth and no risk of loss of principal if held to maturity; Black Hills offers growth and the risks listed in this section. Source FRED; my model; Enbridge page on this site [23][16][18][20].

The Treasury is the honest benchmark. The base case gives 7.6%, which is 2.6 points over a bond. That is a thin premium for the risks above, and it is why I do not call this cheap. Enbridge’s price offers 0.4 points more than I ask and Black Hills’ offers 0.7 points less, though they are different businesses and I would not rank them on that line alone.

What past lows looked like

The stock fell 44%, from a record close of $85.53 in February 2020 to $47.93 in October 2023, over three and a half years.1 In March 2020 it closed at $50.93.1 My bear value of $45 is about what the 2023 low was. The last time it closed at or below $60, my margin-of-safety price, was 2 October 2025, 13 months ago.1 And the stock has risen 40% since, on the merger, the Google contract and a falling rate.1 If those fade, it can fall back, and has twice since 2020.

The share price over ten years

Last close of each calendar quarter; the last point is Q4 2026. Not adjusted for dividends.

  • Close, Q4 2026 $84.19
The share price over ten yearsQuarter-end closes from $61.34 in late 2016 to $84.19 now. The highest close was $85.53 on 18 February 2020 and the lowest $47.93 on 2 October 2023.$40$60$80$100’17’18’19’20’21’22’23’24’25’26The share price over ten yearsQuarter-end closes from $61.34 in late 2016 to $84.19 now. The highest close was $85.53 on 18 February 2020 and the lowest $47.93 on 2 October 2023.$40$60$80$100’17’18’19’20’21’22’23’24’25’26The share price over ten yearsQuarter-end closes from $61.34 in late 2016 to $84.19 now. The highest close was $85.53 on 18 February 2020 and the lowest $47.93 on 2 October 2023.$40$60$80$100’17’18’19’20’21’22’23’24’25’26
The price fell 44% from a record close of $85.53 in February 2020 to $47.93 in October 2023, and has since risen 76%. It is within 2% of the old record. Source Nasdaq historical [1]. Calculated from reported closes.

The margin of safety

My rule is to ask for a price at which the bear value is at least three-quarters of what I pay. Bear divided by 0.75 gives $60. Below $60, a bear outcome costs 25% or less, and the base case offers 9.3% a year. That is 29% under today’s close, so today’s price is 40% above it. That is not close.

Two different questions

How good the business is and how good the price is are separate. The business is stable and well regulated by the standards of the industry: a dividend raised for 56 years, eight small jurisdictions, a clear route to growth. The price is a different matter. The shares are within 2% of their ten-year high, the dividend yield is further below the Treasury than at any of the last ten year ends, and the price needs the plan and more.123 So the quality is good, and the price is high for it. A share bought on 2 October 2025 at $59.76 is up 41%, about the same as the 40% gain over the whole ten years from $60.26, so almost all of the decade’s price gain came in 13 months (calculated).1 A good business bought above its value can still earn 7.6% a year, and over a bond that is a modest return for taking the risks. I can’t say the market is wrong. It sees the data center pipeline, and I am valuing only the first contract.

The case for the price

What most people miss

Three facts favour the company and get little attention. Google has already put money down: $399M of refundable advances for long-lead equipment, which the company expects to repay by 30 June 2027, and the arrangement is structured so that Google bears all the costs of serving it.10 Electric demand in the Cheyenne area has risen for 20 years in a row, and the peak of 439 MW on 20 July 2026 was 16% above 2025.2 And the need to issue shares has shrunk: $219M of stock in 2025, and a guided $50M to $70M for 2026.49

The bull case

The strongest version is that Black Hills is a steady utility that has just found a way to grow faster than its plan, and that a stock at a ten-year high can still be cheap if the second and third contracts follow the first. Management says it expects to deliver in the upper half of its 4% to 6% growth target, and describes the large-load work as significant upside to the current five-year plan. It will give a 2027 to 2031 plan with its year-end results.2 Scotiabank raised its rating and its target, to $81 from $66, on 7 November 2025, calling Wyoming data center demand high-probability. It estimated about 35% of earnings upside from a 1.8 GW project, and said the shares had limited downside if the merger failed.24 I opened the report on TipRanks, not the Scotiabank note.

