Why the Upgrade?
This electric utility delivered positive earnings surprises in three out of the last four quarters with an average beat of 10.43%. The long-term expected earnings growth rate for this stock is 6.0%.
Black Hills Corporation is poised to benefit from increased demand from all customer classes. The operational efficiency of this company enhances reliability of its services, increasing consumer satisfaction. This helps the company to further expand its customer base. The company also benefited from customer rate adjustments and will continue to enjoy the same over the next few quarters.
The strategic initiatives undertaken by the utility to add to its power generation capacity and drilling activities in Mancos Shale formation in the Piceance Basin will improve its natural gas production.
The financial strength of Black Hills Corporation allows it to make strategic acquisitions. The gas utility segment acquired two small systems in the first quarter, swelling its customer base by 500 retail and two high-volume industrial customers.
Moreover, the strong financial position enables Black Hills Corporation to reward its shareholders through regular dividend payments. The company has increased its annual dividend rate for 43 consecutive years.
The Zacks Consensus Estimate for 2013 increased 1.7% in the last 60 days to $2.33 per share which reflects year-over-year growth of 11.29%.
Besides Black Hills Corporation, other operators in the sector having a favorable Zacks Rank and are Companhia Paranaense de Energia ( ELP ), Integrys Energy Group Inc. ( TEG ) and The AES Corporation ( AES ). Companhia Paranaense and Integrys Energy currently retain a Zacks Rank #1 (Strong Buy) while AES Corporation has a Zacks Rank #2 (Buy).