Mdu Resources Group Inc (NYSE: MDU)

Sector: Industrials Industry: Conglomerates CIK: 0000067716
Market Cap 3.80 Bn
P/B 1.41
P/E 15.84
P/S 0.97
ROIC (Qtr) 2.34
Div Yield % 3.85
Rev 1y % (Qtr) 8.75
Total Debt (Qtr) 2.35 Bn
Debt/Equity (Qtr) 0.86
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About

MDU Resources Group, Inc., often recognized by its stock symbol MDU, is a company that operates in the energy delivery and construction services industry in the United States. Established in 1924 and headquartered in Bismarck, North Dakota, the company has built a strong reputation over the years. As a holding company, MDU Resources Group, Inc. manages various subsidiaries, the most notable of which is Montana-Dakota Utilities Co. This subsidiary is instrumental in the company's main business activities, which include generating, transmitting,...

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Investment thesis

Bull case

  • Operating cash flow of 453.32M provides strong 72.23x coverage of stock compensation 6.28M, indicating sustainable incentive practices.
  • Strong tangible asset base of 6.84B provides 2.91x coverage of total debt 2.35B, indicating robust asset backing and low credit risk.
  • Operating cash flow of 453.32M provides solid 0.68x coverage of current liabilities 666.55M, showing strong operational health.
  • Operating cash flow of 453.32M provides strong 10.24x coverage of inventory 44.27M, indicating efficient inventory management.
  • Tangible assets of 6.84B provide robust 18.01x coverage of other current liabilities 379.74M, indicating strong asset backing.

Bear case

  • Operating cash flow of 453.32M barely covers its investment activities of (520.02M), with a coverage ratio of -0.87, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 453.32M provides thin coverage of dividend payments of (105.66M) with a -4.29 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • High receivables of 132.24M relative to inventory of 44.27M (2.99 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Free cash flow of (38.27M) provides weak coverage of capital expenditures of 491.60M, with a -0.08 ratio suggesting additional external financing needs for growth initiatives.
  • Operating cash flow of 453.32M provides minimal -23.63x coverage of tax expenses of (19.19M), suggesting potential tax planning inefficiencies or unsustainable tax positions.

Segments Breakdown of Revenue (2024)

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Conglomerates
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 HON Honeywell International Inc 155.07 Bn 32.79 4.14 34.58 Bn
2 MMM 3M Co 100.16 Bn 20.62 3.16 12.60 Bn
3 VMI Valmont Industries Inc 11.52 Bn 79.14 5.93 0.86 Bn
4 SEB Seaboard Corp /De/ 4.74 Bn 9.55 0.49 1.82 Bn
5 MDU Mdu Resources Group Inc 3.80 Bn 15.84 0.97 2.35 Bn
6 OTTR Otter Tail Corp 3.60 Bn 20.35 3.01 1.04 Bn
7 BBU Brookfield Business Partners L.P. 2.64 Bn -19.71 0.10 43.31 Bn
8 TTI Tetra Technologies Inc 1.44 Bn 11.77 2.33 0.21 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.73 1.07
EV to Cash from Ops. EV/CFO 9.57 26.27
EV to Debt EV to Debt 2.24 3.17
EV to EBIT EV/EBIT 11.83 28.37
EV to EBITDA EV/EBITDA 7.14 2.98
EV to Free Cash Flow [EV/FCF] EV/FCF 29.54 24.12
EV to Market Cap EV to Market Cap 1.39 2.07
EV to Revenue EV/Rev 1.35 3.10
Price to Book Value [P/B] P/B 1.41 0.16
Price to Earnings [P/E] P/E 15.84 -51.36
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.60 2.51
Dividend Payout Ratio % Div Payout % (Qtr) 63.90 16.94
Dividend per Basic Share Div per Share (Qtr) 0.53 1.03
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) -283.42 -1.97
Interest Coverage Int. cover (Qtr) 2.50 4.08
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 1.28 -245.15
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -14.08 116.15
Dividend Growth (1y) % Div 1y % (Qtr) 2.91 -1.11
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -45.85 233.90
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 9.56 6.29
EBIT Growth (1y) % EBIT 1y % (Qtr) -41.58 58.90
EBT Growth (1y) % EBT 1y % (Qtr) -53.98 -70.32
EPS Growth (1y) % EPS 1y % (Qtr) -57.65 179.10
FCF Growth (1y) % FCF 1y % (Qtr) -137.70 22.76
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 16.96 19.56
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) -0.03 0.64
Cash Payout Ratio Cash Payout (Qtr) 0.11 -0.01
Cash Ratio Cash Ratio (Qtr) 0.11 0.34
Current Ratio Curr Ratio (Qtr) 0.75 1.70
Debt to Equity Ratio Debt/Equity (Qtr) 0.86 -5.62
Interest Cover Ratio Int Coverage (Qtr) 2.50 4.08
Times Interest Earned Times Interest Earned (Qtr) 2.50 4.08
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) -205.60 -14.03
EBIT Margin % EBIT Margin % (Qtr) -117.58 -16.67
EBT Margin % EBT Margin % (Qtr) -70.48 -20.17
Gross Margin % Gross Margin % (Qtr) -173.60 21.90
Net Profit Margin % Net Margin % (Qtr) -79.50 -21.67