Core Viewpoint - The comparison between Southwest Gas (SWX) and MDU Resources (MDU) indicates that SWX is currently the better option for investors seeking undervalued stocks due to its stronger earnings outlook and favorable valuation metrics [1][3][7]. Valuation Metrics - SWX has a forward P/E ratio of 21.94, while MDU has a forward P/E of 22.10, indicating that both companies are similarly valued in terms of earnings [5]. - The PEG ratio for SWX is 2.27, which is more favorable compared to MDU's PEG ratio of 3.26, suggesting that SWX has a better expected earnings growth relative to its price [5]. - SWX's P/B ratio is 1.46, compared to MDU's P/B of 1.53, further supporting the notion that SWX is relatively undervalued [6]. Zacks Rank - SWX holds a Zacks Rank of 2 (Buy), reflecting an improving earnings outlook, while MDU has a Zacks Rank of 5 (Strong Sell), indicating a negative earnings revision trend [3][7]. - The Zacks Rank system emphasizes companies with positive estimate revision trends, which currently favors SWX [2][3]. Value Grades - Based on various valuation metrics, SWX has earned a Value grade of B, while MDU has received a Value grade of D, highlighting SWX's superior valuation profile [6].

Core Insights - MDU Resources has joined the North Plains Connector utility consortium, marking its commitment to enhancing electrical infrastructure and reliability [1][3] - The consortium aims to develop a high-voltage direct current (HVDC) transmission line that will connect the Eastern and Western Interconnections, with MDU Resources securing 150 megawatts of capacity [1][2] - The North Plains Connector project is expected to significantly contribute to MDU's energy portfolio, representing over 15% of its 2024 peak load [2][3] Company Involvement - MDU Resources signed a non-binding memorandum of understanding (MOU) with North Plains Connector LLC for 150 megawatts of capacity on the 420-mile HVDC project [1][2] - The project will allow MDU Resources to own a portion of the 3,000-megawatt capacity once operational, enhancing its strategic investments in electrical infrastructure [2][3] - MDU Resources is the first utility from North Dakota to join the consortium, indicating a strong regional commitment to improving the electric grid [3] Project Details - The North Plains Connector project represents a multi-billion-dollar investment in Montana and North Dakota, expected to create over 800 jobs during construction [5] - The project will facilitate bidirectional power flow, accommodating various generation sources based on market needs [6] - Construction is anticipated to begin in 2028, with operations expected to start in 2032 [7] Industry Context - The North Plains Connector will be the first HVDC transmission connection among three regional electric energy markets, enhancing grid reliability and market connections [4] - Other utilities involved in the project include Puget Sound Energy, Portland General Electric, Avista, and NorthWestern Energy, all of which are expected to meet approximately 15% or more of their 2024 peak loads through this initiative [3][4]

