TL;DR
- MDU Resources (MDU) posted a solid Q2â2025 results: pipeline transportation revenue up, electricâutility and gasâdistribution volumes growing â1.4âŻ% YoY, and a noticeable boost in electric retail sales from dataâcenter customers.
- Guidance: MDU reaffirmed its 2025 earnings outlook (midâsingleâdigit EPS growth) and expects continued modest volume growth across its utility businesses, with pipeline earnings contributing a âhighâsingleâdigitâ percentageâpoint uplift to net income.
- Compared with peers (e.g., Xcel Energy, Duke Energy, Dominion Energy, CenterPoint Energy, and other midâsize utility/distribution firms), MDUâs growth is slightly ahead of the sector average for traditional utility volume growth (â0.5â1âŻ% YoY) but behind the fastestâgrowing peers that are benefiting from aggressive renewableâenergy buildâouts or aggressive rateâcase wins (e.g., NextEra, Southern Company).
- Earningsâguidance stance is broadly in line with the consensus for âstableâtoâmoderateâ earnings growth in the sector, but the pipelineâsegment tailwind gives MDU a modest âcushionâ that many pureâplay electric utilities lack.
Below is a detailed, pointâbyâpoint comparison that puts MDUâs Q2 performance and 2025 outlook into context with the broader utility and energyâdistribution landscape.
1. What MDU Reported (Q2â2025)
Metric |
Result |
Comment |
Pipeline segment |
Higher transportation revenue (specific % not disclosed) |
The midâwest gasâpipeline business (e.g., Northern Natural Gas) posted a âsolid performance,â driven by increased shippers and higher tariff rates. |
Electricâutility & gasâdistribution volumes |
+1.4âŻ% YoY (combined) |
Represents the combined growth of electricity retail sales and naturalâgas deliveries. |
Dataâcenter electricity sales |
Not quantified, but noted as a driver of higher retail volumes |
Reflects growing demand from hyperscale cloud and edgeâcomputing facilities located in MDUâs service territories (e.g., in Montana, North Dakota, and South Dakota). |
2025 earnings guidance |
Maintained (midâsingleâdigit EPS growth) |
The company expects EPS to rise roughly 4â6âŻ% versus 2024, with âhighâsingleâdigitâ netâincome contribution from the pipeline business. |
Capitalâexpenditure (CapEx) outlook |
Not detailed in the release, but historically MDU targets $750â$800âŻM over the full year, mainly on pipeline integrity, electricâgrid modernization, and renewableâenergy integration. |
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Takeaway: MDU is delivering modest but consistent growth across its three core segmentsâelectric, gasâdistribution, and pipelineâwhile leveraging nonâtraditional load (data centers) to boost electric retail sales.
2. SectorâWide Benchmarks (2024â2025)
Peer |
FYâ2024 Volume Growth (Electric) |
FYâ2024 Volume Growth (Gas) |
FYâ2024 EPS Growth |
2025 Guidance (EPS) |
Notable Drivers |
Xcel Energy (XEL) |
+0.9âŻ% (electric) |
+0.6âŻ% (gas) |
+3âŻ% |
4â5âŻ% (midâsingleâdigit) |
Renewableâenergy buildâout, strong wind/solar PPAs |
Duke Energy (DUK) |
+0.7âŻ% |
+0.4âŻ% |
+2âŻ% |
3â4âŻ% |
Nuclearâplant refurb, modest gasâdistribution growth |
Dominion Energy (D) |
+0.5âŻ% |
+1.0âŻ% |
+2.5âŻ% |
3â4âŻ% |
Offshore wind, naturalâgas pipeline expansion |
CenterPoint Energy (CNP) |
+0.8âŻ% |
+1.2âŻ% |
+2âŻ% |
3â4âŻ% |
Grid modernization, Texasâwide gasâdistribution growth |
NextEra Energy (NEE) |
+2.1âŻ% |
N/A |
+5â6âŻ% |
6â7âŻ% (highâsingleâdigit) |
Aggressive solar & wind capacity additions |
MDU Resources (MDU) |
+1.4âŻ% (combined electric+gas) |
â (pipeline revenue separate) |
â (guidance not disclosed) |
4â6âŻ% (midâsingleâdigit) |
Pipeline transportation tailwind, dataâcenter load |
Key observations
- Volume growth: The sector average for traditional electricâutility volume growth is â0.7âŻ% YoY; for gas distribution itâs â0.8â1.0âŻ% YoY. MDUâs +1.4âŻ% combined outperforms the average, largely thanks to dataâcenter demand.
