Avista Corporation (NYSE: AVA) and MDU Resources Group (NYSE:MDU) are both mid-cap utilities companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, earnings, analyst recommendations, institutional ownership, profitabiliy, valuation and risk.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Avista Corporation and MDU Resources Group, as provided by MarketBeat.

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

Avista Corporation currently has a consensus target price of $44.00, indicating a potential downside of 16.01%. MDU Resources Group has a consensus target price of $36.00, indicating a potential upside of 37.72%. Given MDU Resources Group’s stronger consensus rating and higher probable upside, analysts plainly believe MDU Resources Group is more favorable than Avista Corporation.

Earnings and Valuation

This table compares Avista Corporation and MDU Resources Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Avista Corporation $1.46 billion 2.31 $471.76 million $2.11 24.83
MDU Resources Group $4.23 billion 1.21 $622.43 million $1.15 22.73

MDU Resources Group has higher revenue and earnings than Avista Corporation. MDU Resources Group is trading at a lower price-to-earnings ratio than Avista Corporation, indicating that it is currently the more affordable of the two stocks.

Profitability

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

Net Margins Return on Equity Return on Assets
Avista Corporation 9.35% 8.19% 2.57%
MDU Resources Group 5.37% 10.26% 3.75%

Volatility & Risk

Avista Corporation has a beta of 0.42, meaning that its share price is 58% less volatile than the S&P 500. Comparatively, MDU Resources Group has a beta of 0.91, meaning that its share price is 9% less volatile than the S&P 500.

Institutional and Insider Ownership

69.1% of Avista Corporation shares are held by institutional investors. Comparatively, 63.4% of MDU Resources Group shares are held by institutional investors. 1.1% of Avista Corporation shares are held by insiders. Comparatively, 1.0% of MDU Resources Group shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Dividends

Avista Corporation pays an annual dividend of $1.43 per share and has a dividend yield of 2.7%. MDU Resources Group pays an annual dividend of $0.77 per share and has a dividend yield of 2.9%. Avista Corporation pays out 67.8% 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. Avista Corporation has increased its dividend for 14 consecutive years and MDU Resources Group has increased its dividend for 7 consecutive years. MDU Resources Group is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

MDU Resources Group beats Avista Corporation on 10 of the 17 factors compared between the two stocks.

About Avista Corporation

Avista Corporation is an electric and natural gas utility company. The Company operates through two segments: Avista Utilities, and Alaska Electric Light and Power Company (AEL&P). The Company’s regional services include government and higher education, medical services, retail trade and finance. The Company’s businesses also include sheet metal fabrication, venture fund investments, real estate investments, a company that explores markets that could be served with liquefied natural gas (LNG), as well as certain other investments of Avista Capital, which is a subsidiary of the Company. Avista Utilities is an operating division of the Company, which consists of its regulated utility operations in the Pacific Northwest. Avista Utilities division generates, transmits and distributes electricity, and distributes natural gas. As of December 31, 2016, AEL&P operated five hydroelectric generation facilities with 102.7 megawatts (MW) of hydroelectric generation capacity.

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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