Financial Performance - The Company reported a consolidated net income of $18.4 million for the three months ended September 30, 2025, a decrease of $46.2 million compared to $64.6 million in the same period of 2024[138]. - The absence of income from discontinued operations significantly impacted the Company's earnings for both the three and nine months ended September 30, 2025[140]. - The company reported a net income of $21.5 million in Q3 2025, a decrease of 11.5% from $24.3 million in Q3 2024[155]. - Operating income decreased by 11.5% to $28.4 million in Q3 2025, down from $32.1 million in Q3 2024[155]. - The Company reported a seasonal loss of $700,000 for the three months ended September 30, 2025, despite an increase in revenues[160]. - Net income for the pipeline segment rose by 11.3% to $16.8 million for the three months ended September 30, 2025, compared to $15.1 million in the same period of 2024[179]. - The company reported a decrease in net cash provided by operating activities to $392.8 million for the nine months ended September 30, 2025, down from $441.8 million in 2024, primarily due to the absence of cash from discontinued operations[194]. Revenue and Sales - In the three months ended September 30, 2025, operating revenues increased by 8.6% to $117.8 million compared to $108.5 million in the same period of 2024[155]. - Revenues for the three months ended September 30, 2025, increased by $10.7 million to $144.3 million compared to $133.6 million for the same period in 2024, driven by higher residential and commercial sales[160]. - For the nine months ended September 30, 2025, revenues increased by $95.9 million to $890.5 million compared to $794.6 million in 2024, largely due to higher purchased natural gas sold and rate relief[161]. - The natural gas distribution segment's operating revenues increased by 8.0% to $144.3 million in Q3 2025, compared to $133.6 million in Q3 2024[158]. - Operating revenues for the pipeline segment increased by 11.5% to $57.4 million for the three months ended September 30, 2025, compared to $51.5 million in the same period of 2024[179]. Expenses and Costs - The electric business earnings decreased due to higher operation and maintenance expenses, including increased payroll-related costs and higher contract services, partially offset by higher retail sales revenue[139]. - The natural gas distribution segment reported an increased seasonal loss primarily due to higher operation and maintenance expenses, although it was partially offset by higher retail sales revenue from rate relief in certain states[139]. - Electric fuel and purchased power costs rose by 26.8% to $41.2 million in Q3 2025, up from $32.5 million in Q3 2024, primarily due to higher commodity prices[155]. - Operation and maintenance expenses increased by $11.6 million for the nine months ended September 30, 2025, primarily due to higher payroll-related costs and conservation-related expenses[161]. - The Company experienced a 10.5% increase in operation and maintenance expenses, totaling $21.0 million for the three months ended September 30, 2025, compared to $19.0 million in the same period of 2024[179]. Strategic Initiatives - The Company is focused on modernizing utility infrastructure and managing operating costs while pursuing organic growth opportunities in its electric and natural gas distribution segments[146]. - The Company signed a power purchase agreement for 150 MW of output capacity from the Badger Wind Project to enhance its energy supply and reduce capacity purchase requirements[149]. - Montana-Dakota's JETx project is expected to be placed in service by the end of 2028, with regulatory approvals received in 2024[153]. - The Company is actively monitoring and implementing GHG emissions reduction strategies to minimize potential risks associated with regulatory changes[184]. - The Company continues to evaluate potential future acquisitions and growth opportunities, which may impact capital expenditures depending on economic conditions[201]. Capital Expenditures and Financing - Capital expenditures for the first nine months of 2025 were $379.5 million, slightly up from $377.3 million in 2024, with estimated capital expenditures for the full year expected to be approximately $531.7 million[199]. - The Company expects to fund its capital expenditures for 2025 through various sources, including internally generated funds and credit facilities[201]. - The Company had outstanding revolving credit facilities totaling $200.0 million, with $132.7 million drawn under the Montana-Dakota facility[204]. - Intermountain issued $25.0 million in senior notes on July 15, 2025, with a total expected issuance of $50.0 million at a 6.39% interest rate[208]. - Montana-Dakota entered into a NPA to issue $250.0 million of senior notes at a weighted average interest rate of 5.96%[209]. Market Conditions and Challenges - The Company continues to navigate inflationary pressures and supply chain disruptions while monitoring the impacts of changing tariffs and commodity price volatility[134]. - The company expects delays in raw material delivery and increased costs to continue due to high demand and inflationary pressures[152]. - The company is actively monitoring the impact of tariffs on costs, which could negatively affect construction projects and maintenance work[152]. - The Company continues to face challenges related to supply chain issues and inflationary pressures, which could affect construction and maintenance costs[175]. Debt and Interest Rates - Approximately 13.4% of the outstanding debt as of September 30, 2025, consisted of variable interest rate facilities, exposing the Company to interest rate risk[219]. - An increase of 1% in the interest rate on the Company's variable interest rate facilities would result in an estimated $3.2 million pre-tax annual increase in interest expense[219]. - The Company expects to contribute approximately $3.4 million to its pension plans in 2025, primarily due to accelerated contributions[215]. - The Company was in compliance with applicable covenants for its debt instruments as of September 30, 2025, except for certain non-compliance issues that were subsequently waived[208].

