Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model. NEW YORK ( TheStreet) -- MDU Resources Group (NYSE: MDU) 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 and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.
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- MDU's revenue growth has slightly outpaced the industry average of 3.8%. Since the same quarter one year prior, revenues slightly increased by 1.9%. 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 debt-to-equity ratio is somewhat low, currently at 0.64, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.80 is somewhat weak and could be cause for future problems.
- 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.
- Net operating cash flow has declined marginally to $154.62 million or 1.71% when compared to the same quarter last year. Despite a decrease in cash flow of 1.71%, MDU RESOURCES GROUP INC is in line with the industry average cash flow growth rate of -3.30%.
- The gross profit margin for MDU RESOURCES GROUP INC is rather low; currently it is at 18.60%. Regardless of MDU's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, MDU's net profit margin of -2.52% significantly underperformed when compared to the industry average.
-- Written by a member of TheStreet Ratings Staff