Ferrellgas Partners to Gain on Acquisitions & Customer Growth
Ferrellgas Partners’ FGP extensive presence in the United States, acquisitions and organic initiatives as well as increasing Blue Rhino tank exchange sales locations are likely to boost growth.
We recently issued an updated research report on Ferrellgas Partners. The stock currently carries a zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Units of the partnership have gained 29% on a year-to-date basis compared with the industry’s rise of 8.9%.
What’s Driving the Stock?
Ferrellgas Partners serves propane to customers across the United States. The partnership registered retail propane customer growth of 4% in the fiscal fourth quarter, 2019, from prior-year quarter’s levels and Retail propane sales volume growth of 6.1% from the year-ago quarter’s tally. It is expanding its tank exchange Blue Rhino business. Expansion of the business is important for the partnership as it is less dependent on weather and provides visibility for future earnings.
The partnership is focused on its strategy to expand business through strategic acquisitions and organic initiatives. During fiscal 2019, the partnership acquired propane distribution assets, mostly from independent distributors, with an aggregate value of $15.2 million. To expand footprint in the United States, the partnership has acquired nearly 300 independent retail companies since 1939.
Apart from adding assets through acquisitions, the firm is divesting less profitable businesses. The sale of non-core assets is another strategy of Ferrellgas Partners to lower debt levels and expand operations. The partnership’s long-term debt was $1,457 million as of Jul 31, 2019 compared with $2,078.6 million as of Jul 31, 2018. We believe that the partnership will benefit from the interest rate cuts.
However, Ferrellgas Partners’ dependency on few vendors for propane can affect supply if they fail to meet obligations. Sudden hike in wholesale price of propane and competition with other companies that supply natural gas and oil can hamper its propane distribution business. Increasing demand for these sources may lower demand for propane.
Key Picks
Some better-ranked stocks from the same sector are Magellan Midstream Partners, L.P. MMP, Canadian Solar Inc CSIQ and Equitrans Midstream Corporation ETRN. While Equitrans Midstream sports a Zacks Rank #1, Magellan Midstream and Canadian Solar hold a Zacks Rank #2 (Buy).
Magellan Midstream Partners delivered an average positive earnings surprise of 3.70% in the last four quarters. The company’s long-term (three to five years) earnings growth is pegged at 6%.
Canadian Solar pulled off an average positive earnings surprise of 115.66% in the trailing four quarters. The company’s long-term earnings growth is pegged at 32%.
Equitrans Midstream delivered an average positive earnings surprise of 26.51% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings moved up 13.19% in the past 60 days to $1.63 per unit.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 7 stocks to watch. The report is only available for a limited time.
See 7 breakthrough stocks now>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Magellan Midstream Partners, L.P. (MMP) : Free Stock Analysis Report
Ferrellgas Partners, L.P. (FGP) : Free Stock Analysis Report
Canadian Solar Inc. (CSIQ) : Free Stock Analysis Report
Equitrans Midstream Corporation (ETRN) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
