NEW YORK (
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 4.0%. Since the same quarter one year prior, revenues slightly increased by 2.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The current debt-to-equity ratio, 0.53, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.93 is somewhat weak and could be cause for future problems.
- Net operating cash flow has increased to $133.83 million or 13.17% when compared to the same quarter last year. Despite an increase in cash flow of 13.17%, MDU RESOURCES GROUP INC is still growing at a significantly lower rate than the industry average of 72.50%.
- MDU RESOURCES GROUP INC's earnings per share declined by 7.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, MDU RESOURCES GROUP INC turned its bottom line around by earning $1.29 versus -$0.69 in the prior year. For the next year, the market is expecting a contraction of 10.9% in earnings ($1.15 versus $1.29).
- In its most recent trading session, MDU has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
MDU Resources Group, Inc. operates as a diversified natural resource company in the United States. The company generates, transmits, and distributes electricity, as well as distributes natural gas. The company has a P/E ratio of 16.3, equal to the average materials & construction industry P/E ratio and below the S&P 500 P/E ratio of 17.7. MDU Resources Group has a market cap of $3.9 billion and is part of the
industry. Shares are up 5.6% year to date as of the close of trading on Friday.
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