MDU Resources Group (NYSE:MDU) vs. Southwest Gas (NYSE:SWX) Financial Review

Southwest Gas (NYSE:SWX) 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 valuation, dividends, analyst recommendations, risk, earnings, profitability and institutional ownership.

Dividends

Southwest Gas pays an annual dividend of $2.48 per share and has a dividend yield of 3.0%. MDU Resources Group pays an annual dividend of $0.56 per share and has a dividend yield of 2.7%. Southwest Gas pays out 38.6% of its earnings in the form of a dividend. MDU Resources Group pays out 67.5% 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. MDU Resources Group has raised its dividend for 1 consecutive years. Southwest Gas is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

92.8% of Southwest Gas shares are owned by institutional investors. Comparatively, 71.4% of MDU Resources Group shares are owned by institutional investors. 0.4% of Southwest Gas 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 company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Southwest Gas	11.59%	6.78%	2.25%
MDU Resources Group	9.02%	6.81%	2.64%

Earnings & Valuation

This table compares Southwest Gas and MDU Resources Group”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Southwest Gas	$5.11 billion	1.17	$198.82 million	$6.42	12.87
MDU Resources Group	$1.76 billion	2.45	$281.11 million	$0.83	25.35

MDU Resources Group has lower revenue, but higher earnings than Southwest Gas. Southwest Gas 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 Ratings

This is a breakdown of current ratings for Southwest Gas and MDU Resources Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Southwest Gas	0	2	5	1	2.88
MDU Resources Group	0	4	1	0	2.20

Southwest Gas currently has a consensus price target of $87.40, suggesting a potential upside of 5.79%. MDU Resources Group has a consensus price target of $21.00, suggesting a potential downside of 0.19%. Given Southwest Gas’ stronger consensus rating and higher possible upside, equities research analysts plainly believe Southwest Gas is more favorable than MDU Resources Group.

Risk & Volatility

Southwest Gas has a beta of 0.65, indicating that its share price is 35% less volatile than the S&P 500. Comparatively, MDU Resources Group has a beta of 0.75, indicating that its share price is 25% less volatile than the S&P 500.

Summary

Southwest Gas beats MDU Resources Group on 10 of the 18 factors compared between the two stocks.

About Southwest Gas

Southwest Gas Holdings, Inc., through its subsidiaries, distributes and transports natural gas in Arizona, Nevada, and California. The company operates through Natural Gas Distribution, Utility Infrastructure Services, and Pipeline and Storage segments. It also provides trenching, installation, and replacement of underground pipes, as well as maintenance services for energy distribution systems. As of December 31, 2023, it had 2,226,000 residential, commercial, industrial, and other natural gas customers. Southwest Gas Holdings, Inc. was incorporated in 1931 and is headquartered in Las Vegas, Nevada.

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.