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Why Is MDU Resources (MDU) Down 2.6% Since Last Earnings Report?

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A month has gone by since the last earnings report for MDU Resources (MDU - Free Report) . Shares have lost about 2.6% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is MDU Resources due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

MDU Resources Q1 Earnings Lag Estimates, Revenues Up

MDU Resources delivered first-quarter 2019 operating earnings of 21 cents per share, which missed the Zacks Consensus Estimate of 24 cents by 12.5%. Operating earnings declined by a penny from the year-ago quarter’s level. The decline was caused by a larger loss incurred in the construction materials business.

Total Revenues

Total revenues in the first quarter were $1,091.2 million, up 11.7% from $976.3 million in the year-ago quarter.

Operating revenues in the electric, natural gas distribution and regulated pipeline as well as the midstream segments increased 3.5% to $439.6 million. Revenues in the non-regulated pipeline and midstream, construction materials and contracting, construction services as well as other segments increased 18% to $651.6 million.

Highlights of the Release

In the first quarter, operating expenses amounted to $1,027 million, up 13.2% from the prior-year quarter’s figure of $906.9 million.

Operating income was $64.2 million, down 7.5% year over year.

The company incurred interest expenses of $23.4 million, up from $20.5 million in the prior-year quarter.

As of Mar 31, 2019, the construction services business had backlog of $1.02 billion, up 48% from $675 million as of Mar 31, 2018.

As of Mar 31, 2019, the construction materials business had backlog of $943 million, up 36.3% from $692 million as of Mar 31, 2018.

Financial Highlights

Total debt amounted to $2,268 million as of Mar 31, 2019, up from $1,780 million as of Mar 31, 2018.

The company’s net cash flow from operating activities in the first quarter was $1.5 million compared with $105.8 million in the prior-year quarter.

Guidance

MDU Resources raised the lower end of previously provided guidance. The company currently expects 2019 earnings per share in the range of $1.40-$1.55, whose mid-point of $1.47 is below the current Zacks Consensus Estimate of $1.49.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, MDU Resources has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, MDU Resources has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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