MDU

MDU Resources ($MDU) CFO's Consecutive Purchases Signal Recovery as 580MW Data Center Contracts Drive Post-Spinoff Rebound

09/09/2025 21:43

MDU Resources Group ($MDU) is capturing investor attention as the $3.2 billion regulated utility company shows signs of recovery following a dramatic post-spinoff decline. While the stock plunged by half after separating its construction business in 2024, recent insider buying and surging data center power demand are signaling a potential turnaround. Founded in 1924 and based in North Dakota, MDU Resources operates as a diversified energy company providing electricity generation and distribution, natural gas distribution, and pipeline services across eight states in the northern and western U.S. The company holds stable market positions in Montana, North Dakota, South Dakota, and Wyoming's power markets, particularly benefiting from the current data center boom driving unprecedented electricity demand. The most compelling development is CFO Jason Vollmer's consecutive share purchases. On August 19, he bought 5,000 shares at $16.27 per share ($81,375), followed by another 5,000 shares at $16.07 on September 8 ($80,375). This $160,000+ investment within three weeks represents a strong signal that management views current price levels as undervalued. Notably, the second purchase occurred at a lower price, demonstrating continued conviction despite share price weakness. This bullish sentiment has solid fundamentals behind it. MDU currently holds electric service agreements for 580 megawatts (MW) of data center load, with 180 MW already online and the remaining 400 MW expected to come online starting late 2025. As AI and cloud computing expansion drives explosive data center power demand, these long-term contracts position MDU to capitalize on this structural growth trend. Financial stability adds another layer of investment appeal. The company has maintained an impressive 87-year consecutive dividend payment record, recently increasing its quarterly dividend from 13 cents to 14 cents per share—a 7.7% boost. The current dividend yield of approximately 3.5% offers an attractive premium over 10-year Treasury yields, supported by robust annual operating cash flow of $535 million. However, near-term earnings challenges require attention. Second-quarter net income plummeted 77% year-over-year to $13.7 million, with earnings per share (EPS) of $0.07 falling well short of the $0.13 analyst consensus. Warm weather reduced natural gas sales volumes while operating expenses increased. Full-year 2025 EPS guidance of $0.88-$0.95 suggests continued pressure compared to prior years. Yet these short-term headwinds appear transitory. The October 2024 completion of the Everus construction business spinoff allows management to focus on core utility operations. While this process drove shares from $28 to $15, it actually simplified the business structure. Regulated utility operations provide predictable revenue streams that should enable more stable long-term growth. Investors should monitor several key indicators. Near-term, third-quarter earnings will reveal data center revenue contribution and whether natural gas sales volumes are recovering. Share prices above $18 would suggest the post-spinoff adjustment is complete, while a drop below $15 could signal additional downside risks. Long-term, the planned $811 million infrastructure investment through 2026 represents a critical growth variable. Success will depend on whether these investments translate into rate increases that improve profitability, rather than simply increasing costs. Additionally, securing additional data center contracts will be crucial for sustained growth. At this juncture, MDU Resources appears to be transitioning from post-spinoff shock toward fundamental value recovery. The combination of management's consecutive purchases, an 87-year dividend track record, and data center demand tailwinds may well offset near-term earnings volatility for patient investors.