MDU Resources (MDU)

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RECOMMENDATION

We rate MDU RESOURCES GROUP INC (MDU) a BUY. This is driven by several positive factors, which we
believe should have a greater impact than any weaknesses, and should give investors a better performance
opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its
growth in earnings per share, revenue growth and increase in net income. We feel these strengths outweigh
the fact that the company shows low profit margins.

HIGHLIGHTS

MDU RESOURCES GROUP INC has improved earnings per share by 15.6% in the most recent quarter
compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per
share growth over the past two years. We feel that this trend should continue. During the past fiscal year,
MDU RESOURCES GROUP INC increased its bottom line by earning $1.77 versus $1.71 in the prior year. This
year, the market expects an improvement in earnings ($1.95 versus $1.77).
The revenue growth significantly trails the industry average of 106.0%. Since the same quarter one year prior,
revenues rose by 12.9%. This growth in revenue appears to have trickled down to the company's bottom line,
improving the earnings per share.
The company, on the basis of net income growth from the same quarter one year ago, has significantly
underperformed compared to the Multi-Utilities industry average, but is greater than that of the S&P 500. The
net income increased by 14.7% when compared to the same quarter one year prior, going from $82.58 million
to $94.70 million.
Compared to where it was trading a year ago, MDU's share price has not changed very much due to (a) the
relatively weak year-over-year performance of the overall market, (b) the company's stagnant earnings, and
(c) other mixed results. Despite the stock's decline during the last year, it is still somewhat more expensive
(in proportion to its earnings over the last year) than most other stocks in its industry. We feel, however, that
other strengths this company displays offset this slight negative.
The gross profit margin for MDU RESOURCES GROUP INC is rather low; currently it is at 19.50%. 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 7.70% is significantly lower than the same period
one year prior.