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MDU Resources' Steady Investments & Acquisitions Bode Well

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MDU Resources’ (MDU - Free Report) two-platform business model, strategic acquisitions, planned investments in the electric and natural gas utility, rising backlog as well as ongoing projects will boost its performance.

For 2020, earnings estimates moved up 2.9% to $1.75 per share in the past 30 days. Additionally, long-term earnings growth of the company is pegged at 6%.

In the past 12 months, shares of the company have returned 21.6% compared with the industry’s growth of 19.1%.



What’s Driving the Stock?

MDU Resources’ two-platform business model, regulated energy delivery platform as well as construction materials and services platform include different operating segments. Some of its segments are exposed to seasonality related to the industries in which they operate. This two-platform strategy helps to balance such seasonality related risks that affect demand.

The company expects to invest $2,026 million through 2020-2024. These investments will increase reliability of services and enable the company to serve increasing customer base, effectively. The company anticipates the utility electric and natural gas customer base to expand annually by 1-2% and expects to grow rate base by 5-8% compounded annually over the next five years.

Consistent and disciplined approach to the acquisition of well-managed companies as well as properties is expected to drive performance. For 2020, the company will continue to evaluate additional acquisition opportunities for both businesses. It anticipates to successfully executing on projects that are in backlog. The amount is currently at $1.84 billion.

MDU Resources has been paying dividend for the past 82 consecutive years. The company raised its annual dividend on Nov 2019, which marks 29 consecutive years of hikes. Currently, the company’s dividend yield of 2.68% is better than the Zacks S&P 500 composite’s 1.78%.

Zacks Rank

The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks to Consider

Few top-ranked stocks from the same industry are Atmos Energy Corporation (ATO - Free Report) , Sempra Energy (SRE - Free Report) and Duke Energy Corporation (DUK - Free Report) . All the three stocks hold a Zacks Rank #2 (Buy).

Long-term earnings growth of Atmos Energy, Sempra Energy and Duke Energy is pegged at 7.20%, 8.10% and 4.90%, respectively.

Atmos Energy, Sempra Energy and Duke Energy have trailing four-quarter positive earnings surprise of 1.91%, 3.21% and 4.27%, on average, respectively.

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