Yahoo Finance Reasons to Add UGI Corp. (UGI) to Your Portfolio Right Now
Estimates for UGI Corporation’s UGI earnings are moving up, indicating a positive outlook for this gas distribution utility. Accretive acquisitions and expanding customer base continue to boost demand for its services and make the company a solid investment option in the utility sector.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) company a robust investment pick at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for fiscal 2024 and 2025 earnings per share (EPS) has moved up 2.1% and 4.1% respectively in the past 90 days.
The company delivered an average earnings surprise of 19.1% in the last four quarters.
Investments
UGI continues to make systematic capital investments to address the infrastructural need for various capital projects, and for increasing the safety and reliability of natural gas production and storage facilities, and replacing the aging infrastructure for modernizing the system. The company expects capital expenditure in the range of $3.7-$4.1 billion during fiscal 2024-2027. Nearly 85% of total capital investment is targeted toward natural gas businesses.
Expanding Customer Base
Systematic investment is leading to additions and upgrades of infrastructure, which allows UGI to serve the expanding customer base efficiently. The company’s customer additions remained robust, with more than 3,000 new residential and commercial customers added during the second quarter of fiscal 2024.
Liquidity Ratio
The current ratio at the end of the fiscal second quarter of 2024 was 1.2. The ratio, being greater than one, and better than its industry average of 0.76, reflects the company’s ability to meet near-term debt obligations without difficulties.
Dividend History
The company has been paying dividends for the last 140 years. Currently, its quarterly dividend is 37.5 cents per share, resulting in an annualized dividend of $1.50. The company’s current dividend yield of 6.56% is better than the industry’s average of 3.53%.
Return on Equity
ROE indicates how efficiently a company has been utilizing the funds to generate higher returns. Currently, UGI’s ROE is 15.78%, higher than the industry’s average of 9.01%. This indicates that the company has been utilizing the funds more constructively than its peers in the utility gas distribution industry.
Price Performance
In the past six months, the stock has declined 2.1% compared with the sector’s 3.5% decline.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same sector are Atmos Energy ATO, MDU Resources MDU and PG&E PCG, each holding a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ATO’s long-term (three-to-five years) earnings growth rate is 7%. The company delivered an average earnings surprise of 3.3% in the last four quarters.
MDU’s long-term earnings growth rate is 6%. The Zacks Consensus Estimate for MDU’s 2024 EPS indicates an increase of 3.3% of last 60 days.
PCG reported an earnings surprise of 5.7% in the last reporting quarter. The Zacks Consensus Estimate for PCG’s 2024 EPS implies a rise of 9.8% from the year-ago levels
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