Core Insights - MDU Resources Group Inc. reported third-quarter 2025 operating earnings per share (EPS) of 9 cents, exceeding the Zacks Consensus Estimate of 7 cents by 28.6%, but reflecting a significant decrease of 71.9% year over year [1][8]. Revenue Performance - Total operating revenues for the third quarter increased by 8.8% to $315.1 million, compared to $289.6 million in the same period of 2024 [2][8]. Expense and Income Analysis - Total operating expenses rose to nearly $275.3 million, marking an 8% increase from $254.8 million in the prior year [3]. - Operating income was reported at $39.8 million, which is a 14.4% increase from $34.8 million in the year-ago quarter [3]. Financial Position - As of September 30, 2025, cash and cash equivalents stood at $75.9 million, up from $66.9 million as of December 31, 2024 [4]. - For the first nine months of 2025, net cash provided by operating activities was $392.8 million, down from $441.8 million in the same period last year [4]. Guidance and Projections - MDU Resources has narrowed its earnings guidance for 2025 to a range of 90-95 cents per share, with the Zacks Consensus Estimate at 92 cents, slightly below the midpoint of the guidance [5]. - The company expects utility customer growth to continue at an annual rate of 1-2% and anticipates a long-term EPS growth rate of 6-8% [5]. - Capital expenditure for 2025 is projected to be $531 million [5]. Market Position - MDU Resources currently holds a Zacks Rank of 4 (Sell) [6].

Financial Data and Key Metrics Changes - The company reported income from continuing operations of $18.4 million, or $0.09 per share, for Q3 2025, an increase of $2.8 million, or $0.01 per share, compared to Q3 2024 [3][12] - Third quarter earnings decreased from $64.6 million, or $0.32 per share in Q3 2024 to $18.4 million, or $0.09 per share in Q3 2025 [13] - The company raised the bottom end of its earnings per share guidance to a new range of $0.90-$0.95 per share from the previous range of $0.88-$0.95 per share [12] Business Line Data and Key Metrics Changes - The electric utility segment reported earnings of $21.5 million in Q3 2025, down from $24.3 million in Q3 2024, impacted by higher operation and maintenance expenses [14] - The natural gas utility reported a seasonal loss of $18.2 million in Q3 2025, compared to a loss of $17.5 million in Q3 2024, driven by increased operation and maintenance expenses [15] - The pipeline segment posted record earnings of $16.8 million in Q3 2025, up from $15.1 million in Q3 2024, due to higher transportation revenue from growth projects [16] Market Data and Key Metrics Changes - The utility experienced combined retail customer growth of 1.5% compared to the same time last year, aligning with the targeted annual growth rate of 1%-2% [4] - The company has 580 megawatts of data center load under signed electric service agreements, with 180 megawatts currently online [6] Company Strategy and Development Direction - The company is focused on delivering exceptional performance while positioning itself for long-term growth, with a targeted long-term EPS growth rate of 6%-8% and a 60%-70% annual dividend payout ratio [12] - The company plans to pursue additional capital projects to meet existing customer demand and enhance grid resiliency [8] Management's Comments on Operating Environment and Future Outlook - Management noted that strong customer demand at the pipeline segment and progress in utility regulatory schedules should provide opportunities moving forward [3] - The company remains confident in its ability to execute its long-term growth strategy and deliver strong stockholder returns [12] Other Important Information - The North Dakota Public Service Commission approved the acquisition of a 49% ownership interest in the Badger Wind Farm, expected to be completed upon commercial operation around year-end [4][5] - The company has reestablished an ATM program to meet future equity capital needs [16] Q&A Session Summary - There were no questions during the Q&A session [17]

Financial Performance - The company's net income for the third quarter of 2025 was $18.4 million, resulting in earnings per share (EPS) of $0.09 [29] - This compares to a net income of $15.6 million and EPS of $0.08 in the third quarter of 2024 [29] - Income from continuing operations for the third quarter of 2025 was also $18.4 million, with an EPS of $0.09, compared to $64.6 million and $0.32 in 2024 [29, 30] Business Segment Performance - The Electric Utility segment reported earnings of $21.5 million in the third quarter of 2025, down from $24.3 million in 2024, impacted by increased operation and maintenance expenses [34, 35] - The Natural Gas Utility segment experienced a seasonal loss of $18.2 million in the third quarter of 2025, compared to a loss of $17.5 million in 2024, with rate relief partially offsetting seasonal losses and a 1.6% year-over-year increase in natural gas customer count [37, 38] - The Pipeline segment reported earnings of $16.8 million in the third quarter of 2025, up from $15.1 million in 2024, driven by expansion projects and increased transportation volumes [40, 41] Regulatory and Growth Initiatives - The company anticipates continued growth in utility customers at 1%-2% annually [12, 26] - The company has 580 MW of data center load under signed electric service agreements [12, 16] - The company received approval for a 49% ownership interest in the Badger Wind Project, with an estimated cost of $294 million [12, 21]

