MDU (MDU) Call Options: Riding the Bullish Trend

MDU Resources Group operates as a regulated energy delivery business, focusing on three segments: electric, natural gas distribution, and pipeline. The electric segment, operated through 'Montana-Dakota', provides retail electric service to residential, commercial, industrial, and municipal customers. The natural gas distribution segment, through 'Montana-Dakota', 'Cascade', and 'Intermountain', sells natural gas at retail to similar customer types and offers transportation services. The pipeline segment, 'WBI Energy Transmission', owns and operates FERC-regulated natural gas transmission and storage lines, also providing non-regulated cathodic protection services. MDU's strategy focuses on delivering value as a leading energy provider through its 'CORE' strategy prioritizing customers and communities, operational excellence, returns focused initiatives and an employee driven culture, while pursuing organic growth opportunities.

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MDU exhibits a strongly bullish trend, supported by several key technical indicators. The price has steadily increased over the past 90 days, closing at $19.45 on November 04, 2025. This upward momentum is reflected in the stock price consistently trading above its 21-day EMA, currently at $19.05. The MACD confirms bullish momentum, with the MACD line at 0.508 trending above its signal line at 0.605. The RSI, at 61.82, indicates the stock is approaching overbought conditions but still has room to run. Furthermore, the stock price is trading above both its 50-day SMA ($17.71) and 200-day SMA ($17.04), indicating a sustained long-term uptrend. While the stochastic oscillator shows the %K line at 38.60, which might suggest a possible pullback, the overall strength of the other indicators suggests this would be a buying opportunity. Given these signals, MDU is likely to continue its upward trajectory over the next 1-3 months.

MDU Resources Group's MD&A presents a mixed but cautiously optimistic picture. For the three months ended June 30, 2025, the company's consolidated earnings decreased $46.7 million, which management primarily attributes to the absence of income from discontinued operations following the Everus separation. However, the six-month comparison shows `Net cash provided by operating activities` increased from $301.6 million in 2024 to $334.9 million in 2025, driven by the collection of purchased gas cost balances at the natural gas distribution business. While electric segment earnings decreased $5.1 million for the quarter, natural gas distribution reported an increased seasonal loss of $2.4 million. The pipeline segment saw a decrease in earnings of $1.9 million for the quarter, but an increase of $300,000 for the six-month period. Looking ahead, the company anticipates growing its utility rate base by approximately '7 percent to 8 percent annually over the next five years' and expects customer growth to average '1 percent to 2 percent per year'. Planned capital expenditures for 2025 are estimated at '$539.0 million', focusing on utility investments, system upgrades, and expansion of natural gas transmission capacity. The company is also monitoring legislation and rulemaking related to clean energy standards, which could impact its segments, and is pursuing opportunities under the Infrastructure Investment and Jobs Act and the IRA.

MDU Resources' Q2 2025 earnings call reveals a mildly bearish sentiment driven by unfavorable weather, increased operating costs, and a narrowed EPS guidance. The company reported income from continuing operations of $14.1 million, or $0.07 per diluted share, impacted by weather at the Natural Gas Distribution segment and increased operating costs. CEO Nicole Kivisto noted that these factors 'did impact our second quarter results.' Consequently, the company narrowed its earnings per share guidance to a range of $0.88 to $0.95 per share, from a previous range of $0.88 to $0.98 per share. CFO Jason Vollmer attributed the revision to weather impacts, particularly in Idaho, and higher operating expenses, including inflationary costs and payroll-related expenses. While the company highlighted strong customer demand in the pipeline segment and progress in utility regulatory filings, the lowered guidance and cost pressures suggest potential headwinds in the near term. The company is actively pursuing data center opportunities, with 580 megawatts of data center load under signed electric service agreements, but the benefits of this are still developing.

MDU's financial performance presents a mixed picture. Revenue is volatile, starting at $1,213.8M in Q1 2024, dipping to -$1,553.9M in Q4 2024, and then recovering to $351.2M in Q2 2025, indicating inconsistency in top-line performance. The gross profit ratio also fluctuates, ranging from a low of 0.0349 in Q4 2024 to a high of 0.6786 in Q2 2025, suggesting instability in profitability. Operating cash flow is inconsistent, with $165.1M in Q1 2024, dipping to $60.5M in Q4 2024, and recovering to $118.1M in Q2 2025. The total debt has decreased slightly from $2,462.7M in Q1 2024 to $2,181.9M in Q2 2025. While operating cash flow is positive in the most recent quarter, the revenue volatility and unstable gross profit ratio raise concerns about MDU's near-term financial health. Although the debt has decreased, the inconsistency in revenue and profitability needs to be addressed for a stable outlook.

The company demonstrates a moderately bullish profile, characterized by solid revenue growth and improving profitability. Revenue has consistently increased, indicating strong market demand. The gross margin exhibits stability, suggesting efficient cost management. Return on Equity (ROE) has shown positive movement, signaling enhanced profitability and efficient use of shareholder equity. The Price-to-Earnings (P/E) ratio, while elevated, might be justifiable given the growth trajectory and positive ROE trend. The Debt-to-Equity ratio shows a slight increase, which warrants monitoring, but is counterbalanced by a healthy Current Ratio, implying sufficient liquidity to meet short-term obligations. Overall, the company presents a favorable picture with growth and profitability, though the leverage should be watched closely. The combination of growth and profitability suggests potential for continued positive performance over the next 12 months.