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MDU Resources' (MDU) Investments & Liquidity Status Look Good
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MDU Resources Group, Inc.’s (MDU - Free Report) two-platform business model, strategic acquisitions, capital investments in the electric and natural gas utility, and an increasing backlog are helping the utility fortify its existing operations. Also, the company has enough liquidity to meet its near-term obligations.
We recently issued an updated research report on this currently Zacks Rank #3 (Hold) company. In the past year, shares of the company have gained 46.9%, outperforming the industry's rally of 24.7%. The utility’s long-term (three to five years) earnings growth rate is pegged at 6.63%.
One-Year Price Performance
Image Source: Zacks Investment Research
What’s Boosting the Stock?
MDU Resources’ two-platform business structure, comprising the regulated energy delivery arm and the construction materials and services unit, includes different operating segments. This strategy aids in balancing out the industry-related seasonality risks that erode demand.
After spending $648 million in 2020, the utility spent $107.2 million in the first quarter of 2021. However, it reduced its investment plans to $810.5 million from $826 million in the ongoing year. It expects to invest $3,032 million during the 2021-2025 period. These investments will increase the reliability of its services and enable it to serve the growing customer base more efficiently.
At the end of the January-March quarter, backlog for construction materials stood at $819 million, while that of the construction services business was $1.27 billion. Further, the construction materials business acquired Mt. Hood Rock to expand aggregates operation in Portland.
As of Mar 31, 2021, the utility had cash and cash equivalents worth $55.1 million and an available borrowing capacity of $695.5 million under its outstanding credit facilities. This shows that the company currently has ample liquidity to meet its near-term debt obligations.
Woes
However, the company’s electric and natural gas transmission, and distribution businesses are governed by the federal, state and local administrative agencies. Also, changes in strict regulations or additional rules could inflate the company’s overall expenses depending on the extent of its investments. Moreover, an aging infrastructure and stiff competition remain concerns.
NewJersey Resources’ long-term (three to five years) earnings growth rate is pegged at 7.1%. The Zacks Consensus Estimate for fiscal 2021 earnings has been revised 12.8% upward in the past 60 days.
The Zacks Consensus Estimate for Hawaiian Electric Industries’ 2021 earnings has been revised 8.8% upward in the past 60 days. The company’s long-term earnings growth rate is pegged at 7.1%.
UGI Corporation’s long-term earnings growth rate stands at 8%. The company delivered a trailing four-quarter earnings surprise of 58.23%, on average.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Image: Bigstock
MDU Resources' (MDU) Investments & Liquidity Status Look Good
MDU Resources Group, Inc.’s (MDU - Free Report) two-platform business model, strategic acquisitions, capital investments in the electric and natural gas utility, and an increasing backlog are helping the utility fortify its existing operations. Also, the company has enough liquidity to meet its near-term obligations.
We recently issued an updated research report on this currently Zacks Rank #3 (Hold) company. In the past year, shares of the company have gained 46.9%, outperforming the industry's rally of 24.7%. The utility’s long-term (three to five years) earnings growth rate is pegged at 6.63%.
One-Year Price Performance
What’s Boosting the Stock?
MDU Resources’ two-platform business structure, comprising the regulated energy delivery arm and the construction materials and services unit, includes different operating segments. This strategy aids in balancing out the industry-related seasonality risks that erode demand.
After spending $648 million in 2020, the utility spent $107.2 million in the first quarter of 2021. However, it reduced its investment plans to $810.5 million from $826 million in the ongoing year. It expects to invest $3,032 million during the 2021-2025 period. These investments will increase the reliability of its services and enable it to serve the growing customer base more efficiently.
At the end of the January-March quarter, backlog for construction materials stood at $819 million, while that of the construction services business was $1.27 billion. Further, the construction materials business acquired Mt. Hood Rock to expand aggregates operation in Portland.
As of Mar 31, 2021, the utility had cash and cash equivalents worth $55.1 million and an available borrowing capacity of $695.5 million under its outstanding credit facilities. This shows that the company currently has ample liquidity to meet its near-term debt obligations.
Woes
However, the company’s electric and natural gas transmission, and distribution businesses are governed by the federal, state and local administrative agencies. Also, changes in strict regulations or additional rules could inflate the company’s overall expenses depending on the extent of its investments. Moreover, an aging infrastructure and stiff competition remain concerns.
Stocks to Consider
A few better-ranked utilities are NewJersey Resources Corporation (NJR - Free Report) , Hawaiian Electric Industries, Inc. (HE - Free Report) and UGI Corporation (UGI - Free Report) , all carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NewJersey Resources’ long-term (three to five years) earnings growth rate is pegged at 7.1%. The Zacks Consensus Estimate for fiscal 2021 earnings has been revised 12.8% upward in the past 60 days.
The Zacks Consensus Estimate for Hawaiian Electric Industries’ 2021 earnings has been revised 8.8% upward in the past 60 days. The company’s long-term earnings growth rate is pegged at 7.1%.
UGI Corporation’s long-term earnings growth rate stands at 8%. The company delivered a trailing four-quarter earnings surprise of 58.23%, on average.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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