Today I will examine MDU Resources Group Inc’s (NYSE:MDU) latest earnings update (30 June 2018) and compare these figures against its performance over the past couple of years, in addition to how the rest of MDU’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.
Commentary On MDU’s Past Performance
MDU’s trailing twelve-month earnings (from 30 June 2018) of US$291m has jumped 24% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 15%, indicating the rate at which MDU is growing has accelerated. What’s enabled this growth? Let’s take a look at if it is merely a result of an industry uplift, or if MDU Resources Group has seen some company-specific growth.
In terms of returns from investment, MDU Resources Group has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. However, its return on assets (ROA) of 5.7% exceeds the US Integrated Utilities industry of 4.9%, indicating MDU Resources Group has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for MDU Resources Group’s debt level, has increased over the past 3 years from 3.6% to 6.1%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 76% to 76% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While MDU Resources Group has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research MDU Resources Group to get a better picture of the stock by looking at:
- Financial Health: Are MDU’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Valuation: What is MDU worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether MDU is currently mispriced by the market.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.