Why Is MDU Resources (MDU) Up 7.5% Since Last Earnings Report?

A month has gone by since the last earnings report for MDU Resources (MDU). Shares have added about 7.5% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is MDU Resources due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

MDU Resources Q2 Earnings & Revenues Increase Y/Y

MDU Resources delivered second-quarter 2020 operating earnings of 50 cents per share, which surged 61.3% from the year-ago quarter’s level. This upside was led by lower operation and maintenance expense, and higher returns on certain benefit plans.

Total Revenues

Total revenues in the second quarter were $1,362.9 million, up 4.5% from $1,303.6 million in the year-ago quarter.

Operating revenues in the electric, natural gas distribution and regulated pipeline inched up 2.1% to $241.3 million. Revenues in the non-regulated pipeline, construction materials and contracting, construction services and other segments increased 5.1% to $1,121.6 million.

Highlights of the Release

In the quarter under review, operating expenses of $1,224.6 million were up 1.5% from the prior-year quarter’s $1,206.3 million.

Operating income was $138.3 million, up 42.1% year over year.

The company’s interest expenses of $24.8 million were down 2.4% from $25.4 million in the prior-year quarter.

As of Jun 30, 2020, the construction services business had backlog of $1.31 billion, up 13.9% from $1.15 billion a year ago.

The construction materials business had a backlog of $875 million, down from $1.04 billion in the year-ago quarter.

Financial Highlights

Total debt amounted to $2,357 million as of Jun 30, 2020, down from $2,470 million as of Jun 30, 2019.

The company’s net cash provided by operating activities in the first six months of 2020 was $261.4 million compared with net cash used in operating activities of $22.9 million in the first six months of 2019.

Guidance

MDU Resources raised 2020 earnings per share guidance to $1.65-$1.85 from the prior projection of $1.50-$1.70 with the current Zacks Consensus Estimate being $1.60. This expectation is based on the assumption that the company will invest $614 million in capital projects.

Also, it anticipates Construction services revenues in the range of $1.90-$2.10 billion with margins compared to the 2019 levels and construction materials revenues in the band of $2.20-$2.40 billion with margins slightly higher than the 2019 reading.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

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