Questar Upped to Buy

Zacks Equity Research
May 21, 2014

On May 20, Zacks Investment Research upgraded natural gas-focused energy company, Questar Corp. (STR) to a Zacks Rank #2 (Buy).

Why the Upgrade?

On the earnings front, Questar has sailed smoothly through the past few quarters. In the last reported quarter, the company succeeded in meeting the Zacks Consensus Estimate of 48 cents per share and recorded a 17% improvement from the prior-year quarter figure as well. Lower operating costs and better performance by the company’s Wexpro and Questar Gas segments aided the results.

Questar plans to invest $50 million to $55 million annually in its gas segment and $550 million to $700 million in the Wexpro business unit over the next 5 years. These investments should boost the company’s earnings going forward.

Moreover, Questar is a promising dividend stock with a long and consistent paying record. The company currently pays an annual dividend of 72 cents per share, yielding a stable 3.1%. As it is placed in the utilities sector (which itself is looking promising from the industry perspective) and has an above-average credit rating, the stock is all the more bullish.   

Since the QEP Resources, Inc. (QEP) spin-off, Questar has transformed itself into a natural gas-operated energy company. In the long run, this single-line focus could prove to be a positive for the company.  

Additionally, the earnings estimate for the next quarter has inched up by a penny to 23 cents over the past 30 days. The current year estimates have also moved north over the same time frame, indicating strong growth ahead for Questar.
 
Other Stocks to Consider

Apart from Questar, one may consider other stocks from the utilities sector like New Jersey Resources Corp. (NJR) and AGL Resources Inc. (GAS). While New Jersey Resources sports a Zacks Rank #1 (Strong Buy), AGL Resources holds a Zacks Rank #2.

Read the Full Research Report on STR
Read the Full Research Report on QEP
Read the Full Research Report on GAS
Read the Full Research Report on NJR


Zacks Investment Research