Financial Performance - Net income for Q3 2025 was $18.4 million, a decrease of 71.5% from $64.6 million in Q3 2024[2] - Earnings per share (EPS) from continuing operations for Q3 2025 was $0.09, compared to $0.08 in Q3 2024, reflecting a 12.5% increase[2] - Income from continuing operations increased by $2.8 million year-over-year, totaling $18.4 million in Q3 2025[3] - The electric utility segment reported a net income of $21.5 million in Q3 2025, down from $24.3 million in Q3 2024, primarily due to higher operation and maintenance expenses[4] - For Q3 2025, the company reported a net loss of $1.7 million, a significant decrease from a net income of $42.7 million in Q3 2024, primarily due to the absence of income from discontinued operations[28] - The loss from continuing operations for Q3 2025 was $1.7 million, a 73.0% improvement from a loss of $6.3 million in Q3 2024[27] Revenue and Expenses - Operating revenues for Q3 2025 were $315.1 million, an increase of 8.5% from $289.6 million in Q3 2024[17] - The electric business reported operating revenues of $117.8 million for Q3 2025, an increase of 8.6% compared to $108.5 million in Q3 2024[21] - Natural gas distribution operating revenues increased to $144.3 million in Q3 2025, an 8.0% rise from $133.6 million in Q3 2024[23] - Pipeline operating revenues reached $57.4 million in Q3 2025, an increase of 11.5% from $51.5 million in Q3 2024[25] - Total operating expenses for the electric segment increased by 17.0% to $89.4 million in Q3 2025, compared to $76.4 million in Q3 2024[21] - The natural gas distribution segment's total operating expenses increased by 7.4% to $159.3 million in Q3 2025, compared to $148.3 million in Q3 2024[23] - The pipeline segment's total operating expenses rose by 11.6% to $32.8 million in Q3 2025, compared to $29.4 million in Q3 2024[25] Capital Expenditures and Guidance - Total capital expenditures for 2025 are estimated at $531 million, with $294 million allocated to natural gas distribution[19] - The company narrowed its earnings guidance for 2025 to a range of $0.90 to $0.95 per share, reflecting performance through Q3[9] Customer Growth - Natural gas retail customer count increased by 1.6% year-over-year, indicating growth in the customer base[7] Business Segments Performance - The pipeline segment reported a net income of $16.8 million in Q3 2025, up 11.3% from $15.1 million in Q3 2024[8] - The natural gas distribution segment reported a seasonal loss of $18.2 million in Q3 2025, compared to a loss of $17.5 million in Q3 2024, driven by higher operation and maintenance expenses[24] - Net income for the electric segment decreased to $21.5 million in Q3 2025, down 11.5% from $24.3 million in Q3 2024, primarily due to higher operation and maintenance expenses[22] Operational Improvements - The operating income for Q3 2025 was $1.8 million, a turnaround from an operating loss of $4.7 million in Q3 2024, reflecting a 138.3% improvement[27] - The company experienced a 61.0% reduction in interest expense, which decreased to $1.6 million from $4.1 million year-over-year[27] Tax and Valuation - The income tax expense for Q3 2025 was $3.9 million, reflecting a 129.4% increase compared to $1.7 million in Q3 2024[27] - The book value per common share as of September 30, 2025, was $13.33, while the market price per common share was $17.81, resulting in a market value of 133.6% of book value[30] - Total assets as of September 30, 2025, amounted to $7,186 million, with total equity at $2,723 million and total debt at $2,353 million[30] - The company's capitalization ratios indicated that total equity comprised 53.6% of the capital structure, while total debt accounted for 46.4%[30] Corporate Developments - The company completed the separation of its former construction services business, Everus, into a new independent publicly-traded company on October 31, 2024[27] - The company is actively pursuing expansion projects, including the Line Section 32 Expansion Project and the Minot Industrial Pipeline Project, to enhance service capacity[10]

