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MDU Resources' (MDU) Buyouts & Liquidity Position Augur Well

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MDU Resources Group, Inc.’s (MDU - Free Report) two-platform business model, strategic buyouts, planned investments in the electric and natural gas utility, rising backlog as well as ongoing projects are its key tailwinds. Also, the company boasts enough liquidity to meet its near-term obligations.

We recently issued an updated research report on this currently Zacks Rank #3 (Hold) company.

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. This strategy helps balancing out the industry-related seasonality risks that adversely impact demand.

The company spent $413.8 million in the first nine months of 2020, expecting to invest $626 million in the full year. These investments will increase the reliability of its services and enable it to serve the growing customer base more efficiently.

As of Sep 30, 2020, construction materials had a backlog of $571.3 million while that of the construction services business was $1.3 billion. Further, the construction material business continues to acquire operations for expanding the company’s aggregate reserves and its market coverage across the West United States.

Moreover, total liquidity of MDU Resources at the end of the first nine months was worth $718.7 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 governed by the federal, state and local administrative agencies. Also, changes in strict regulations or the introduction of additional rules could increase its overall expenses depending on the extent of its investments. Moreover, an aging infrastructure and stiff competition remain concerns.

Price Performance

In the past six months, shares of the company have gained 18.8%, outperforming the industry's rise of 5.8%.

Stocks to Consider

A few better-ranked utilities are National Fuel Gas Company (NFG - Free Report) , ONEOK, Inc. (OKE - Free Report) and Portland General Electric Company (POR - 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.

National Fuel Gas Company delivered an earnings surprise of 10.68%, on average, in the trailing four quarters. The Zacks Consensus Estimate for fiscal 2021 earnings has been revised 2.5% upward in the past 60 days.

ONEOK’s long-term (three to five years) earnings growth rate is pegged at 4.62%. The Zacks Consensus Estimate for 2020 earnings has moved 3% north in the past 60 days.

Portland General Electric Company delivered an earnings surprise of 98.07%, on average, in the trailing four quarters. The company’s long-term earnings growth rate is pegged at 5.48%.

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