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Investments and Increasing Customer Base Drive MDU Resources' Growth
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Key Takeaways
MDU Resources projects 6-8% long-term EPS growth and 1-2% annual customer gains through 2026.
The company plans $3.1B in regulated capital spending from 2025 to 2029 to boost reliability.
Data center demand lifted Q2 retail sales by 12%, with 580 MW in signed electric service deals.
MDU Resources’ (MDU - Free Report) long-term capital investments should further improve the reliability of its services and assist in serving an expanding customer base. After the spinoff of Knife River and Everus Construction, MDU Resources is now focused on its regulated energy delivery business.
However, this Zacks Rank #3 (Hold) company faces risks related to aging infrastructure and seasonality of business operations.
Factors Acting in Favor of MDU
MDU Resources is set to gain from its focus on safely meeting customer demand by upgrading and expanding its electric and natural gas infrastructure. MDU Resources expects to achieve long-term earnings per share (EPS) growth of 6-8%. MDU is likely to continue witnessing 1-2% customer growth annually in the electric and natural gas segments through 2026.
The company expects its regulated capital expenditures to be nearly $3.1 billion in the 2025-2029 period. These investments should enhance the reliability of its services and enable it to effectively serve an increasingly large customer base.
The company is also set to gain from data center opportunities. MDU has signed electric service agreements for 580 megawatt (MW) of data center load. Of this, 180 MW is currently online, with an additional 100 MW expected to come online later this year. Nearly 150 MW is expected to come online in 2026, and the remaining in 2027. During the second quarter of 2025, the Electric Utility segment witnessed a 12% increase in retail sales volumes, driven by data center demand.
Challenges Faced by MDU
A significant portion of the company’s natural gas pipelines and transmission facilities is aging, which may affect operational results. Transmission infrastructure and deteriorated natural gas pipes raise the possibility of equipment failure or breakdown, pipeline leaks, and power line fires. This may result in unplanned outages, which can hamper the company’s reliability and ability to serve customers. It may also require additional maintenance or replacement costs that could adversely affect the company’s operational results.
Some of its operations are highly seasonal, and revenues and certain expenses for such operations may fluctuate significantly among quarterly periods.
MDU’s Stock Price Performance
In the past month, shares of the company have lost 7.1% against the industry’s 1.4% growth.
ATO’s long-term (three to five years) earnings growth rate is 7.32%. The Zacks Consensus Estimate for fiscal 2025 EPS is pinned at $7.33, indicating a year-over-year increase of 7.3%.
The Zacks Consensus Estimate for NWN’s 2025 EPS is pinned at $2.92, indicating a year-over-year increase of 25.3%. It delivered an average earnings surprise of 33.2% in the last four quarters.
SRE’s long-term earnings growth rate is 7.01%. The Zacks Consensus Estimate for 2025 sales is pinned at $15.86 billion, indicating a year-over-year increase of 20.3%
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Investments and Increasing Customer Base Drive MDU Resources' Growth
Key Takeaways
MDU Resources’ (MDU - Free Report) long-term capital investments should further improve the reliability of its services and assist in serving an expanding customer base. After the spinoff of Knife River and Everus Construction, MDU Resources is now focused on its regulated energy delivery business.
However, this Zacks Rank #3 (Hold) company faces risks related to aging infrastructure and seasonality of business operations.
Factors Acting in Favor of MDU
MDU Resources is set to gain from its focus on safely meeting customer demand by upgrading and expanding its electric and natural gas infrastructure. MDU Resources expects to achieve long-term earnings per share (EPS) growth of 6-8%. MDU is likely to continue witnessing 1-2% customer growth annually in the electric and natural gas segments through 2026.
The company expects its regulated capital expenditures to be nearly $3.1 billion in the 2025-2029 period. These investments should enhance the reliability of its services and enable it to effectively serve an increasingly large customer base.
The company is also set to gain from data center opportunities. MDU has signed electric service agreements for 580 megawatt (MW) of data center load. Of this, 180 MW is currently online, with an additional 100 MW expected to come online later this year. Nearly 150 MW is expected to come online in 2026, and the remaining in 2027. During the second quarter of 2025, the Electric Utility segment witnessed a 12% increase in retail sales volumes, driven by data center demand.
Challenges Faced by MDU
A significant portion of the company’s natural gas pipelines and transmission facilities is aging, which may affect operational results. Transmission infrastructure and deteriorated natural gas pipes raise the possibility of equipment failure or breakdown, pipeline leaks, and power line fires. This may result in unplanned outages, which can hamper the company’s reliability and ability to serve customers. It may also require additional maintenance or replacement costs that could adversely affect the company’s operational results.
Some of its operations are highly seasonal, and revenues and certain expenses for such operations may fluctuate significantly among quarterly periods.
MDU’s Stock Price Performance
In the past month, shares of the company have lost 7.1% against the industry’s 1.4% growth.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the same industry are Atmos Energy (ATO - Free Report) , Northwest Natural (NWN - Free Report) and Sempra Energy (SRE - Free Report) . Each stock presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ATO’s long-term (three to five years) earnings growth rate is 7.32%. The Zacks Consensus Estimate for fiscal 2025 EPS is pinned at $7.33, indicating a year-over-year increase of 7.3%.
The Zacks Consensus Estimate for NWN’s 2025 EPS is pinned at $2.92, indicating a year-over-year increase of 25.3%. It delivered an average earnings surprise of 33.2% in the last four quarters.
SRE’s long-term earnings growth rate is 7.01%. The Zacks Consensus Estimate for 2025 sales is pinned at $15.86 billion, indicating a year-over-year increase of 20.3%