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MDU Resources Unveils Five Year Capex Plan, Updates '18View

MDU Resources Group, Inc. MDU recently made announcements to provide capital expenditure forecast for 2019 through 2023 and update 2018 earnings per share (EPS) guidance.

Guidance

The company has raised the lower end of the 2018 EPS guidance to the range of $1.30-$1.45 from the previous range of $1.25-$1.45.

Capex Plan

The company expects to invest $2.6 billion through 2019-2023 period. The latest capex plan includes a 13.7% hike from the previous five years plan of $2.3 billion for 2018-2022 period.

Per the plan, the company expects to spend roughly $630 million in construction materials and contracting along with nearly $97 million in construction services.

In the Regulated Energy delivery segment, the company intends to spend approximately $657 million, $823 million and $435 million in electric, natural gas & pipeline as well as midstream operations, respectively.

To cope with growing demand of increasing customer count, the company focuses on system expansions, safety enhancements and upgrade or replacement of existing systems. The capital investment in construction materials and services businesses will be allocated toward normal equipment and plant replacement as well as upgrade services. Investment in the pipeline and midstream business reflects the company’s focus on organic growth with multiple natural gas pipeline projects already in the planning phases.

Our View

MDU Resources’ investments will increase reliability of services and enable the company to serve increasing customer base effectively. The company expects customer base to expand annually by 1-2%. The company also projects base rate of the electric and natural gas utility business to grow by approximately 5% annually over the next five years on a compound basis. We expect organic growth projects to aid the company to gain over the long term and in the upcoming quarter as well.

Price Movement

Shares of MDU Resources have lost 8.4% wider than the industry’s loss of 2.1% in the last three months.

 


 

Zacks Rank and Other Key Picks

MDU Resources currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A few better-ranked stocks from the same sector are ONE Gas, Inc OGS, Ameren Corporation AEE and FirstEnergy Corp FE. All the stocks carry a Zacks Rank #2 (Buy). In the past 30 days, the Zacks Consensus Estimate for 2018 earnings for ONE Gas, Ameren and FirstEnergy have moved up 0.9%, 3.0% and 0.8%, respectively.

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