Energy and construction materials company MDU Resources (NYSE: MDU) reported revenue ahead of Wall Street’s expectations in Q1 CY2025, but sales fell by 44.4% year on year to $674.8 million. Its GAAP profit of $0.40 per share was in line with analysts’ consensus estimates.
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MDU Resources (MDU) Q1 CY2025 Highlights:
- Revenue: $674.8 million vs analyst estimates of $653.1 million (44.4% year-on-year decline, 3.3% beat)
- EPS (GAAP): $0.40 vs analyst estimates of $0.40 (in line)
- Adjusted EBITDA: $164.1 million vs analyst estimates of $166.1 million (24.3% margin, 1.2% miss)
- EPS (GAAP) guidance for the full year is $0.93 at the midpoint, missing analyst estimates by 1.1%
- Operating Margin: 16.7%, up from 11.3% in the same quarter last year
- Free Cash Flow Margin: 32.2%, up from 3.2% in the same quarter last year
- Market Capitalization: $3.60 billion
"We delivered a strong start to the year, with our pipeline and natural gas distribution businesses achieving meaningful earnings growth and contributing to the momentum we're building as a fully regulated energy delivery company," said Nicole A. Kivisto, president and CEO of MDU Resources.
Company Overview
Founded to provide electricity to towns in Minnesota, MDU Resources (NYSE: MDU) provides products and services in the utilities and construction materials industries.
Sales Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. MDU Resources struggled to consistently generate demand over the last five years as its sales dropped at a 25.9% annual rate. This was below our standards and suggests it’s a low quality business.
We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. MDU Resources’s recent performance shows its demand remained suppressed as its revenue has declined by 49.4% annually over the last two years. 
This quarter, MDU Resources’s revenue fell by 44.4% year on year to $674.8 million but beat Wall Street’s estimates by 3.3%.
We also like to judge companies based on their projected revenue growth, but not enough Wall Street analysts cover the company for it to have reliable consensus estimates.
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Operating Margin
Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.
MDU Resources has managed its cost base well over the last five years. It demonstrated solid profitability for an industrials business, producing an average operating margin of 10.8%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.
Looking at the trend in its profitability, MDU Resources’s operating margin rose by 9.7 percentage points over the last five years, showing its efficiency has meaningfully improved.
This quarter, MDU Resources generated an operating profit margin of 16.7%, up 5.4 percentage points year on year. The increase was driven by stronger leverage on its cost of sales (not higher efficiency with its operating expenses), as indicated by its larger rise in gross margin.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Sadly for MDU Resources, its EPS and revenue declined by 4.3% and 25.9% annually over the last five years. We tend to steer our readers away from companies with falling revenue and EPS, where diminishing earnings could imply changing secular trends and preferences. If the tide turns unexpectedly, MDU Resources’s low margin of safety could leave its stock price susceptible to large downswings.
Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.
For MDU Resources, its two-year annual EPS declines of 16.4% show it’s continued to underperform. These results were bad no matter how you slice the data.
In Q1, MDU Resources reported EPS at $0.40, down from $0.49 in the same quarter last year. This print was close to analysts’ estimates. We also like to analyze expected EPS growth based on Wall Street analysts’ consensus projections, but there is insufficient data.
Key Takeaways from MDU Resources’s Q1 Results
We enjoyed seeing MDU Resources beat analysts’ revenue expectations this quarter. On the other hand, its full-year EPS guidance and EBITDA fell slightly short of Wall Street’s estimates. Zooming out, we think this was a mixed quarter. The stock remained flat at $17.49 immediately after reporting.
Should you buy the stock or not? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.
