MDU Resources Group (MDU) Completes Spin-Off of Knife River
MDU Resources Group, Inc. MDU recently announced that it has completed the spin-off of its construction materials subsidiary, Knife River Corporation. As a result, Knife River has started to trade in the New York Stock Exchange under the ticker symbol "KNF." MDU Resources shares will continue trading on the NYSE under "MDU."
The separation of Knife River was carried out through a pro rata distribution of approximately 90% of the outstanding shares of its common stock to MDU stockholders. MDU Resources stockholders retained the shares of MDU common stock and received one share of KNF common stock on May 31 for every four shares of MDU common stock held on the record date of May 22.
Benefits of the Spin-Off
The completion of this spin-off will bring MDU and Knife River closer to the goal of becoming two best-in-class, pure-play companies. MDU is working toward becoming a pure-play regulated energy delivery business, which includes electric and natural gas utilities and a natural gas pipeline company.
MDU Resources' previously announced a strategic review of its construction services business, and this separation will provide long-term value to its stockholders.
The construction material sector faces risks related to inflation and supply chain management. Throughout the first quarter, delays from unfavorable weather conditions across the majority of Knife River's markets were observed. This delayed the start of construction season in many parts and a seasonal loss of $41.3 million was reported. With the spin-off, MDU will separate itself from the riskier segment. It will explore business expansion opportunities by focusing on less risky and comparatively stable businesses.
Price Performance
Shares of MDU have recorded a relatively wider decline compared with the broader industry over the past year.
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Zacks Rank & Key Picks
MDU Resources currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked utilities in the same sector are NewJersey Resources NJR, Atmos Energy ATO and NiSource NI, each carrying a Zacks Rank #2 (Buy) at present.
NewJersey’s long-term (three- to five-year) earnings growth rate is pegged at 6%. The Zacks Consensus Estimate for earnings per share indicates an increase of 5.6%.
Atmos’ long-term earnings growth rate is pegged at 7.5%. The Zacks Consensus Estimate for earnings per share indicates an increase of 7.7%.
NiSource’s long-term earnings growth rate is pegged at 6.9%. The Zacks Consensus Estimate for earnings per share indicates an increase of 6.8%.
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NiSource, Inc (NI) : Free Stock Analysis Report
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NewJersey Resources Corporation (NJR) : Free Stock Analysis Report
