Energy and construction materials company MDU Resources (NYSE: MDU) reported Q2 CY2025 results exceeding the market’s revenue expectations, but sales fell by 66.5% year on year to $351.2 million. Its GAAP profit of $0.07 per share decreased from $0.30 in the same quarter last year.

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"We continued our solid start to 2025, despite weather and operating cost challenges that impacted the second quarter results," 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.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, MDU Resources’s demand was weak and its revenue declined by 37.6% per year. This was below our standards and is a sign of poor business quality.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. MDU Resources’s recent performance shows its demand remained suppressed as its revenue has declined by 67.2% annually over the last two years.

This quarter, MDU Resources’s revenue fell by 66.5% year on year to $351.2 million but beat Wall Street’s estimates by 15.9%.

Looking ahead, sell-side analysts expect revenue to grow 281% over the next 12 months, an improvement versus the last two years. This projection is eye-popping and indicates its newer products and services will catalyze better top-line performance.

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Operating Margin

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.

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 11%. 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.

Analyzing the trend in its profitability, MDU Resources’s operating margin rose by 25.4 percentage points over the last five years, showing its efficiency has meaningfully improved.

In Q2, MDU Resources generated an operating margin profit margin of 8.7%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for MDU Resources, its EPS and revenue declined by 9.9% and 37.6% 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 shorter period to see if we are missing a change in the business.

For MDU Resources, its two-year annual EPS declines of 30.7% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q2, MDU Resources reported EPS at $0.07, down from $0.30 in the same quarter last year. 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 Q2 Results

We were impressed by how significantly MDU Resources blew past analysts’ revenue expectations this quarter. On the other hand, its EBITDA missed and its full-year EPS guidance fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 6.4% to $16.38 immediately after reporting.

MDU Resources underperformed this quarter, but does that create an opportunity to invest right now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.