MDU Resources Group Gains From Capital Investments, Spinoffs

MDU Resources Group MDU has been gaining from long-term capital investments to expand infrastructure that assists in serving an expanding customer base and spinoffs that allow it to focus on the energy delivery business.

Long-term (three to five years) earnings growth rate of the company is projected at 7.56%.

Tailwinds

MDU projects capital expenditures of $531 million for 2025 and nearly $3.4 billion during 2026-2030 for upgrading and expanding its electric and natural gas infrastructure. Courtesy of customer growth and increasing demand for its services, MDU expects to achieve long-term earnings per share growth of 6-8%.

MDU is also set to gain from the increasing demand for clean energy from data centers. The company has signed electric service agreements of 580 megawatts (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 150 MW is expected in 2027.

After the spinoff of Knife River in 2023 and Everus Construction in 2024, MDU Resources is now focused on its regulated energy delivery business. MDU continues with its work on several expansion projects. The company’s Line Section 32 Expansion project will serve a new electric generation facility in northwest North Dakota. The project is expected to come online in late 2028 and is supported by a long-term customer agreement.

Headwinds

The company is subject to comprehensive regulations from federal, state and local regulatory agencies, which can adversely impact all expenses related to the investments. It is also exposed to the impact of market fluctuations associated with commodity prices. Imposed and proposed tariffs could sharply affect the company’s growth.

Price Performance of MDU

In the past three months, shares of this utility have gained 7.3%, against the industry’s 3.2% decline.

Zacks Rank & Stocks to Consider

MDU Resources currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry are ONE Gas, Inc. OGS, Spire Inc. SR and Atmos Energy Corp. ATO. All stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

OGS, SR and ATO’s dividend yield is 3.49%, 4.01% and 2.40%, respectively.

The Zacks Consensus Estimate for 2025 earnings per share of ONE Gas, Spire and Atmos Energy has moved up 0.46%, 3.34% and 0.75%, respectively, in the past 60 days.

 

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research