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MDU Resources' Strong Liquidity Position & Buyouts Bode Well
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MDU Resources Group, Inc.’s (MDU - Free Report) two-platform business model, inorganic activities, strategic investments in the electric and natural gas utility, rising backlog as well as ongoing projects are key tailwinds.
The company’s long-term (three to five years) earnings growth rate is pegged at 5%.
What’s Boosting the Stock?
MDU Resources’ two-platform business model, namely the regulated energy delivery platform and the construction materials and services platform include different operating segments. Some of its segments are exposed to seasonality related to the industries they operate in. This strategic two-platform set-up helps mitigate seasonality-related risks that affect demand.
The company spent $310.6 million in the first half of 2020 and expects to invest $609 million in 2020 and $1,942 million through the 2020-2022 time period. These investments will increase its reliability of services and enable it to serve the growing customer base more efficiently.
At the end of first-half 2020, the construction materials had a backlog of $875 million. The construction services business had a backlog of $1.3 billion, up 18.2% from the year-ago quarter’s level. Further, the construction material business continues to successfully acquire businesses to expand the company’s aggregate reserves and market coverage across the West United States.
Moreover, total liquidity of MDU Resources at the end of the first half was worth $719.5 million, which will be sufficient to meet its near-term debt obligation.
Woes
However, the company’s electric and natural gas transmission and distribution businesses are subject to a comprehensive regulation by the federal, state and local regulatory agencies. Also, changes in regulations or the introduction of additional rules could increase its overall expenses depending on the extent of investments.
Price Performance
In the past three months, shares of the company have gained 6% against the industry's decline of 2.4%.
Key Picks
A few better-ranked utilities are Atmos Energy Corporation (ATO - Free Report) , Chesapeake Utilities Corporation (CPK - Free Report) and Portland General Electric Company (POR - Free Report) , all carrying a Zacks Rank#2 (Buy) at present.
Atmos Energy delivered an earnings surprise of 1.30%, on average, in the last four quarters. The company has a long-term earnings growth rate of 7.26%.
Chesapeake Utilities delivered an earnings surprise of 3.54%, on average, in the last four quarters. The Zacks Consensus Estimate for current-year earnings has moved 1.7% north in the past 60 days.
Portland General Electric Company delivered an earnings surprise of 7.74%, on average, in the last four quarters. The company has a long-term earnings growth rate of 5.14%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
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MDU Resources' Strong Liquidity Position & Buyouts Bode Well
MDU Resources Group, Inc.’s (MDU - Free Report) two-platform business model, inorganic activities, strategic investments in the electric and natural gas utility, rising backlog as well as ongoing projects are key tailwinds.
We recently issued an updated research report on this currently Zacks Rank #3 (Hold) company. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The company’s long-term (three to five years) earnings growth rate is pegged at 5%.
What’s Boosting the Stock?
MDU Resources’ two-platform business model, namely the regulated energy delivery platform and the construction materials and services platform include different operating segments. Some of its segments are exposed to seasonality related to the industries they operate in. This strategic two-platform set-up helps mitigate seasonality-related risks that affect demand.
The company spent $310.6 million in the first half of 2020 and expects to invest $609 million in 2020 and $1,942 million through the 2020-2022 time period. These investments will increase its reliability of services and enable it to serve the growing customer base more efficiently.
At the end of first-half 2020, the construction materials had a backlog of $875 million. The construction services business had a backlog of $1.3 billion, up 18.2% from the year-ago quarter’s level. Further, the construction material business continues to successfully acquire businesses to expand the company’s aggregate reserves and market coverage across the West United States.
Moreover, total liquidity of MDU Resources at the end of the first half was worth $719.5 million, which will be sufficient to meet its near-term debt obligation.
Woes
However, the company’s electric and natural gas transmission and distribution businesses are subject to a comprehensive regulation by the federal, state and local regulatory agencies. Also, changes in regulations or the introduction of additional rules could increase its overall expenses depending on the extent of investments.
Price Performance
In the past three months, shares of the company have gained 6% against the industry's decline of 2.4%.
Key Picks
A few better-ranked utilities are Atmos Energy Corporation (ATO - Free Report) , Chesapeake Utilities Corporation (CPK - Free Report) and Portland General Electric Company (POR - Free Report) , all carrying a Zacks Rank#2 (Buy) at present.
Atmos Energy delivered an earnings surprise of 1.30%, on average, in the last four quarters. The company has a long-term earnings growth rate of 7.26%.
Chesapeake Utilities delivered an earnings surprise of 3.54%, on average, in the last four quarters. The Zacks Consensus Estimate for current-year earnings has moved 1.7% north in the past 60 days.
Portland General Electric Company delivered an earnings surprise of 7.74%, on average, in the last four quarters. The company has a long-term earnings growth rate of 5.14%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Click here for the 6 trades >>