Why Black Hills’ Ready Wyoming project matters for shareholders

Black Hills (BKH) has just completed and energized its 260 mile, $350 million Ready Wyoming electric transmission expansion, linking its South Dakota and Wyoming systems and putting fresh attention on the stock.

Despite the Ready Wyoming announcement and an upcoming 2025 earnings release in early February, Black Hills’ share price at $70.72 sits on a modest year to date gain of 1.54%, while its 1 year total shareholder return of 32.55% suggests stronger longer term momentum.

If this kind of infrastructure story has you looking further afield, it could be a useful moment to widen your search with fast growing stocks with high insider ownership.

With Ready Wyoming now in service, a 32.55% 1 year total return on the table and the stock trading at $70.72, the key question is whether Black Hills is still attractively priced or if the market already reflects the expected future growth.

Most Popular Narrative: 7.6% Undervalued

With Black Hills last closing at US$70.72 against a narrative fair value of about US$76.50, the current share price sits below that reference point and puts Ready Wyoming into a bigger earnings and cash flow story.

Large-scale capital investments such as the Ready Wyoming transmission expansion, Lange II natural gas generation, and Colorado Clean Energy Plan renewables projects are expected to materially expand Black Hills' regulated rate base, enabling predictable, above-sector-average long-term earnings and net margins through constructive rate recovery mechanisms and innovative tariffs.

Curious what earnings path and profit profile sit behind that valuation gap? The narrative leans on firm growth targets, consistent margins, and a richer future P/E. The full set of assumptions may surprise you.

Result: Fair Value of $76.50 (UNDERVALUED)

However, that story could change quickly if heavy project spending faces regulatory delays, or if large tech and blockchain customers scale back planned power demand.

Another View: Fair Ratio Signals Less Room For Error

The analyst narrative points to a fair value of about US$76.50 and a 7.6% undervaluation, but the current P/E of 18.7x sits very close to the estimated fair ratio of 18.8x. That tight gap suggests less of a clear bargain and more of a fine margin for error. Which signal do you put more weight on?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Black Hills for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 879 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Black Hills Narrative

If you see the numbers differently or prefer to work through the data yourself, you can shape your own view in a few minutes: Do it your way.

A great starting point for your Black Hills research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.

Looking for more investment ideas?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.