Core Insights - MDU Resources Group, Inc. reported third quarter financial results for 2025, highlighting strong performance in the pipeline segment and regulatory activities in utility segments, despite increased operational costs [1][2][4] Financial Performance - Net income for Q3 2025 was $18.4 million, down from $64.6 million in Q3 2024, with earnings per share (EPS) at $0.09 compared to $0.32 in the previous year [2][19] - Income from continuing operations increased to $18.4 million from $15.6 million year-over-year, with diluted EPS from continuing operations at $0.09, up from $0.08 [2][19] - For the nine months ended September 30, 2025, net income was $114.1 million, down from $225.9 million in 2024, with EPS decreasing from $1.11 to $0.56 [2][19] Segment Performance Electric Utility Segment - The electric utility segment reported a net income of $21.5 million in Q3 2025, down $2.8 million from the previous year, primarily due to higher operation and maintenance expenses [4][26] - Retail sales volumes declined by 1.6%, attributed to cooler summer temperatures, although industrial retail sales volumes increased [4][26] Natural Gas Distribution Segment - The natural gas distribution segment experienced a seasonal loss of $18.2 million in Q3 2025, compared to a loss of $17.5 million in Q3 2024, driven by higher operational costs [5][30] - Operating revenues increased by 8.0% year-over-year to $144.3 million, with total operating expenses rising by 7.4% [27] Pipeline Segment - The pipeline segment reported net income of $16.8 million in Q3 2025, up from $15.1 million in Q3 2024, driven by revenue from growth projects and increased customer demand [10][32] - Operating revenues for the pipeline segment increased by 11.5% year-over-year to $57.4 million [31] Regulatory Updates - MDU Resources is actively involved in regulatory proceedings across multiple states, including rate case filings in Montana and Wyoming, seeking annual increases of $14.1 million and $7.5 million, respectively [9][30] - The North Dakota Public Service Commission approved the acquisition of a 49% interest in Badger Wind Farm, which is expected to enhance the company's renewable energy portfolio [4][9] Guidance and Future Outlook - The company narrowed its earnings guidance for 2025 to a range of $0.90 to $0.95 per share, reflecting a slight adjustment based on performance through Q3 [3][11] - MDU Resources anticipates continued customer growth at a rate of 1% to 2% annually, with ongoing capital investment and rate recovery plans [17][30]

Core Points - MDU Resources Group, Inc. will host its third quarter 2025 earnings conference call on November 6, 2025, at 2 p.m. ET, with results released before U.S. markets open that day [1] - The webcast will be accessible on the company's website under the "Investors" section, with a replay available after the event [2] - MDU Resources serves over 1.2 million customers in the Pacific Northwest and Midwest, focusing on safe, reliable, and environmentally responsible utility services [3] - The company operates a natural gas pipeline network exceeding 3,800 miles, ensuring energy delivery across the Northern Plains [3] - MDU Resources has a legacy of over a century in the energy sector, emphasizing its commitment to energizing lives for a better tomorrow [3]

Core Insights - MDU Resources Group, Inc. is recognized for its significant upside potential and is included in the list of the 13 Best Diversified Stocks to Buy according to hedge funds [1] - Jefferies upgraded MDU from 'Hold' to 'Buy' and raised its price target from $18 to $20, citing attractive valuation and growth potential [2] - The company is considered undervalued relative to its core business, even after accounting for potential benefits from the Bakken East Pipeline project [3] Financial Performance - MDU Resources Group has a healthy dividend yield of 3.48% and consistent earnings growth of 6-8% annually [3] - The path for the company's regulated energy delivery operations is clear as uncertainty following the spin-off subsides [3] Business Segments - MDU provides regulated energy delivery services across the U.S. through its Electric, Natural Gas Distribution, and Pipeline segments [4] - The upcoming pipeline announcement is viewed as a potential catalyst for the stock to be re-rated by the market [3]