About MDU Resources
I spent my first two years of college in North Dakota. I was almost 200 miles away from the Canadian border where the winters were brutal but the summers were delightful. During my two years in North Dakota, I made a lot of great friends, connections and grew to know the central and east corridors of the state quite well. For instance, Fargo is the “big city” near the North Dakota-Minnesota border, Grand Forks is not merely a brief description of enlarged silverware but a fun college town where it’s hard to find places open past 9:00 PM.
Bismarck is a happening place too.
It’s not only the capital of the state but is also where the company we’ll be analyzing in this stock analysis article, MDU Resources is headquartered.
In a nutshell the company is an energy company that has various lines of business related to industries such as utilities, pipeline, and construction materials and services.
Off the bat we like the fact that MDU serves different industries across the country. However, a lot of their business and operations primarily serve the northern region of the United States in states near and around North Dakota, Montana and Wyoming, which makes sense given that the aforementioned economies are all heavily centered around and reliant upon energy.
Nevertheless, MDU seems to know what they know and what they don’t.
Now that you have a bit of an overview of what the company does and how they make money, let’s see how financially strong this company is and whether or not they are worth considering investing in.
MDU Resources’ stock financials
With a market capitalization of $6.35 billion, an annual dividend of $0.87 (3.23% yield) and a price-to-earnings (P/E) ratio of 19.37, shares of the company’s stock appear to be slightly undervalued at its current share price of just under $32.
While not a bad start, let’s dig a bit deeper and see what else MDU has to offer, aside from its pipeline products.
According to the company’s balance sheet, MDU manages around $8.9 billion in total assets as well as about $5.5 billion in total liabilities. This appears to be a fairly typical balance sheet structure when it comes to how total assets and liabilities measure up with one another, particularly for larger companies in the energy sector. We’re definitely happy that their total assets outweigh their total liabilities by a fairly wide margin.
From the company’s income statement it can be noted that their total revenue has steadily grown over the past five years, starting at around $4.4 billion in 2017, since climbing up to nearly $5.7 billion in 2021.
So far, the company’s numbers appear steady and reliable, but let’s see if the company has the ability to turn a profit in comparison to the competition.
MDU Resources’ stock fundamentals
The company’s trailing twelve month (TTM) net profit margin is slightly lower than that of the industry, however this doesn’t greatly concern our team given that the energy and utilities space is highly regulated and highly competitive.
However, from a returns standpoint MDU gets the job done.
Specifically, the company’s TTM returns on equity, assets and investment are all considerably higher than that of the industry average. This could possibly be attributed to the fact that the company operates well and dominates a few core markets and regions, as opposed to trying to serve the entire country and overdiversify, diminishing their overall impact and ability to eke out a profit.
Should you buy MDU Resources’ stock?
Given the company’s strong core numbers, the current environment in the energy and utilities spaces and the fact that the company is pretty much a regulated monopoly (which is common in the utilities industry), we give the company a “buy” rating.
DISCLAIMER: This analysis of the aforementioned stock security is in no way to be construed, understood, or seen as formal, professional, or any other form of investment advice. We are simply expressing our opinions regarding a publicly traded entity.