The wider sell-side has followed. MarketBeat shows an average target of $83.25 across 8 analysts, from $77 to $97.25 That is a roll-up of other people’s views, and I treat it as such. It also sits at today’s price, so the typical target offers no upside. I found no public view on Black Hills from any named investor beyond the analysts above. BlackRock and Vanguard are listed in the March 2026 proxy at 14.6% (as of March 2025) and 12.0% (as of December 2023), but they are index managers and I do not count them as a bull case.11

Against reality

If the plan grows EPS at 6.5% through 2031, Google delivers in full, and the merger costs what I think it does, my value is $80. Add half of a second contract of Google’s size and it is about $83 (estimate). So the price is possible, and what it asks for is two things beyond the plan. Today, one is partly in hand. Google is signed, with the Wyoming approvals for $686M of transmission still ahead. The second does not exist yet: there is a pipeline above 3 GW, under confidentiality, and no signed contract beyond Google.29 I put rough odds on the four things the price needs: EPS growth near 6.5%, 40%; Google in full and on time, 75%; a second contract worth half as much again, 50%; and the merger closing with the savings kept, 85%. Multiplied, that is 13% (estimate). They overlap, so perhaps 15%. That is not an argument that the price is wrong. It is a measure of how much has to go right.

What they have to hit

Six numbers a reader can check. The thresholds are my base case unless stated, and they agree with the signposts below.

What they have to hit
IndicatorTodayWhat the case needsWhere to track itNext check
Adjusted EPS$2.89 for nine months; 2026 guidance $4.25 to $4.452$4.35 in 2026, then about $4.59 in 2027, which is 5.5% growth (estimate)Earnings release, adjusted EPS reconciliation; Form 10-KQ4 release with the 2027 to 2031 plan, expected February 2027
Colorado Electric returnAsked 10.5% on 51% equity; last allowed 9.30% to 9.50%239.5% or better (estimate)Colorado PUC decision; 10-Q, Note 2, regulatory mattersFirst quarter of 2027
Wyoming approvals for GoogleTransmission tariff and two projects ($80M, $606M) pending2Tariff approved in the first quarter of 2027, projects in mid-2027, first earnings in mid-2027, $399M advance repaid by 30 June 2027Wyoming PSC dockets; earnings releasesFirst quarter of 2027
Shares76,253,141 outstanding on 4 August 2026; $69M sold this year52No more than 5 million new shares before any merger shares by the end of 2028, with the Google funding mix stated (estimate)Cover page and equity note of each Form 10-QForm 10-Q for the third quarter, due in November 2026
Industrial electricity sold770.1 GWh in the third quarter, up from 639.1 a year earlier2Growth of 15% or more a year through 2027, as Google ramps from late 2027 (estimate)Earnings release, operating statistics table, electric utilities by customer classQ4 release, expected February 2027
Net interest expense$50.1M in the third quarter, up from $49.4M2No more than about $56M a quarter by the third quarter of 2027: $2.9M from refinancing the January 2027 notes plus about $3M for new debt (estimate)Earnings release, consolidated financial results, interest expense, netQ3 2027 release, expected November 2027
Thresholds are my estimates. The share count tracks only the Black Hills side. Source Q3 2026 release; Form 10-Q for the June quarter 2026; Form 10-K 2025 [2][5][3].

What a 10x would take. Ten times $84.19 is $841.90, or $64.2B of market value on today’s shares and $115B on the merged share count. At 20 times earnings, which is already generous for a utility, that needs about $3.2B of net income, eleven times the $292M of 2025. At the 2025 net margin of 12.6%, that is about $25B of revenue, eleven times the $2.3B it makes now (calculated).4 By 2036 it needs net income to grow 25% a year for ten years, from a plan of 4% to 6%. The price rose 40% in the last ten years.1 A regulator sets the return on each dollar invested, so earnings can grow faster than 6% only by investing much faster, and the customers pay for it. The merger doubles the size and not the value per share. I do not know of a regulated utility that has grown tenfold from this size, and for Black Hills it is close to impossible.

Where I come down

What moved me is the Google contract: a tariff that makes the customer carry the cost and a $399M advance make a risky project a reasonable one, worth about $10 a share at full weight. What did not move me is the price. It already pays for the contract, and part of a second, and the 3.3% yield sits well under the Treasury. What would raise my values is a signed second contract on similar terms, a Colorado ruling at 9.5% or better, and a funding plan for the Google build with little new equity. What would lower them is a heavy Montana condition or a freeze in Wyoming.

Risks, and what would change my view

The three ways this goes badly wrong are at the start of Valuation. These are the rest.

