Q2 Earnings Outperformers: MDU Resources (NYSE:MDU) And The Rest Of The Construction and Engineering Stocks

As the Q2 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the construction and engineering industry, including MDU Resources (NYSE:MDU) and its peers.

Construction and engineering companies not only boast technical know-how in specialized areas but also may hold special licenses and permits. Those who work in more regulated areas can enjoy more predictable revenue streams - for example, sprinkler systems need to be maintained every three years. More recently, services addressing energy efficiency and labor availability are also creating incremental demand. But like the broader industrials sector, construction and engineering companies are at the whim of economic cycles as external factors like interest rates can greatly impact the new construction that drives topline performance for these companies.

The 21 construction and engineering stocks we track reported a mixed Q2. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 0.7% below.

Inflation progressed towards the Fed's 2% goal recently, leading the Fed to reduce its policy rate by 50bps (half a percent or 0.5%) in September 2024. This is the first cut in four years. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be debating whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.

Luckily, construction and engineering stocks have performed well with share prices up 10.6% on average since the latest earnings results.

MDU Resources (NYSE:MDU)

Founded to provide electricity to towns in Minnesota, MDU Resources (NYSE:MDU) provides products and services in the utilities and construction materials industries.

MDU Resources reported revenues of $1.05 billion, down 4% year on year. This print fell short of analysts’ expectations by 1.3%. Overall, it was a softer quarter for the company with some shareholders anticipating a better outcome.

"Our second quarter results reflect the exceptional efforts and dedication of our employees," said Nicole A. Kivisto, president and CEO of MDU Resources.

Interestingly, the stock is up 5.7% since reporting and currently trades at $26.88.

Read our full report on MDU Resources here, it’s free.

Best Q2: Great Lakes Dredge & Dock (NASDAQ:GLDD)

Founded as Lydon & Drews dredging company, Great Lakes Dredge & Dock (NASDAQ:GLDD) provides dredging services, land reclamation, and coastal protection projects in the United States and internationally.

Great Lakes Dredge & Dock reported revenues of $170.1 million, up 28.2% year on year, outperforming analysts’ expectations by 3.5%. The business had an incredible quarter with an impressive beat of analysts’ earnings estimates.

The market seems happy with the results as the stock is up 39.1% since reporting. It currently trades at $11.27.

Is now the time to buy Great Lakes Dredge & Dock? Access our full analysis of the earnings results here, it’s free.

Weakest Q2: Orion (NYSE:ORN)

Established in 1994, Orion (NYSE:ORN) provides construction services for marine infrastructure and industrial projects.

Orion reported revenues of $192.2 million, up 5.3% year on year, falling short of analysts’ expectations by 3.4%. It was a disappointing quarter as it posted a miss of analysts’ earnings estimates.

As expected, the stock is down 46.9% since the results and currently trades at $5.87.

Read our full analysis of Orion’s results here.

Sterling (NASDAQ:STRL)

Involved in the construction of a major highway, the Grand Parkway in Houston, TX, Sterling Infrastructure (NASDAQ:STRL) provides civil infrastructure construction.

Sterling reported revenues of $582.8 million, up 11.6% year on year. This result surpassed analysts’ expectations by 4.1%. Overall, it was a very strong quarter as it also logged optimistic earnings guidance for the full year and a solid beat of analysts’ earnings estimates.

The stock is up 42.1% since reporting and currently trades at $145.99.

Read our full, actionable report on Sterling here, it’s free.

MasTec (NYSE:MTZ)

Involved in the 1996 Olympic Games MasTec (NYSE:MTZ) is an infrastructure construction company that specializes in the telecommunications, energy, and utility industries.

MasTec reported revenues of $2.96 billion, up 3% year on year. This number missed analysts’ expectations by 4.2%. Aside from that, it was a satisfactory quarter as it also produced an impressive beat of analysts’ operating margin estimates but underwhelming EBITDA guidance for the next quarter.

The stock is up 17.9% since reporting and currently trades at $125.

Read our full, actionable report on MasTec here, it’s free.

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