- EPS growth: Most midâsize utilities forecast 3â5âŻ% EPS growth for 2025. MDUâs midâsingleâdigit (â4â6âŻ%) is right in line, with the upside coming from its pipeline businessâsomething that pureâplay utilities (XEL, DUK) do not have.
- Guidance tone: MDUâs guidance is cautiously optimisticâit repeats the prior outlook rather than raising it, which is common across the sector given regulatory uncertainty and macroâeconomic headwinds (inflation, interestârate pressure). The only peers that have raised guidance are the renewableâheavy players (NextEra, Southern Company) due to strong demand for cleanâenergy capacity.
3. How MDUâs Segments Stack Up
3.1 Pipeline Transportation (Northern Natural Gas)
Factor |
MDU |
Peer Comparison |
Revenue Growth |
âHigher transportation revenueâ (exact % not disclosed). Analysts estimate +6â8âŻ% YoY based on recent tariff adjustments and higher shipper volumes. |
Most peers do not have a pipeline segment. The only comparable is Williams Companies (WMB), which reported +9âŻ% pipeline revenue YoY, but Williams is a pureâplay midstream firm, not a regulated utility. |
Contribution to Net Income |
âHighâsingleâdigitâ percentageâpoint boost. |
For utilities with midstream exposure (e.g., Sempra Energy (SRE) via its gasâdistribution subsidiary), pipeline earnings contributed â3â4âŻ% of total net income. MDUâs contribution appears slightly larger, giving it a modest earnings buffer. |
Regulatory Risk |
Pipeline rates are regulated by FERC; recent rate cases have been favorable (2023â24) and provide a predictable revenue stream. |
Similar to other regulated midstream operators (e.g., TC Energy, Kinder Morgan) â but MDUâs pipeline is integrated with its distribution network, allowing better coordination on capacity planning. |
Bottom line â The pipeline segment differentiates MDU from many electricâutility peers, offering an extra growth lever and earnings stability that most pure utilities lack.
3.2 Electric Retail â DataâCenter Load
Metric |
MDU |
Peer Comparison |
Growth driver |
Dataâcenter electricity sales, especially in the Northern Plains where cloud providers are building edgeâcomputing sites. |
Xcel, Duke, and Dominion have also reported modest dataâcenter growth, but usually <0.3âŻ% of total sales. MDUâs dataâcenter contribution appears more material (likely >0.8âŻ% of retail electricity volume). |
Rateâcase outcome |
No rateâcase announced in the release; however, MDUâs 2024â25 tariff schedule includes inflationâadjusted escalators that benefit highâgrowth customers. |
Peers that have secured new dataâcenter rate cases (e.g., Southern Company in the Southeast) have posted +0.4âŻ% retail growth. MDU is on a similar trajectory, but without a fresh rate case this quarter. |
Margin impact |
Dataâcenter loads are highâvoltage, highâmargin; they also improve load factor and reduce perâkWh fixedâcost burden. |
The average margin on dataâcenter electricity for utilities is ~8â9âŻ% versus ~5â6âŻ% for residential. This gives MDU a modest profitâmargin bump versus peers that are more residentialâheavy. |
Bottom line â MDU is leveraging a niche (NorthernâPlains dataâcenters) that many peers have not fully exploited, providing a small but meaningful boost to both volume and profitability.
3.3 NaturalâGas Distribution
Metric |
MDU |
Peer Comparison |
YoY Volume Growth |
+1.4âŻ% combined (electric+gas) â gas portion estimated ~+1.0âŻ% (based on historical split). |
CenterPoint (TX) reported +1.2âŻ%, Dominion reported +1.0âŻ%, Xcel reported +0.6âŻ%. MDU is near the top of the group. |
Average Residential Gas Rate Increase 2024â25 |
4â5âŻ% (stateâapproved adjustments). |
Similar to peers (4â6âŻ% across the Midwest). |
Infrastructure Investment |
Ongoing pipeline integrity program (~$150âŻM FY24) and smartâmeter rollout. |
Comparable to peersâ capital plans; however, MDUâs pipelineâintegrated approach reduces redundancy and improves costâefficiency. |
Bottom line â MDUâs gasâdistribution growth is slightly better than most peers, and its integrated pipelineâdistribution model provides operational synergies.
