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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) planned investments will further improve the reliability of its services. Post the spinoff of Knife River, MDU now primarily focuses on regulated energy delivery. 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 2023 earnings per share (EPS) has increased 4.6% to $1.36 in the past 90 days.
The Zacks Consensus Estimate for 2024 EPS has increased 4.3% to $1.47 in the past 90 days.
The company’s long-term (three- to five-year) earnings growth rate is 5.77%.
Return on Equity
Return on equity (ROE) indicates how efficiently a company has been utilizing the funds to generate returns. Currently, MDU Resources’ ROE is 11.5%, higher than the industry’s average of 10.66%. This indicates that the company has been utilizing the funds more constructively than its peers in the utility gas distribution industry.
Debt Position
Currently, MDU’s total debt to capital is 48.93%, better than the industry’s average of 50.81%.
The time to interest earned ratio at the end of second-quarter 2023 was 5.6. The ratio, being greater than one, reflects the company’s ability to meet future interest obligations without difficulties.
Dividend History
MDU Resources continues to increase shareholders’ value through dividend payments. The company has been paying dividends for the past 85 consecutive years.
After the spinoff of Knife River in August 2023, it declared new quarterly dividends of 12.5 cents per share, resulting in an annualized dividend of 50 cents. The company has set a new dividend payout range of 60-70%. Its current dividend yield is 2.59%, better than the Zacks S&P 500 Composite’s 1.48%.
Systematic Investments
MDU’s capital expenditures for the first six months of 2023 totaled $232.1 million compared with $209.9 million in the corresponding period of 2022. Capital expenditures allocated to the company’s business segments are estimated to be $528.3 million for 2023.
These investments will increase the reliability of MDU’s services and enable it to effectively serve an increasing customer base. The company’s compound annual growth rate target for the next five years is in the 6-7% range.
Price Performance
In the past month, shares of MDU have lost 2% compared with the broader industry’s decline of 4.8%.
The Zacks Consensus Estimate for VST’s 2023 EPS indicates a year-over-year improvement of 220.4%. The same for sales indicates a year-over-year increase of 47.8%.
ALE’s long-term earnings growth rate is 8.1%. The Zacks Consensus Estimate for the company’s 2023 EPS implies year-over-year growth of 8.6%.
OGE’s long-term earnings growth rate is 3.65%. It delivered an average earnings surprise of 3.8% 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) planned investments will further improve the reliability of its services. Post the spinoff of Knife River, MDU now primarily focuses on regulated energy delivery. 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 2023 earnings per share (EPS) has increased 4.6% to $1.36 in the past 90 days.
The Zacks Consensus Estimate for 2024 EPS has increased 4.3% to $1.47 in the past 90 days.
The company’s long-term (three- to five-year) earnings growth rate is 5.77%.
Return on Equity
Return on equity (ROE) indicates how efficiently a company has been utilizing the funds to generate returns. Currently, MDU Resources’ ROE is 11.5%, higher than the industry’s average of 10.66%. This indicates that the company has been utilizing the funds more constructively than its peers in the utility gas distribution industry.
Debt Position
Currently, MDU’s total debt to capital is 48.93%, better than the industry’s average of 50.81%.
The time to interest earned ratio at the end of second-quarter 2023 was 5.6. The ratio, being greater than one, reflects the company’s ability to meet future interest obligations without difficulties.
Dividend History
MDU Resources continues to increase shareholders’ value through dividend payments. The company has been paying dividends for the past 85 consecutive years.
After the spinoff of Knife River in August 2023, it declared new quarterly dividends of 12.5 cents per share, resulting in an annualized dividend of 50 cents. The company has set a new dividend payout range of 60-70%. Its current dividend yield is 2.59%, better than the Zacks S&P 500 Composite’s 1.48%.
Systematic Investments
MDU’s capital expenditures for the first six months of 2023 totaled $232.1 million compared with $209.9 million in the corresponding period of 2022. Capital expenditures allocated to the company’s business segments are estimated to be $528.3 million for 2023.
These investments will increase the reliability of MDU’s services and enable it to effectively serve an increasing customer base. The company’s compound annual growth rate target for the next five years is in the 6-7% range.
Price Performance
In the past month, shares of MDU have lost 2% compared with the broader industry’s decline of 4.8%.
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Other Stocks to Consider
A few other top-ranked stocks from the same sector are Vistra Corp. (VST - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy), and ALLETE (ALE - Free Report) and OGE Energy Corp. (OGE - Free Report) , each holding a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for VST’s 2023 EPS indicates a year-over-year improvement of 220.4%. The same for sales indicates a year-over-year increase of 47.8%.
ALE’s long-term earnings growth rate is 8.1%. The Zacks Consensus Estimate for the company’s 2023 EPS implies year-over-year growth of 8.6%.
OGE’s long-term earnings growth rate is 3.65%. It delivered an average earnings surprise of 3.8% in the last four quarters.