NewJersey Resources (NYSE:NJR) versus MDU Resources Group (NYSE:MDU) Critical Analysis

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

Volatility and Risk

NewJersey Resources has a beta of 0.61, indicating that its share price is 39% less volatile than the S&P 500. Comparatively, MDU Resources Group has a beta of 0.7, indicating that its share price is 30% less volatile than the S&P 500.

Valuation & Earnings

This table compares NewJersey Resources 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
NewJersey Resources	$1.80 billion	2.54	$289.77 million	$4.12	11.01
MDU Resources Group	$1.76 billion	1.95	$281.11 million	$1.29	13.03

NewJersey Resources has higher revenue and earnings than MDU Resources Group. NewJersey Resources 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.

Analyst Recommendations

This is a summary of recent ratings and price targets for NewJersey Resources and MDU Resources Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NewJersey Resources	0	4	2	0	2.33
MDU Resources Group	0	1	2	0	2.67

NewJersey Resources currently has a consensus price target of $51.29, indicating a potential upside of 13.01%. MDU Resources Group has a consensus price target of $18.00, indicating a potential upside of 7.08%. Given NewJersey Resources’ higher possible upside, equities research analysts clearly believe NewJersey Resources is more favorable than MDU Resources Group.

Dividends

NewJersey Resources pays an annual dividend of $1.80 per share and has a dividend yield of 4.0%. MDU Resources Group pays an annual dividend of $0.52 per share and has a dividend yield of 3.1%. NewJersey Resources pays out 43.7% of its earnings in the form of a dividend. MDU Resources Group pays out 40.3% 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. NewJersey Resources has raised its dividend for 29 consecutive years and MDU Resources Group has raised its dividend for 1 consecutive years. NewJersey Resources is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

71.0% of NewJersey Resources shares are owned by institutional investors. Comparatively, 71.4% of MDU Resources Group shares are owned by institutional investors. 0.7% of NewJersey Resources shares are owned by company insiders. Comparatively, 0.9% of MDU Resources Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
NewJersey Resources	20.03%	16.95%	5.48%
MDU Resources Group	7.93%	9.86%	3.77%

Summary

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

About NewJersey Resources

New Jersey Resources Corporation, an energy services holding company, distributes natural gas. The company operates through four segments: Natural Gas Distribution, Clean Energy Ventures, Energy Services, and Storage and Transportation. The Natural Gas Distribution segment offers regulated natural gas utility services to approximately 576,000 customers in Burlington, Middlesex, Monmouth, Morris, Ocean, and Sussex counties in New Jersey; provides capacity and storage management services; and participates in the off-system sales and capacity release markets. The Clean Energy Ventures segment invests in, owns, and operates clean energy projects, including commercial and residential solar installation situated in New Jersey, Rhode Island, New York, Connecticut, Michigan, and Indiana. The Energy Services segment maintains and operates natural gas transportation and storage capacity contracts, as well as provides physical wholesale energy, retail energy and energy management services in the United States and Canada. The Storage and Transportation segment invests in invests in energy-related ventures. It provides heating, ventilation, and cooling services; sales and installation of appliances; offers solar equipment installation, and plumbing repair and installation services; and holds commercial real estate properties. The company was incorporated in 1981 and is headquartered in Wall, New Jersey.

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.