Analyzing Ameren Corporation (AEE) and MDU Resources Group (MDU)

Ameren Corporation (NYSE: AEE) 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 earnings, profitability, risk, analyst recommendations, dividends, institutional ownership and valuation.

Earnings and Valuation

This table compares Ameren Corporation and MDU Resources Group’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Ameren Corporation $6.06 billion 2.39 $2.44 billion $2.86 20.90
MDU Resources Group $4.23 billion 1.24 $617.43 million $1.15 23.43

Ameren Corporation has higher revenue and earnings than MDU Resources Group. Ameren Corporation 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.

Dividends

Ameren Corporation pays an annual dividend of $1.76 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 2.9%. Ameren Corporation pays out 61.5% 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. Ameren Corporation has raised its dividend for 7 consecutive years and MDU Resources Group has raised its dividend for 3 consecutive years. Ameren Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Ameren Corporation 11.11% 9.57% 2.82%
MDU Resources Group 5.37% 10.24% 3.76%

Risk and Volatility

Ameren Corporation has a beta of 0.36, indicating that its stock price is 64% less volatile than the S&P 500. Comparatively, MDU Resources Group has a beta of 0.91, indicating that its stock price is 9% less volatile than the S&P 500.

Institutional & Insider Ownership

69.8% of Ameren Corporation shares are owned by institutional investors. Comparatively, 63.6% of MDU Resources Group shares are owned by institutional investors. 0.4% of Ameren Corporation shares are owned by company insiders. Comparatively, 1.0% of MDU Resources Group shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Ameren Corporation and MDU Resources Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ameren Corporation 1 3 0 0 1.75
MDU Resources Group 0 2 1 0 2.33

Ameren Corporation currently has a consensus target price of $55.33, suggesting a potential downside of 7.44%. MDU Resources Group has a consensus target price of $32.00, suggesting a potential upside of 18.78%. Given MDU Resources Group’s stronger consensus rating and higher possible upside, analysts plainly believe MDU Resources Group is more favorable than Ameren Corporation.

Summary

Ameren Corporation beats MDU Resources Group on 9 of the 17 factors compared between the two stocks.

About Ameren Corporation

Ameren Corporation is a utility holding company. The Company’s subsidiaries include Ameren Missouri, Ameren Illinois and Ameren Transmission Company (ATXI). It operates through four segments. The Ameren Missouri segment includes all of the operations of Ameren Missouri. The Ameren Illinois Electric Distribution segment consists of the electric distribution business of Ameren Illinois. The Ameren Illinois Natural Gas segment consists of the natural gas business of Ameren Illinois. The ATXI segment consists of the aggregated electric transmission businesses of Ameren Illinois and ATXI. Ameren Missouri operates a rate-regulated electric generation, transmission, and distribution business and a rate-regulated natural gas distribution business in Missouri. Ameren Illinois operates rate-regulated electric distribution, electric transmission and natural gas distribution businesses in Illinois. ATXI operates a Federal Energy Regulatory Commission rate-regulated electric transmission business.

About MDU Resources Group

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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