  • The merger. It could still be rejected or approved on terms that hurt. Montana is the last state, and the end date moves to 18 November and then to 18 February 2027 only if everything else is satisfied.177 If it fails, I value a share at $77 in my base, which is $4 higher, and at $46 in my bear. The price of $84.19 would probably fall, since it now reflects a deal at 0.6% from parity with NorthWestern.118 Each party owes $100M in some cases if the deal ends.17
  • Integration. Mr. Evans leaves at closing, and the combined firm would be run by NorthWestern’s chief executive; Ms. Jones and Ms. Nooney stay in new roles.12 NorthWestern took over Avista’s and Puget’s shares of Colstrip Units 3 and 4, a coal plant in Montana, for $0 on 1 January 2026. It reports about $18.0M a year of added operating cost for the Avista share, not yet in customer rates, and about $30.0M for the Puget share, largely offset by a contract that runs only to late 2027.16 Black Hills holders would own 56% of that company’s results.
  • Data centers and the household bill. The Wyoming tariff and the Montana rule both rest on the claim that data centers pay their own way. If a commission decides otherwise, or if a customer fails, the cost lands somewhere. The Google generation sits in a non-regulated affiliate, with no commission to turn to.10
  • Cost inflation and supply. The 10-K flags tariffs, transformers and generation equipment as a risk to the plan.3 A cost overrun on $2.5B of data center projects would fall on the affiliate that holds the plant and on shareholders.
  • Wildfire. Protection exists in three states and I found none for Colorado.3
  • Weather. Mild weather cost $0.12 a share in the first nine months, even after a $0.06 gain in the third quarter. Weather evens out over time and I do not treat it as a trend (calculated).2
  • Interest rates. About $1.55B of debt reprices by 2030, and the multiple could fall if the 10-year Treasury stays near 5%.323
  • Tax credits. A 14% tax rate is helped by wind credits; a change in the law would cost about $0.39 a share if the rate rose to 21% (calculated).24

What would change my view

Signals that move my values, in either direction.

Signposts
SignalTodayRaises my valueLowers my value
Montana orderPending; vote 10 November7Approval with ring-fencing onlyConditions that cap savings or force a change in the ratio
Colorado rulingAsked 10.5%29.5% or betterBelow 9.3%
Wyoming tariffPending, Q1 20272Approved as filedCosts shifted to other customers
Second large contractNone signed beyond Google2Signed with a customer advancePipeline stalls or terms weaken
Adjusted EPS$4.25 to $4.45 for 20262$4.59 or more in 2027Below $4.45 in 2027
Share count76.25 million5Little new equity for the Google buildMore than 5 million shares by 2028
CreditBBB+ and Baa2, stable5Rating upgrade after the mergerNegative outlook or a cut
Source Q2 10-Q; Q3 2026 release; Daily Montanan [5][2][7]. Thresholds are my judgement.

