For a utility that has delivered one low-drama quarter after another, Black Hills Corporation arrives at its third-quarter report on November 4 with an unusual number of loose ends that could be tied up at once. Management had pointed to the third quarter as the target for signing definitive agreements on its marquee 1.8 gigawatt data center project, and the reservation on that deal ran only through August 31. Montana, the last of seven merger approvals, was expected to rule somewhere between mid-October and mid-November. The quarterly numbers matter, but the narrative around them may matter more.
Wall Street expects earnings of $0.42 per share, a 6.7% decline from the $0.45 earned a year ago. That is a modest contraction rather than a warning sign, and the whisper number of $0.45 suggests some investors expect the company to simply match last year's result. The gap is small, but it tilts the bar slightly higher than the published consensus. Full-year guidance of $4.25 to $4.45 has been reaffirmed for three straight reports, and the $4.34 consensus sits almost exactly at the midpoint. With $2.33 already banked through June, the company needs roughly $2.01 in the back half to hit that midpoint, so a third quarter near expectations keeps the year on track without demanding heroics from the seasonally important fourth quarter.
The second quarter showed what is driving the core business. Adjusted EPS jumped to $0.54 from $0.38, powered by about $0.21 of new rates and rider recovery, while operating costs excluding merger expenses held flat and employee costs fell. The question for the third quarter is whether rate recovery continues to outrun the persistent weather drag, which had cost 18 cents year to date versus the prior year. Commentary on the new Colorado Electric rate review, which seeks $26.7 million at a 10.5% return on equity, and the Wyoming large-customer transmission tariff slated for January 2027 will help show whether the regulatory engine can sustain growth into next year. Investors should also look for clarity on refinancing the $400 million of debt maturing in January 2027.
The bigger swing factor is the data center pipeline. Management described more than 3 gigawatts of opportunity, with 600 megawatts from Microsoft and Meta already in plan and another 2.5 gigawatts in negotiation. Refundable reservation advances on the 1.8 gigawatt project nearly doubled to as much as $377 million, which signals serious intent, but Crusoe's exit from the project added noise even as management insisted talks with the hyperscale end user were unaffected. A signed contract, or even a firm update on the new 75 megawatt opportunity, would validate the company's increasingly confident talk about landing in the upper half of its 4% to 6% long-term growth range. Another extension without a signature would not break the thesis, but it would challenge the timeline. Wyoming's July peak load of 439 megawatts, up 16% from a year earlier, offers tangible evidence that demand is real.
The market has clearly leaned into this story. Shares have climbed 13% since the last report while the S&P 500 slipped 2.4%, and sentiment swung from mildly bearish before the prior quarter to solidly bullish now. At $82.51, the stock sits well above its 200-day average of $73.42 and less than 1% below its post-earnings high of $82.95, effectively testing a breakout above a range that topped out near $76.74 last quarter. That positioning implies some good news is already priced in.
Ultimately, this report will be judged less on whether Black Hills clears $0.42 and more on whether management can convert promises into paper. A completed Montana approval and a signed 1.8 gigawatt agreement would give the company grounds to finally formalize higher growth expectations. Continued delays would leave a rallying stock leaning on an unchanged guidance range and a deal that remains a target rather than a certainty.