Back to top

Analyst Blog

Zacks Investment Research downgraded Suburban Propane Partners, L.P. (SPH - Snapshot Report) to a Zacks Rank #5 (Strong sell) on Aug 29, 2013.

Why the Downgrade?

Suburban Propane reported net loss per share of 77 cents for the fiscal third quarter of 2013 (ended Jun 29, 2013) on Aug 8, 2013. The results were unfavorable compared with loss per share of 26 cents reported in the year-ago quarter and the Zacks Consensus Estimate of a loss per share of 57 cents.

Revenue in the quarter increased 61.9% year over year as Suburban Propane reported healthy year-over-year increases in all its business segments including Propane, Fuel oil and refined fuels, Natural gas and electricity, and Others.

Talking of expenses and margins, cost of products sold in the quarter represented 51.0% of total revenue, an increase from 49.4% reported in the year-ago quarter. Operating loss in the quarter increased manifold as compared with the year ago quarter.

In the last 30 days, the Zacks Consensus Estimate for Suburban Propane has gone down by 11.3% to $1.73 for fiscal year 2013 and has declined 11.7% to $2.50 for fiscal year 2014.

Also, Suburban Propane had a negative earnings surprise in all the trailing four quarters, with the average being 17.1%. Additionally, we have an Earnings ESP (Read: Zacks Earnings ESP: A Better Method) of 2.3% for the fiscal fourth quarter 2013, 4.6% for fiscal 2013 and 4.8% for fiscal 2014.

Other Stocks to Consider

Suburban Propane Partners is a master limited partnership, engaged in the retail marketing and distribution of propane, fuel oil, and refined fuels. The company has a market capitalization of $2.8 billion.

Other stocks to watch out for in the industry are AGL Resources Inc. (GAS - Analyst Report), Atmos Energy Corporation (ATO - Snapshot Report) and Piedmont Natural Gas Co. Inc. (PNY - Snapshot Report), each with a Zacks Rank #2 (Buy).
 

Please login to Zacks.com or register to post a comment.