Sources

  1. 1BKH daily closes, Nasdaq.com historical API, 4 November 2016 to 4 November 2026 (opens in a new tab)PriceNasdaq · 4 Nov 2026 · Close/Last on 11/04/2026 = $84.19, volume 2,564,385; Yahoo Finance chart feed shows the same $84.19 regular-session price and the same prior closes; closes are not adjusted for dividends · Accessed 4 Nov 2026↩︎
  2. 2Black Hills third-quarter 2026 earnings release (Ex. 99 to Form 8-K) (opens in a new tab)FilingSEC EDGAR · 4 Nov 2026 · Q3 and nine-month results, 2026 guidance, rate decisions, Google agreements, merger status, dividend · Accessed 4 Nov 2026↩︎
  3. 3Black Hills Form 10-K for 2025 (opens in a new tab)FilingSEC EDGAR · 11 Feb 2026 · Business; authorized returns and rate bases; capital plan; dividends; debt table and maturities; segments; regulatory assets; risk factors; employees · Accessed 4 Nov 2026↩︎
  4. 4Black Hills Corporation XBRL company facts (annual data from Forms 10-K, fiscal 2016 to 2025) (opens in a new tab)FilingSEC EDGAR · 4 Nov 2026 · Revenue, operating income, net income, EPS, cash flow, capital spending, D&A, interest, dividends, equity issued, debt, equity, goodwill, stock pay · Accessed 4 Nov 2026↩︎
  5. 5Black Hills Form 10-Q, quarter ended 30 June 2026 (opens in a new tab)FilingSEC EDGAR · 6 Aug 2026 · Balance sheet, cash flow, debt covenant, ratings, refundable advances, cover share count at 4 August 2026 · Accessed 4 Nov 2026↩︎
  6. 6Black Hills and NorthWestern press release on the combined company name, 22 October 2026 (Ex. 99.1 to Form 8-K) (opens in a new tab)FilingSEC EDGAR · 22 Oct 2026 · Bright Horizon Energy, ticker HZN on completion; approvals received; Montana timing · Accessed 4 Nov 2026↩︎
  7. 7Montana Public Service Commission postpones vote on NorthWestern Energy merger (opens in a new tab)NewsDaily Montanan · 27 Oct 2026 · Vote moved to 10 November on a 3 to 2 motion; Fielder condition on Colstrip power · Accessed 4 Nov 2026↩︎
  8. 8Black Hills and NorthWestern joint announcement of the merger, 19 August 2025 (Ex. 99.1 to Form 8-K) (opens in a new tab)FilingSEC EDGAR · 19 Aug 2025 · Exchange ratio, 56/44 ownership, combined rate base $11.4B, 2.1 million customers, 5% to 7% growth target · Accessed 4 Nov 2026↩︎
  9. 9Black Hills Q4 2025 earnings call transcript (Rule 425 filing) (opens in a new tab)FilingSEC EDGAR · 6 Feb 2026 · Credit targets, data center pipeline, equity need, 4% to 6% growth, Meta and Microsoft load · Accessed 4 Nov 2026↩︎
  10. 10Black Hills press release on the Google data center agreements, 6 October 2026 (Ex. 99.1 to Form 8-K) (opens in a new tab)FilingSEC EDGAR · 6 Oct 2026 · $1.8B, 564 MW, $150M of net income in 2030, $2.4B of free cash flow, $399M of advances · Accessed 4 Nov 2026↩︎
  11. 11Black Hills proxy statement (Schedule 14A) for the 2026 annual meeting (opens in a new tab)FilingSEC EDGAR · 18 Mar 2026 · Executive pay, incentive metrics, ownership guidelines, beneficial ownership, merger payments, 5% holders · Accessed 4 Nov 2026↩︎
  12. 12Black Hills Form 8-K on the merger agreement, 19 August 2025 (opens in a new tab)FilingSEC EDGAR · 19 Aug 2025 · Exchange ratio, closing conditions, board and officers of the combined company, headquarters in Rapid City · Accessed 4 Nov 2026↩︎
  13. 13Public Service Commission to take up NorthWestern, Black Hills merger (opens in a new tab)NewsDaily Montanan · 23 Oct 2026 · Staff recommendation, draft order protections, 12 November deadline, holdouts · Accessed 4 Nov 2026↩︎
  14. 14Black Hills fourth-quarter 2025 earnings release (Ex. 99.1 to Form 8-K) (opens in a new tab)FilingSEC EDGAR · 4 Feb 2026 · 2025 adjusted EPS $4.10; growth target base; capital plan · Accessed 4 Nov 2026↩︎
  15. 15NorthWestern Energy Group Form 10-Q cover and XBRL data, quarter ended 30 June 2026 (opens in a new tab)FilingSEC EDGAR · 4 Nov 2026 · 61,517,850 shares outstanding at 24 July 2026 · Accessed 4 Nov 2026↩︎
  16. 16NorthWestern Energy Group second-quarter 2026 earnings release (Ex. 99.1 to Form 8-K) (opens in a new tab)FilingSEC EDGAR · 30 Jul 2026 · 2026 EPS guidance $3.68 to $3.83, 4% to 6% growth, $3.2B capital plan, dividend $0.67, data center agreements · Accessed 4 Nov 2026↩︎
  17. 17Agreement and Plan of Merger, Black Hills, NorthWestern and River Merger Sub (Ex. 2.1 to Form 8-K) (opens in a new tab)FilingSEC EDGAR · 19 Aug 2025 · Section 8.01(b)(i) end date and extensions; Section 8.02 termination fees of $100M · Accessed 4 Nov 2026↩︎
  18. 18NWE daily closes, Nasdaq.com historical API, 1 August 2025 to 4 November 2026 (opens in a new tab)PriceNasdaq · 4 Nov 2026 · Close/Last on 11/04/2026 = $82.00 · Accessed 4 Nov 2026↩︎
  19. 19Black Hills Form 10-K for 2016 (opens in a new tab)FilingSEC EDGAR · 27 Feb 2017 · SourceGas acquisition on 12 February 2016 for about $1.89B including $760M of assumed debt; 2016 acquisition costs and oil and gas impairments · Accessed 4 Nov 2026↩︎
  20. 20Enbridge (ENB): the business, the moat and the price (opens in a new tab)SitePedrum Shokouhi · Q4 2026 · On this site: the price asks 9.4% on my cash flows and I ask 9.0% · Accessed 4 Nov 2026↩︎
  21. 21NorthWestern Energy Group proxy statement (Schedule 14A), 2026 (opens in a new tab)FilingSEC EDGAR · 12 Mar 2026 · Brian Bird biography and 2025 pay · Accessed 4 Nov 2026↩︎
  22. 22Black Hills Form 8-K with NorthWestern financial statements and pro forma combined financial information (Ex. 99.2) (opens in a new tab)FilingSEC EDGAR · 17 Aug 2026 · Pro forma shares, debt, equity, goodwill; NorthWestern shares at 24 July 2026 · Accessed 4 Nov 2026↩︎
  23. 2310-year Treasury constant maturity yield, series DGS10 (opens in a new tab)DataFederal Reserve Bank of St. Louis (from US Treasury) · 3 Nov 2026 · 4.95% on 3 November 2026; the 4 November value was not yet posted; year-end values for 2016 to 2025 · Accessed 4 Nov 2026↩︎
  24. 24Scotiabank upgrades Black Hills to Outperform on data center upside (opens in a new tab)NewsTipRanks (from The Fly) · 7 Nov 2025 · Upgrade from Sector Perform, target $81 from $66; I opened this page, not the Scotiabank note · Accessed 4 Nov 2026↩︎
  25. 25MarketBeat alert on Black Hills (NYSE: BKH) price targets, with consensus summary (opens in a new tab)NewsMarketBeat · 4 Nov 2026 · Consensus target $83.25 across 8 analysts, range $77 to $97, at a price of $84.14 on the page; an aggregator, not a primary source; the alert’s own headline is about a target raised to $87 · Accessed 4 Nov 2026↩︎

