UGI Corporation UGI benefits from systematic investments to modernize and renew outdated infrastructure. Strategic acquisitions that are positive for earnings, efficient debt management and expanding the customer base should drive its performance over the long term.
UGI Corporation currently holds a #3 Zacks rank (hold). The Zacks Consensus estimate for UGI’s fiscal 2023 earnings per share is up 14.2% year over year. The company’s long-term (three to five years) earnings growth rate is currently set at 8%. Additionally, UGI’s current dividend yield of 3.4% beats the industry average of 2.6%. You can see the full list of today’s Zacks #1Rank (Strong Buy) stocks can be found here.
UGI continues to grow its customer base and has added more than 8,400 customers in fiscal 2022 to date. The Company continues to make systematic capital investments to increase the safety and reliability of natural gas production and storage facilities and to replace aging infrastructure to modernize the system. UGI spent $674 million in fiscal 2021 and plans to invest $500 million in fiscal 2022. UGI invested $345 million in the first six months of fiscal 2022.
UGI is rewarded with recent strategic acquisitions of Stonehenge and Mountaineer. On January 27, 2022, UGI completed the Stonehenge acquisition, which is consistent with the utility’s growth strategies, including expansion of midstream natural gas production assets in the Appalachia region. In February, UGI entered into an agreement with Global Clean Energy Holdings to purchase and distribute renewable LPG in California. Also in April, the utility acquired a 33% stake in Ag-Grid Energy, a renewable energy producer with projects in the United States. These initiatives help UGI expand its renewable and eco-friendly products.
UGI reported total debt of $6,390 million as of March 31, 2022 compared to $6,539 million on December 31, 2021. As of March 31, 2022, UGI’s available liquidity was $1.9 billion, which is reasonable is to meet current debt obligations. UGI’s interest income ratio ended the second quarter of fiscal 2022 at 7.6, up from 4.6 in the prior year quarter of 2021. Such a strong ratio is indicative of the Company’s adequate financial flexibility to service its debt obligations.
UGI faces several regulatory and environmental issues in its domestic and international operations. The business is highly seasonal and unfavorable weather can affect demand, thereby lowering profitability. Failure to complete capital projects within time and budget will impact operations and profitability. In addition, UGI is exposed to increased interest rate risk, which may increase UGI’s borrowing costs and also adversely affect the Company’s operating and financial results. Falling demand due to natural gas price volatility may result in lower revenues, which may negatively impact cash flows.
value for money
Over the past month, shares of UGI are up 11.5% while the industry is down 1.8%.
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Stocks to consider
Some better-ranked stocks from the same sector are Dominion Energy D, DTE energy DTE and Hawaiian electrical industry HE, everyone currently carries a Zacks Rank #2 (Buy).
Long-term earnings growth for Dominion Energy, DTE Energy, and Hawaiian Electric Industries is forecast at 6.3%, 10%, and 3.2%, respectively.
Dominion Energy, DTE Energy, and Hawaiian Electric Industries have averaged earnings surprises of 0.65%, 8.97%, and 30.8%, respectively, over the past four quarters.
Over the past six months, D, DTE, and HE shares are up 10.2%, 14.8%, and 5.3%, respectively.
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