UGI Corporation UGI continues to focus on systematic investments in expanding its existing operations coupled with inorganic growth, which will boost its performance in the long term. Also, the company’s target to build a clean energy portfolio acts as a tailwind.
We recently issued an updated research report on UGI Corp. The Zacks Consensus Estimate for fiscal 2021 earnings is pegged at $2.86 per share, indicating growth of 7.12% from the year-ago reported figure. Also, the consensus mark for fiscal 2021 revenues stands at $7.44 billion, suggesting 13.44% growth from the prior-year reported number. Additionally, long-term (three-five years) earnings growth of the company is pegged at 8%.
The company currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past six months, shares of this utility have gained 9.9%, outperforming the industry’s rise of 4%.
What’s Aiding the Stock?
The company continues to make systematic capital investments in maintaining and enhancing its infrastructure, and growing via acquisitions. These projects will help curb competition, increase the safety and reliability of natural gas production and storage facilities plus replace the aging infrastructure with a modernized system. After slashing its fiscal 2020 capital expenditure, UGI Corp. estimates a total of $850 million investment for fiscal 2021.
Further, consistent customer additions will spur demand for its services. Notably, the utility added 12,000 residential heating and commercial customers in fiscal 2020. All these developments will assist it to achieve the long-term annual earnings per share growth target of 6-10%.
Moreover, the company’s strategic plans are aimed to reduce emissions and provide services generated by eco-friendly resources. In third-quarter fiscal 2020, the company completed the buyout of GHI Energy, LLC, a renewable natural gas company operating in California. This will enable it to expand its renewable product offerings and support of the expansion goals in an environmentally-friendly way. Apart from buyouts, the company decided to dispose its 5.97% ownership interest in the Conemaugh coal-fired generating station to lower the total Scope I direct emissions by more than 30%.
UGI Corp. has enough liquidity to meet its near-term obligations while its consistent performance has enabled it to reward shareholders through raise in annual dividend rates and share repurchase.
However, the company fulfills its propane requirement from a limited number of suppliers with fixed-price contracts. Any disruption in the supply chain will affect business and profitability. Also, the company is exposed to several regulatory and environmental uncertainties in domestic and international operations.
Stocks to Consider
A few better-ranked stocks in the same sector are ONEOK, Inc. OKE, Portland General Electric Company POR and National Fuel Gas Company NFG. While both ONEOK and Portland General Electric Company sport a Zacks Rank #1, National Fuel Gas Company carries a Zacks Rank #2 (Buy), currently.
ONEOK’s long-term (three-five years) earnings growth rate is pegged at 4.62%. The Zacks Consensus Estimate for 2021 earnings has moved 9.3% north in the past 60 days.
Portland General Electric Company delivered an earnings surprise of 98.07%, on average, in the last four quarters. The company’s long-term earnings growth rate is pegged at 5.48%.
National Fuel Gas Company delivered an earnings surprise of 13.86%, on average, in the trailing four quarters. The Zacks Consensus Estimate for fiscal 2021 earnings has been revised 2.5% upward in the past 60 days.
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