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MDU Resources (MDU) Gains on Investment & Two-Platform Business
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MDU Resources Group Inc. (MDU - Free Report) has been gaining from its two-platform business model and planned investments in capital projects to strengthen infrastructure. Efficient debt management, strategic acquisitions and a solid backlog are expected to drive its performance over the long run.
The Zacks Consensus Estimate for 2023 earnings per share (EPS) of MDU Resources has moved up 13.8% year over year. MDU’s long-term (three to five years) earnings growth rate is currently pegged at 6.2%. Moreover, MDU Resources’ current dividend yield of 3.1% is better than the Zacks S&P 500 Composite’s average of 1.8%.
Tailwinds
MDU Resources’ two-platform business model helps balance out seasonality-related risks that can adversely impact energy demand. Planned investments help MDU increase the reliability of services and enable it to serve an increasing customer base effectively.
MDU Resources spent $936 million in 2021 and plans to spend $747 million on capital projects in 2022. The capital program is expected to be largely funded by operating cash flows in the range of $550-$600 million. Overall, MDU Resources plans to invest $3,048 million in the 2022-2026 period and continues to witness 1-2% customer growth in the electric and natural gas segments annually.
MDU Resources continues to work on many pipeline expansion projects across its system, including the North Bakken Expansion project, the Wahpeton Expansion project and the recent long-term customer agreements for four additional projects. These projects are likely to increase natural gas transportation capacity across the system.
The utility’s consistent and disciplined approach to acquisitions, along with a solid backlog, is expected to drive its performance. As of Jun 30, 2022, the construction services business had a backlog of $1.92 billion compared with $1.32 billion in the corresponding period of 2021.
As of Jun 30, 2022, the construction material business had a backlog of $1.13 billion, up from $912 million as of Jun 30, 2021. MDU Resources has already made a few acquisitions to strengthen Construction Materials and Services.
Headwinds
MDU Resources operates in a highly competitive electric and natural gas industry. The utility is exposed to fluctuating fuel costs and increasing interest rates on borrowings, which will adversely affect the operating and financial results.
Moreover, to meet the conditions of stringent rules and regulations and maintain cyber security, MDU Resources needs to bear additional costs.
Price Performance
In the past six months, shares of MDU have rallied 3.7% against the industry’s 15.6% decline.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the same industry are Sempra Energy (SRE - Free Report) , Spire (SR - Free Report) and Northwest Natural (NWN - Free Report) , each carrying a Zacks Rank #2 (Buy).
The long-term earnings growth rate of Sempra Energy, Spire and Northwest Natural is 5.7%, 5% and 4.3%, respectively.
The Zacks Consensus Estimate for the 2023 EPS of Sempra Energy, Spire and Northwest Natural indicates 3.4%, 12.2% and 6.8% year-over-year growth, respectively.
SRE, SR and NWN delivered average earnings surprises of 4.4%, 12.8% and 43.5%, respectively, in the last four quarters.
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MDU Resources (MDU) Gains on Investment & Two-Platform Business
MDU Resources Group Inc. (MDU - Free Report) has been gaining from its two-platform business model and planned investments in capital projects to strengthen infrastructure. Efficient debt management, strategic acquisitions and a solid backlog are expected to drive its performance over the long run.
MDU Resources currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for 2023 earnings per share (EPS) of MDU Resources has moved up 13.8% year over year. MDU’s long-term (three to five years) earnings growth rate is currently pegged at 6.2%. Moreover, MDU Resources’ current dividend yield of 3.1% is better than the Zacks S&P 500 Composite’s average of 1.8%.
Tailwinds
MDU Resources’ two-platform business model helps balance out seasonality-related risks that can adversely impact energy demand. Planned investments help MDU increase the reliability of services and enable it to serve an increasing customer base effectively.
MDU Resources spent $936 million in 2021 and plans to spend $747 million on capital projects in 2022. The capital program is expected to be largely funded by operating cash flows in the range of $550-$600 million. Overall, MDU Resources plans to invest $3,048 million in the 2022-2026 period and continues to witness 1-2% customer growth in the electric and natural gas segments annually.
MDU Resources continues to work on many pipeline expansion projects across its system, including the North Bakken Expansion project, the Wahpeton Expansion project and the recent long-term customer agreements for four additional projects. These projects are likely to increase natural gas transportation capacity across the system.
The utility’s consistent and disciplined approach to acquisitions, along with a solid backlog, is expected to drive its performance. As of Jun 30, 2022, the construction services business had a backlog of $1.92 billion compared with $1.32 billion in the corresponding period of 2021.
As of Jun 30, 2022, the construction material business had a backlog of $1.13 billion, up from $912 million as of Jun 30, 2021. MDU Resources has already made a few acquisitions to strengthen Construction Materials and Services.
Headwinds
MDU Resources operates in a highly competitive electric and natural gas industry. The utility is exposed to fluctuating fuel costs and increasing interest rates on borrowings, which will adversely affect the operating and financial results.
Moreover, to meet the conditions of stringent rules and regulations and maintain cyber security, MDU Resources needs to bear additional costs.
Price Performance
In the past six months, shares of MDU have rallied 3.7% against the industry’s 15.6% decline.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the same industry are Sempra Energy (SRE - Free Report) , Spire (SR - Free Report) and Northwest Natural (NWN - Free Report) , each carrying a Zacks Rank #2 (Buy).
The long-term earnings growth rate of Sempra Energy, Spire and Northwest Natural is 5.7%, 5% and 4.3%, respectively.
The Zacks Consensus Estimate for the 2023 EPS of Sempra Energy, Spire and Northwest Natural indicates 3.4%, 12.2% and 6.8% year-over-year growth, respectively.
SRE, SR and NWN delivered average earnings surprises of 4.4%, 12.8% and 43.5%, respectively, in the last four quarters.