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AmeriGas Partners LP Message Board

  • good_old_bob good_old_bob Feb 9, 2005 5:50 PM Flag

    HOW? EPS=1.76; DIV=2.20

    How can APU sustain a 2.20 dividend with earnigs of 1.76? Also, a 5.65 price/book ratio seems very high. P/B for ETP and FGP are just over 4. Many of the analysts predict that APU will drop to around 28.25 over the next few weeks. I'd like to buy but I am very cautious when I hear/see unexplained things. Any opinions?


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    • MLP's squeezed by rising interest rates! Smart investors cashing in until the smoke clears. Propane usage down for remainder of heating season. These are not good long term investments for the smart players!

      • 1 Reply to bp53garden
      • You suggest that APU is risky because "Propane usage down for remainder of heating season." Looking back at the past 3-4 years, I don't see a direct corrolation between price drop and spring season.

        Also, I don't see direct corrolation to interest rates. The steady 25 point increase in interest rates seems to have already been reflected in high dividend stocks. If rates go up faster, that could change. Have you any indication that rates will climb faster than 25 points per quarter?

    • EPS is a GAAP measure. What is more important, and if you actually do some due dilligence, you will find that free cash flow, or as it is called in the MLP circles, distributable cash flow, is the determining factor on what "distribution" not dividend is paid out. DCF is almost always significantly higher than EPS, because of non-cash charges such as depreciation and amortiazation. When you back D&A back into the earnings and then net out maintenance cap ex, you start to get a rough idea of what dcf is. It gets a little more refined from their but that is ballpark.

      • 1 Reply to rrb1981
      • I wasn't sure if distributions for APU worked the same as distributions for REITs and other MLPs since I have not owned Propane MLPs before. Since free cash flow is 116M and there are 56M shares, $2.20/shr distribution seems about right.

        How much does price/book ratio figure into value of this MLP? APU has a ratio of 5.6% whereas ETP and FGP have ratios closer to 4%. Does the price/book ratio indicate that APU may be overpriced or is price/book irrelavent for MLPs?


    • "I'd like to buy but I am very cautious when I hear/see unexplained things"

      They have been explained, over and over again. The fact that they are not reported hourly for the benefit of the unwashed masses does not make them unexplained.

      Whether or not you decide to a few shares will have zero impact on the world, so please either take the time to look for answers which will assuage your lack of insight or remain in silent ignorance.

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