NorthWestern (NASDAQ:NWE) & MDU Resources Group (NYSE:MDU) Critical Analysis

NorthWestern (NASDAQ:NWE) and MDU Resources Group (NYSE:MDU) are both mid-cap utilities companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, valuation, earnings, risk, dividends and profitability.

Dividends

NorthWestern pays an annual dividend of $2.68 per share and has a dividend yield of 3.8%. MDU Resources Group pays an annual dividend of $0.56 per share and has a dividend yield of 2.8%. NorthWestern pays out 96.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. MDU Resources Group pays out 58.9% of its earnings in the form of a dividend. NorthWestern has increased its dividend for 21 consecutive years and MDU Resources Group has increased its dividend for 1 consecutive years. NorthWestern is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent ratings and target prices for NorthWestern and MDU Resources Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NorthWestern	0	3	3	0	2.50
MDU Resources Group	0	4	3	0	2.43

NorthWestern presently has a consensus price target of $73.30, suggesting a potential upside of 4.24%. MDU Resources Group has a consensus price target of $23.40, suggesting a potential upside of 18.06%. Given MDU Resources Group’s higher probable upside, analysts plainly believe MDU Resources Group is more favorable than NorthWestern.

Valuation & Earnings

This table compares NorthWestern and MDU Resources Group”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NorthWestern	$1.61 billion	2.69	$181.09 million	$2.77	25.39
MDU Resources Group	$1.88 billion	2.16	$190.40 million	$0.95	20.86

MDU Resources Group has higher revenue and earnings than NorthWestern. MDU Resources Group is trading at a lower price-to-earnings ratio than NorthWestern, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

96.1% of NorthWestern shares are owned by institutional investors. Comparatively, 71.4% of MDU Resources Group shares are owned by institutional investors. 0.9% of NorthWestern shares are owned by insiders. Comparatively, 0.5% of MDU Resources Group shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Volatility and Risk

NorthWestern has a beta of 0.34, indicating that its share price is 66% less volatile than the S&P 500. Comparatively, MDU Resources Group has a beta of 0.67, indicating that its share price is 33% less volatile than the S&P 500.

Profitability

This table compares NorthWestern and MDU Resources Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NorthWestern	10.13%	8.03%	2.73%
MDU Resources Group	10.75%	6.89%	2.58%

Summary

NorthWestern beats MDU Resources Group on 10 of the 16 factors compared between the two stocks.

About NorthWestern

NorthWestern Energy Group, Inc. provides electricity and natural gas to residential, commercial, and various industrial customers. It generates, purchases, transmits, and distributes electricity; and produces, purchases, stores, transmits, and distributes natural gas, as well as owns municipal franchises to provide natural gas service in the communities. The company operates 6,600 miles of electric transmission and 18,674 miles of electric distribution lines with approximately 395 transmission and distribution substations; and 2,235 miles of natural gas transmission and 5,155 miles of natural gas distribution lines with approximately 133 city gate stations in Montana. It also operates 1,310 miles of electric transmission and 2,365 miles of electric distribution lines in South Dakota with approximately 124 transmission and distribution substations; and 55 miles of natural gas transmission and 2,573 miles of natural gas distribution lines in South Dakota and Nebraska. The company provides electricity and/or natural gas to approximately 775,300 customers in Montana, South Dakota, Nebraska, and Yellowstone National Park. NorthWestern Energy Group, Inc. was founded in 1923 and is based in Sioux Falls, South Dakota.

About MDU Resources Group

MDU Resources Group, Inc. engages in the regulated energy delivery, and construction materials and services businesses in the United States. It operates through four segments: Electric, Natural Gas Distribution, Pipeline, and Construction Services. The Electric segment generates, transmits, and distributes electricity for residential, commercial, industrial, and municipal customers in Montana, North Dakota, South Dakota, and Wyoming; and operates 3,400 miles of transmission lines, 4,800 miles of distribution lines, and 82 transmission and 298 distribution substations. The Natural Gas Distribution segment distributes natural gas for residential, commercial, and industrial customers in Idaho, Minnesota, Montana, North Dakota, Oregon, South Dakota, Washington, and Wyoming; and supplies related value-added services. The Pipeline segment provides natural gas transportation and underground storage services through a regulated pipeline system primarily in the Rocky Mountain and northern Great Plains regions; and cathodic protection and other energy-related services. The Construction Services segment offers electrical and mechanical contracting services, including the construction and maintenance of electrical and communication wiring and infrastructure, fire suppression systems, mechanical piping, and services; transmission and distribution contracting services, comprise construction and maintenance of overhead and underground electrical, and gas and communication infrastructure; and manufactures and supplies transmission and distribution lines construction equipment and tools. It serves manufacturing, commercial, industrial, transportation, institutional, and renewable and government customers, as well as utilities. MDU Resources Group, Inc. was incorporated in 1924 and is headquartered in Bismarck, North Dakota.