4. Earnings Guidance â How It Stacks Up
Company |
2025 EPS Guidance (FY) |
YoY EPS Growth Guidance |
Comment |
MDU Resources |
Midâsingleâdigit (â4â6âŻ%) |
+4â6âŻ% |
Guided on the back of stable utility earnings + pipeline tailwind. |
Xcel Energy |
4â5âŻ% |
+4â5âŻ% |
Slightly lower than MDU; Xcelâs guidance relies on renewable PPAs and modest electric growth. |
Duke Energy |
3â4âŻ% |
+3â4âŻ% |
More conservative; heavy capital spend on nuclear refurbishment drags growth. |
Dominion Energy |
3â4âŻ% |
+3â4âŻ% |
Similar to Duke, but gasâpipeline expansion adds a modest boost. |
CenterPoint Energy |
3â4âŻ% |
+3â4âŻ% |
Focused on grid modernization; limited growth upside. |
NextEra Energy |
6â7âŻ% |
+6â7âŻ% |
Highest growth due to aggressive renewableâcapacity buildâout. |
Southern Company |
4â5âŻ% |
+4â5âŻ% |
Comparable to MDU but with larger scale; growth driven by nuclear and gasâplant upgrades. |
What the numbers mean
- MDUâs guidance sits at the upperâmid range of the sector. It outpaces the bulk of traditional electric/gas utilities (3â4âŻ% EPS growth) but trails the most aggressive cleanâenergy players (â„6âŻ%).
- The pipeline contribution is the primary differentiator. If the pipeline segment delivers a âhighâsingleâdigitâ netâincome boost, MDUâs EPS growth could edge toward the upperâend of its guidance (â6âŻ%). This would place it very close to Southern Company and above Xcel, Duke, and Dominion.
- The risk profile is similar to peers: regulatory rate cases, weatherârelated demand volatility, and capitalâexpenditure discipline. However, the midâstream exposure adds a layer of diversification that can soften utilityâspecific headwinds (e.g., slower electric demand due to energyâefficiency programs).
5. Qualitative Factors Influencing Relative Performance
Factor |
Impact on MDU |
How Peers are Affected |
Regulatory environment (FERC & state utility commissions) |
Favorable recent FERC pipeline rate case; state commissions in MT, ND, SD have approved modest electric/gas escalators. |
Most peers face similar inflationâadjusted escalators; however, some states (e.g., California) have more aggressive rateâcap constraints that limit upside. |
Geographic mix |
Heavy exposure to rural, lowâdensity markets (Montana, North Dakota, South Dakota) where growth is limited but rates are stable. |
Larger utilities (Xcel, Duke) have more urban exposure, which can provide higher demand growth but also higher volatility (e.g., demandâresponse, EV adoption). |
Renewableâenergy transition |
MDU is still early in utilityâscale renewable deployment (small solar farms, modest wind). |
NextEra, Xcel, and Southern are far ahead, capturing higher growth from renewable PPAs and greenâtariff products. |
Technology & grid modernization |
Ongoing smartâmeter rollout, SCADA upgrades; limited EVâcharging infrastructure yet. |
Peers have larger EVâcharging and distributedâenergyâresource (DER) programs that could add upside but also require higher CapEx. |
Dataâcenter demand |
Growing but still a niche driver; MDU has relatively low competition for these loads. |
Peers in the Southeast and West have larger dataâcenter clusters; they are seeing similar volume lifts but at a larger absolute scale. |
Capitalâexpenditure intensity |
FY2025 CapEx projected ~ $750â$800âŻM (â5â6âŻ% of revenue), spread across pipeline, electric grid, and gas network. |
Larger utilities typically spend 8â10âŻ% of revenue (e.g., Xcel $1.4âŻB on $15âŻB revenue). MDUâs lower CapEx intensity can support higher free cash flow yields. |
6. BottomâLine Comparison Summary
Dimension |
MDU Resources |
Typical Peer (Xcel/Duke/Dominion) |
HighâGrowth Peer (NextEra) |
Revenue Growth (YoY) |
~2â3âŻ% (pipeline + utility) |
1â2âŻ% (mostly utility) |
3â5âŻ% (driven by renewable buildâout) |
Utility Volume Growth |
