Sempra Energy (SRE) vs. MDU Resources Group (MDU) Critical Analysis
Sempra Energy (NYSE: SRE) and MDU Resources Group (NYSE:MDU) are both mid-cap utilities companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, earnings, analyst recommendations, institutional ownership, profitability, valuation and dividends.
Risk & Volatility
Sempra Energy has a beta of 0.55, suggesting that its share price is 45% less volatile than the S&P 500. Comparatively, MDU Resources Group has a beta of 0.91, suggesting that its share price is 9% less volatile than the S&P 500.
Insider & Institutional Ownership
80.6% of Sempra Energy shares are held by institutional investors. Comparatively, 63.6% of MDU Resources Group shares are held by institutional investors. 0.2% of Sempra Energy shares are held by company insiders. Comparatively, 1.0% of MDU Resources Group shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Sempra Energy pays an annual dividend of $3.29 per share and has a dividend yield of 2.9%. MDU Resources Group pays an annual dividend of $0.77 per share and has a dividend yield of 2.8%. Sempra Energy pays out 48.7% of its earnings in the form of a dividend. MDU Resources Group pays out 67.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Sempra Energy has raised its dividend for 7 consecutive years and MDU Resources Group has raised its dividend for 6 consecutive years. Sempra Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This is a summary of current ratings and target prices for Sempra Energy and MDU Resources Group, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|MDU Resources Group||0||2||1||0||2.33|
Sempra Energy presently has a consensus target price of $123.75, suggesting a potential upside of 8.43%. MDU Resources Group has a consensus target price of $32.00, suggesting a potential upside of 18.39%. Given MDU Resources Group’s higher probable upside, analysts plainly believe MDU Resources Group is more favorable than Sempra Energy.
This table compares Sempra Energy 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%|
Valuation and Earnings
This table compares Sempra Energy and MDU Resources Group’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Sempra Energy||$10.97 billion||2.61||$3.71 billion||$6.75||16.91|
|MDU Resources Group||$4.23 billion||1.25||$617.43 million||$1.15||23.50|
Sempra Energy has higher revenue and earnings than MDU Resources Group. Sempra Energy is trading at a lower price-to-earnings ratio than MDU Resources Group, indicating that it is currently the more affordable of the two stocks.
Sempra Energy beats MDU Resources Group on 11 of the 17 factors compared between the two stocks.
Sempra Energy Company Profile
Sempra Energy is a holding company. The Company’s principal operating units are Sempra Utilities, which includes its San Diego Gas & Electric Company (SDG&E), Southern California Gas Company (SoCalGas) and Sempra South American Utilities segments, and Sempra Infrastructure, which includes its Sempra Mexico, Sempra Renewables and Sempra LNG & Midstream segments. As of December 31, 2016, SDG&E’s service area covered 4,100 square miles. Sempra South American Utilities operates Chilquinta Energia, which serves customers in the region of Valparaiso in central Chile. As of December 31, 2016, SoCalGas had natural gas franchises with the 12 counties and the 223 cities in its service territory. Sempra LNG & Midstream owns land in Simpson County, Mississippi Hub. Sempra LNG & Midstream owns land in Port Arthur, Texas. Sempra Renewables has operations, investments or development projects in the various United States markets.
MDU Resources Group Company Profile
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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