MDU Resources' (MDU) Arm to Supply Power to Applied Digital
MDU Resources Group, Inc.’s MDU subsidiary, Montana-Dakota Utilities, received approval from the North Dakota Public Service Commission (“NDPSC”) on an electric service agreement (ESA) to provide power for Applied Digital Corporation's data center near Ellendale, ND.
The data center had already started receiving electric services since Mar 4, under an interim ESA approved by the NDPSC. With this approval, Montana-Dakota Utilities will now be serving Applied Digital in full capacity.
Benefits of the Power Supply Project
The aforementioned project comes with benefits for Montana-Dakota customers as well as MDU stockholders. North Dakota is the largest and fastest growing service territory of MDU’s electric and natural gas business segment. With almost 3% of the nation’s total natural gas reserves, it has the second-highest per-capita electricity sales.
This project is quite significant for MDU Resources as it came following the spinoff of Knife River that turned MDU into a utility natural gas distribution company. In full capacity, the data center requires 180 megawatts of electricity, equivalent to about 28% of Montana-Dakota's generation portfoli.
MDU Resources’ regulated energy delivery business’s 2023 earnings is expected in the range of $140-$150 million. The project will help meet the company’s bottom-line goal.
The power supply deal clearly substantiates the MDU subsidiary’s capabilities to efficiently meet the demands of a huge customer base. It also indicates that Montana-Dakota could be a potential candidate for providing electricity to other upcoming big data centers in North Dakota. The region’s climate and vast energy resources make it an ideal location for data centers.
Price Performance
Shares of MDU have experienced 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 #5 (Strong Sell).
Some better-ranked utilities in the same sector are NewJersey Resources Corporation NJR, Atmos Energy Corporation ATO and Consolidated Edison Inc. ED, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NewJersey Resources’ long-term (three- to five-year) earnings growth rate is 6%. The Zacks Consensus Estimate for 2023 earnings per share (EPS) indicates an increase of 8.4% year over year.
Atmos Energy’s long-term earnings growth rate is 7.5%. The Zacks Consensus Estimate for 2023 EPS implies a year-over-year improvement of 7.7%.
Consolidated Edison’s long-term earnings growth rate is 2%. The Zacks Consensus Estimate for 2023 EPS indicates growth of 6.8% from the previous year’s reported figure.
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