Financial Survey: NiSource (NI) vs. MDU Resources Group (MDU)
NiSource (NYSE: NI) and MDU Resources Group (NYSE:MDU) are both mid-cap utilities companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, risk, institutional ownership, valuation, analyst recommendations, dividends and profitability.
NiSource pays an annual dividend of $0.70 per share and has a dividend yield of 2.7%. MDU Resources Group pays an annual dividend of $0.77 per share and has a dividend yield of 3.0%. NiSource pays out 81.4% 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 67.0% of its earnings in the form of a dividend. NiSource has increased its dividend for 7 consecutive years. MDU Resources Group is clearly the better dividend stock, given its higher yield and lower payout ratio.
Institutional & Insider Ownership
82.0% of NiSource shares are owned by institutional investors. Comparatively, 63.6% of MDU Resources Group shares are owned by institutional investors. 0.4% of NiSource shares are owned by company insiders. Comparatively, 1.0% of MDU Resources Group shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
This table compares NiSource and MDU Resources Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|MDU Resources Group||5.37%||10.24%||3.76%|
Earnings and Valuation
This table compares NiSource and MDU Resources Group’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|NiSource||$4.75 billion||1.76||$1.40 billion||$0.86||29.76|
|MDU Resources Group||$4.23 billion||1.20||$617.43 million||$1.15||22.57|
NiSource has higher revenue and earnings than MDU Resources Group. MDU Resources Group is trading at a lower price-to-earnings ratio than NiSource, indicating that it is currently the more affordable of the two stocks.
This is a summary of current ratings for NiSource and MDU Resources Group, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|MDU Resources Group||0||2||1||0||2.33|
NiSource currently has a consensus target price of $26.79, suggesting a potential upside of 4.67%. MDU Resources Group has a consensus target price of $32.00, suggesting a potential upside of 23.31%. Given MDU Resources Group’s higher probable upside, analysts clearly believe MDU Resources Group is more favorable than NiSource.
Risk and Volatility
NiSource has a beta of 0.39, meaning that its share price is 61% less volatile than the S&P 500. Comparatively, MDU Resources Group has a beta of 0.92, meaning that its share price is 8% less volatile than the S&P 500.
NiSource beats MDU Resources Group on 9 of the 17 factors compared between the two stocks.
NiSource Inc. is an energy holding company. The Company is engaged in the distribution of natural gas. The Company operates through two business segments: Gas Distribution Operations and Electric Operations. The Company’s Gas Distribution Operations segment provides natural gas service and transportation for residential, commercial and industrial customers in Ohio, Pennsylvania, Virginia, Kentucky, Maryland, Indiana and Massachusetts. As of December 31, 2016, the Company’s Electric Operations segment provided electric services in 20 counties in the northern part of Indiana. The Company’s electric operations segment generated, transmitted and distributed electricity through the Company’s subsidiary NIPSCO to approximately 466,000 customers in 20 counties in the northern part of Indiana and engaged in wholesale and transmission transactions, as of December 31, 2016. NIPSCO owned and operated three coal-fired electric generating stations, as of December 31, 2016.
About MDU Resources Group
MDU Resources Group, Inc. is engaged in regulated energy delivery and construction materials and services business. The Company’s businesses segments are electric, natural gas distribution, pipeline and midstream, construction materials and contracting, and construction services. The electric segment generates, transmits and distributes electricity. The natural gas distribution segment distributes natural gas. The pipeline and midstream segment provides natural gas transportation, underground storage, processing and gathering services, as well as oil gathering. The construction materials and contracting segment mines aggregates and markets crushed stone, sand, gravel and related construction materials, including ready-mixed concrete, asphalt, liquid asphalt and other value-added products. The construction services segment provides utility construction services in constructing and maintaining electric and communication lines, and external lighting and traffic signalization.
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