Value
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 6.3 |
| P/S | 8.5 |
| EV/EBITDA | 4.2 |
| Fwd P/E | 7.1 |
| PEG | 4.6 |
| Analyst target | 3.0 |
- ▸Forward P/E: 17.8x
- ▸PEG: 1.91
BKH · Why this verdict
Why Black Hills (BKH) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score5.5/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Black Hills is a regulated gas utility with strong price momentum and a solid Piotroski score, but it trades 7.6% above the analyst target, near its 52-week high, with negative free cash flow, no moat and high short interest ahead of earnings on 2026-11-04.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Momentum is 7.2/10 with rising on-balance volume, price above the 200-day average and only 0.2% below the 52-week high, though RSI is overbought at 76. Momentum breakdown | Price holds above the 200-day average and RSI cools below 70 without a breakdown over the next quarter. | ↑Improving |
| CounterOverbought readings at 52-week highs often precede pullbacks, and a 21% short interest signals meaningful skepticism. | ||
Price of $82.01 is 7.6% above the analyst target of $75.75, so the target is reached and reward-to-risk is negative at -0.53. Upside pct | Price pulls back toward the $80.47 entry level or analysts raise targets above $82. | ↓Deteriorating |
| CounterUtilities in a rate-cut or defensive rotation can keep re-rating, and coverage is light so targets may be stale. | ||
Earnings quality is flagged as a red flag at -26% free cash flow to net income, with no competitive moat and quality at 4.2. Quality breakdown | Free cash flow turns positive relative to net income as capital spending is recovered in rates over 12 months. | →Stable |
| CounterRegulated utilities spend heavily on capital projects that earn allowed returns, so negative free cash flow is normal and the Piotroski F-Score is a strong 7/9. | ||
Two of the last four quarters were beats, including +33.3% on 2026-08-05, with one miss of -2.7% and an average surprise of +14.8%, and earnings are due on 2026-11-04. Last 4 quarters | EPS meets or beats estimates in the 2026-11-04 report and the following quarter. | ↑Improving |
| CounterUtility earnings are seasonal and weather-driven, so a binary event within 3 days could produce a miss that reverses the rally. | ||
Short interest is 21%, implied volatility is 99% and dividend safety scores only 3.0 with a yield-trap warning. Risk breakdown | Short interest declines below 15% and dividend safety rises above 5.0 within 12 months. | →Stable |
| CounterHigh short interest in a rising utility can fuel a squeeze, and the dividend is backed by regulated cash flows. | ||
Momentum is 7.2/10 with rising on-balance volume, price above the 200-day average and only 0.2% below the 52-week high, though RSI is overbought at 76.
↑ImprovingMomentum breakdown
- Expectation
- Price holds above the 200-day average and RSI cools below 70 without a breakdown over the next quarter.
CounterOverbought readings at 52-week highs often precede pullbacks, and a 21% short interest signals meaningful skepticism.
Price of $82.01 is 7.6% above the analyst target of $75.75, so the target is reached and reward-to-risk is negative at -0.53.
↓DeterioratingUpside pct
- Expectation
- Price pulls back toward the $80.47 entry level or analysts raise targets above $82.
CounterUtilities in a rate-cut or defensive rotation can keep re-rating, and coverage is light so targets may be stale.
Earnings quality is flagged as a red flag at -26% free cash flow to net income, with no competitive moat and quality at 4.2.
→StableQuality breakdown
- Expectation
- Free cash flow turns positive relative to net income as capital spending is recovered in rates over 12 months.
CounterRegulated utilities spend heavily on capital projects that earn allowed returns, so negative free cash flow is normal and the Piotroski F-Score is a strong 7/9.
Two of the last four quarters were beats, including +33.3% on 2026-08-05, with one miss of -2.7% and an average surprise of +14.8%, and earnings are due on 2026-11-04.
↑ImprovingLast 4 quarters
- Expectation
- EPS meets or beats estimates in the 2026-11-04 report and the following quarter.
CounterUtility earnings are seasonal and weather-driven, so a binary event within 3 days could produce a miss that reverses the rally.
Short interest is 21%, implied volatility is 99% and dividend safety scores only 3.0 with a yield-trap warning.
→StableRisk breakdown
- Expectation
- Short interest declines below 15% and dividend safety rises above 5.0 within 12 months.
CounterHigh short interest in a rising utility can fuel a squeeze, and the dividend is backed by regulated cash flows.
Per-dimension breakdown
Quality
4.2/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.7 |
| ROA | 2.1 |
| Gross margin | 3.9 |
| Op margin | 8.6 |
| Net margin | 6.5 |
| Current ratio | 2.1 |
| FCF quality | 0.0 |
| Moat | 4.5 |
| Piotroski F | 7.8 |
- ▸Earnings quality RED FLAG: -26% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 7/9
Growth
5.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.3 |
| EPS growth | 8.3 |
Momentum
8.4/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.7 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 9.1 |
- ▸Overbought (RSI 87)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 5.4 |
| Analyst rating | 7.7 |
| Price target | 5.5 |
- ▸Light analyst coverage (7.0) — signal dampened
Insider
5.2/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.3 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
3.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.1 |
| quality rank | 3.6 |
| growth rank | 2.9 |
Technical
3.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.2 |
| support resistance | 1.0 |
| 52w position | 9.7 |
Risk (lower is worse)
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 0.0 |
| days to cover | 1.5 |
| volatility | 8.2 |
| put call | 10.0 |
| implied vol | 4.6 |
| beta | 9.3 |
| debt equity | 4.8 |
- ▸High short interest: 21%
- ▸Concentration risks: 2 MED (10-K Item 1A)
Catalyst
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 6.5 |
| earnings history | 5.6 |
| earnings timing | 5.0 |
| surprise avg | 9.9 |
| dividend safety | 3.0 |
| news activity | 8.0 |
- ▸Earnings today
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (5)
- MOMENTUM:8.4>=5.5
- INSIDER:OK
- 8K:CLEAN
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:-0.8=NEGATIVE
- EARNINGS_PROXIMITY:0d<=7d
Warning (0)
none
Reward-to-Risk
-0.82
Upside
-10.0%
Downside
12.3%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.5 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Momentum at 8.4) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.8=NEGATIVE, EARNINGS_PROXIMITY:0d<=7d) reinforce the read. Current asymmetry R:R is -0.82 — supplementary context, not the trigger for this path.
The strongest dimensions are Momentum at 8.4, Sentiment at 6.3, and Catalyst at 6.3; the weakest are Technical at 3.6, Peer rank at 3.9, and Quality at 4.2. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of -0.82 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Strong Momentum Near Highs
Trip ifMomentum score falls below 5.0 from current 7.2.
- P2Price Above Analyst Target
Trip ifPrice exceeds $90, more than 18% above the $75.75 analyst target, without a target raise.
- P3Negative Cash Conversion No Moat
Trip ifFree cash flow to net income stays below -25% for 2 consecutive quarters.
- P4Earnings Record Mostly Positive
Trip ifEPS surprise stays below 0% for the 2026-11-04 report and the next quarter.
- P5Risk Short Interest And Yield
Trip ifShort interest rises above 25% from current 21%.