MDU Resources Group Inc.’s MDU planned investments will strengthen its energy delivery operations and allow it to provide reliable services to its expanding customer base. Given its growth prospects, MDU 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 solid investment pick at the moment. MDU Resources also has a VGM Score of B. The combination of rank and style score makes it one of the most comprehensive and best-performing stocks.
Growth Projections
The Zacks Consensus Estimate for MDU’s 2024 earnings per share (EPS) has increased 4% to $1.55 in the past 90 days.
The company’s long-term (three to five years) earnings growth rate is 6%.
Return on Equity
Return on equity (ROE) indicates how efficiently a company has been utilizing its funds to generate higher returns. Currently, MDU’s ROE is 11.42% compared to its industry’s average of 9.01%. This indicates that the company has been utilizing its funds more constructively than its peers.
Systematic Investments
Strategic capital investments are making MDU Resources stronger and more resilient. MDU’s capital expenditures for 2023 totaled $536 million. It expects capital expenditures of $2.7 billion in the 2024-2028 period. These investments should increase the reliability of its services and enable it to effectively serve an increasingly large customer base. The company’s CAGR target for the next five years is 6-7%.
Dividend History
MDU has been increasing shareholders’ value through dividend payments. The company has set a new dividend payout range of 60-70%. In February 2024, the company announced a quarterly dividend of 12.5 cents per share, resulting in an annual dividend of 50 cents per share.
MDU Resources has been paying out dividends for the past 85 years. Currently, its dividend yield is 1.98%, better than the Zacks S&P 500 Composite’s 1.58%.
Solvency & Liquidity
The time-to-interest earned ratio at the end of the first quarter of 2024 was 5.7. The ratio, being greater than one, reflects MDU’s ability to meet future interest obligations without difficulties.
The company’s current ratio at the end of the first quarter was 1.43, higher than the industry’s average of 0.76. The ratio, being greater than one, indicates MDU Resources’ ability to meet its future short-term liabilities without difficulties.
Price Performance
In the past three months, MDU’s shares have rallied 20.1% compared with the industry’s 9% growth.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same sector are DTE Energy DTE, Atmos Energy ATO and UGI Corporation UGI, each holding a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DTE’s long-term earnings growth rate is 6%. The Zacks Consensus Estimate for second-quarter earnings has moved up by 8.6% in the last 60 days.
ATO’s long-term earnings growth rate is 7%. The Zacks Consensus Estimate for fiscal 2024 earnings has moved up by 0.9% in the last 60 days.
UGI reported an average positive surprise of 19.1% in the last four quarters. The Zacks Consensus Estimate for UGI’s fiscal 2024 EPS is pegged at $2.91, implying an increase of 2.5% in the last 90 days.
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Free: See Our Top Stock And 4 Runners Up
DTE Energy Company (DTE) : Free Stock Analysis Report
Atmos Energy Corporation (ATO) : Free Stock Analysis Report
UGI Corporation (UGI) : Free Stock Analysis Report
MDU Resources Group, Inc. (MDU) : Free Stock Analysis Report
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