How the figures are labelled

(reported)Reported: taken from a filing or a price feed, as printed.

(calculated)Calculated: arithmetic on reported figures, such as a margin or a growth rate.

(estimate)Estimate: my judgement, such as a case value or a growth assumption.

The price

Close in Q4 2026: $84.19, from Nasdaq [1], matched to the Yahoo Finance regular-session price. Retrieved in Q4 2026. Market value uses 76.25 million shares outstanding at 4 August 2026, from the cover of the June quarter 10-Q. Close is not adjusted for dividends.

The page covers Black Hills Corporation, which would be renamed Bright Horizon Energy Corporation, ticker HZN, if the merger closes. The first values in the answer assume the merger closes. The values for a failed merger are in Section VI.

The valuation

Dividend discount model. I project earnings per share for 2027 to 2036: the stated growth for five years, then a straight fade to the terminal rate. Dividends are the payout shown in the cases times earnings, with the $0.703 fourth-quarter 2026 dividend first. Dividends are discounted at mid-year to today and the terminal value is taken at the end of 2036. The discount rate is 4.95% plus 3.3 points, or 8.25%, with 9.0% and 7.5% in the bear and bull. The Google contract is valued as cash flows, $1.8B invested in 2027 to 2029 and $2.4B net after that, peaking in 2030 and fading to zero in 2049, discounted at 7.5%, and counted at 0%, 70% and 100%. NorthWestern is valued the same way from its own guidance ($3.755, a 71% payout, 5.0% growth) and the merger is built from the shares of both companies at 0.98, plus savings I assume are kept, net of costs. The merged value is $73, the sum of both equity values and the savings divided by the shares after the deal. The yearly return is the rate that equates the price to my base cash flows and the contract.

The margin-of-safety price is $60, which is the bear value divided by 0.75. No rating: the page states a range and the price, and leaves the decision to the reader. The odds in Section VII are my guesses and are not used in the values, except that the weighted value of $73 uses 25%, 50% and 25%.

Research, not investment advice. Figures as of .

Legal information and disclosures

These are my own views as of the update shown on this page. They can change without notice, and I have no duty to update them. Past performance does not indicate future results, and any investment can lose money.

This is for education only. It is not investment, legal, tax or accounting advice, and it is not an offer to sell or a solicitation to buy any security in any jurisdiction. It does not consider your goals or circumstances.

Figures from company filings and other third parties are believed to be reliable, but I have not independently verified them and cannot guarantee them. Bear, base and bull values, and anything marked as an estimate, are my own and rest on assumptions that may prove wrong.

Please do not copy or republish this material without my written consent.