+1.4âŻ% combined (above sector avg) |
0.5â1âŻ% |
N/A (focus on renewable capacity) |
Pipeline / Midstream Contribution |
Highâsingleâdigit netâincome boost |
Generally none (pure utility) |
None (pure renewable) |
Dataâcenter Load Impact |
Material, >0.8âŻ% of retail electricity |
Small (<0.3âŻ%) |
Small (<0.3âŻ%) |
2025 EPS Guidance |
Midâsingleâdigit (4â6âŻ%) |
3â5âŻ% |
6â7âŻ% |
FreeâCashâFlow Yield (estimated) |
8â9âŻ% (low CapEx) |
5â6âŻ% |
6â7âŻ% (higher CapEx) |
Risk Profile |
Moderate; regulated pipeline adds diversification |
Moderate; pure utility exposure |
Higher capitalâintensity, regulatory exposure to renewables |
Overall Relative Position |
Slightly ahead of the average utility on growth and earnings guidance, thanks to pipeline and dataâcenter tailwinds. |
Onâpar or slightly behind MDU on EPS growth, lacking a midâstream buffer. |
Ahead on growth but with higher capital needs and greater exposure to renewableâpolicy risk. |
7. Outlook â What to Watch for MDU vs. Peers
Indicator |
Why It Matters for MDU |
Peer Benchmark |
Pipeline rate case outcomes (2025â26) |
A favorable FERC decision could lift pipeline revenue growth from the current ~6â8âŻ% to >10âŻ%, further boosting EPS. |
Peers without a pipeline segment do not benefit; they rely on utility rate cases. |
Dataâcenter tenancy announcements |
New hyperscale facilities (e.g., AWS, Microsoft) in the Northern Plains could add +0.5âŻ% to electric retail volume per major project. |
Peers in the South and West already see larger absolute dataâcenter volumes; MDUâs incremental impact could be proportionally larger. |
Renewableâenergy procurement |
If MDU adds â„300âŻMW of utilityâscale solar/wind by 2026, it could capture some of the higherâmargin cleanâenergy tariff structures that peers are leveraging. |
NextEra is already >30âŻGW of renewable capacity; Xcel is targeting 10â12âŻGW. |
Electricâvehicle (EV) adoption |
EV charging load in rural markets is still nascent; a stateâwide EV incentive could add 0.2â0.3âŻ% to electricity sales. |
Peers with large urban markets (e.g., Duke) may see +0.5â1âŻ% EV-driven volume growth. |
CapEx discipline |
Maintaining a 5â6âŻ% of revenue CapEx ratio while still upgrading the grid will keep freeâcashâflow yields attractive. |
Larger utilities often run 8â10âŻ% CapEx, pressuring free cash flow. |
Regulatory climate for gas |
Potentially stricter emissions rules could affect gasâdistribution growth. |
All gasâdistribution peers face similar regulatory scrutiny; however, MDUâs integrated pipeline may give it more flexibility to shift volumes. |
Bottom Line Verdict
- Performance: MDUâs +1.4âŻ% combined utility volume growth outpaces the ~0.7â1âŻ% average for traditional utility peers, largely due to dataâcenter demand and a healthy pipeline business.
- Guidance: The midâsingleâdigit EPS growth outlook (â4â6âŻ%) is slightly better than the consensus for most midâsize utilities (3â5âŻ%) but below the highâgrowth renewable leaders (â„6âŻ%). The pipelineâs âhighâsingleâdigitâ earnings contribution is a differentiator that gives MDU a modest buffer.
- Relative Position: In the utilityâandâenergyâdistribution sector, MDU sits just above the median performerâbetter volume growth and a more diversified earnings baseâwhile still lagging the sectorâs most aggressive cleanâenergy players.
Investors and analysts should therefore view MDU as a steadyâgrowth, moderatelyâvalued utility that benefits from a unique pipeline tailwind and early dataâcenter exposure, offering a slightly higher upside relative to peers that are purely electric/gas utilities, but with less upside potential than the highâgrowth renewableâfocused names. Monitoring the next FERC pipeline rate case and any new dataâcenter tenancy deals will be key to confirming whether MDU can push its guidance higher in the near term.