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Reasons to Add MDU Resources (MDU) to Your Portfolio Now
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MDU Resources Group Inc.’s (MDU - Free Report) systematic investments should further improve the reliability of its services. It is expected to benefit from its focus on regulated energy delivery business. Given its growth opportunities, the company makes for a solid investment option in the utility sector.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) company a strong investment pick at the moment.
Growth Projections
The Zacks Consensus Estimate for 2024 earnings per share (EPS) has increased 3.3% to $1.55 in the past 60 days.
The Zacks Consensus Estimate for 2025 EPS is pinned at $1.65, indicating a year-over-year increase of 6.5%.
The company’s long-term (three to five-year) earnings growth rate is 6%.
Return on Equity (ROE)
ROE indicates how efficiently a company has been utilizing the funds to generate returns. Currently, MDU Resources’ ROE is 11.42%, higher than the industry’s average of 9.7%. This indicates that the company has been utilizing the funds more constructively than its peers in the utility gas distribution industry.
Debt Position & Solvency
Currently, MDU’s total debt to capital is 44.46%, better than the industry’s average of 49.52%.
The time-to-interest earned ratio at the end of the first quarter of 2024 was 5.7. The ratio, being greater than one, reflects the company’s ability to meet future interest obligations without difficulties.
Dividend History
Steady earnings generation enables the company to distribute regular dividends to its shareholders. MDU Resources has been paying out dividends for the past 86 years.
Currently, its quarterly dividend is 12.5 cents per share, resulting in an annualized dividend of 50 cents per share. The company targets dividend payout in the range of 60-70%. Its current dividend yield of 2.02% is better than the Zacks S&P 500 composite’s 1.29%.
Systematic Investments
The company expects its capital expenditures to be $2.7 billion in the 2024-2028 period. These investments should further increase the reliability of its services and enable it to effectively serve an increasingly large customer base. MDU’s compound annual growth rate target for the next five years is 6-7%.
Price Performance
In the past three months, shares of MDU have risen 9.9% compared with the industry’s growth of 3.6%.
ATO’s long-term (three to five years) earnings growth rate is 7%. The Zacks Consensus Estimate for ATO’s fiscal 2024 EPS indicates year-over-year growth of 10.2%.
The Zacks Consensus Estimate for NJR’s fiscal 2024 EPS indicates a year-over-year improvement of 9.7%. The company delivered an average earnings surprise of 107.4% in the last four quarters.
The Zacks Consensus Estimate for UGI’s fiscal 2024 EPS indicates a year-over-year improvement of 2.8%. The company delivered an average earnings surprise of 19.1% in the last four quarters.
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Reasons to Add MDU Resources (MDU) to Your Portfolio Now
MDU Resources Group Inc.’s (MDU - Free Report) systematic investments should further improve the reliability of its services. It is expected to benefit from its focus on regulated energy delivery business. Given its growth opportunities, the company makes for a solid investment option in the utility sector.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) company a strong investment pick at the moment.
Growth Projections
The Zacks Consensus Estimate for 2024 earnings per share (EPS) has increased 3.3% to $1.55 in the past 60 days.
The Zacks Consensus Estimate for 2025 EPS is pinned at $1.65, indicating a year-over-year increase of 6.5%.
The company’s long-term (three to five-year) earnings growth rate is 6%.
Return on Equity (ROE)
ROE indicates how efficiently a company has been utilizing the funds to generate returns. Currently, MDU Resources’ ROE is 11.42%, higher than the industry’s average of 9.7%. This indicates that the company has been utilizing the funds more constructively than its peers in the utility gas distribution industry.
Debt Position & Solvency
Currently, MDU’s total debt to capital is 44.46%, better than the industry’s average of 49.52%.
The time-to-interest earned ratio at the end of the first quarter of 2024 was 5.7. The ratio, being greater than one, reflects the company’s ability to meet future interest obligations without difficulties.
Dividend History
Steady earnings generation enables the company to distribute regular dividends to its shareholders. MDU Resources has been paying out dividends for the past 86 years.
Currently, its quarterly dividend is 12.5 cents per share, resulting in an annualized dividend of 50 cents per share. The company targets dividend payout in the range of 60-70%. Its current dividend yield of 2.02% is better than the Zacks S&P 500 composite’s 1.29%.
Systematic Investments
The company expects its capital expenditures to be $2.7 billion in the 2024-2028 period. These investments should further increase the reliability of its services and enable it to effectively serve an increasingly large customer base. MDU’s compound annual growth rate target for the next five years is 6-7%.
Price Performance
In the past three months, shares of MDU have risen 9.9% compared with the industry’s growth of 3.6%.
Image Source: Zacks Investment Research
Other Stocks to Consider
A couple of other top-ranked stocks from the same industry are Atmos Energy (ATO - Free Report) , New Jersey Resources (NJR - Free Report) and UGI Corporation (UGI - Free Report) , each holding a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ATO’s long-term (three to five years) earnings growth rate is 7%. The Zacks Consensus Estimate for ATO’s fiscal 2024 EPS indicates year-over-year growth of 10.2%.
The Zacks Consensus Estimate for NJR’s fiscal 2024 EPS indicates a year-over-year improvement of 9.7%. The company delivered an average earnings surprise of 107.4% in the last four quarters.
The Zacks Consensus Estimate for UGI’s fiscal 2024 EPS indicates a year-over-year improvement of 2.8%. The company delivered an average earnings surprise of 19.1% in the last four quarters.