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Energy services holding company AGL Resources Inc. (GAS - Analyst Report) reported strong third-quarter 2013 results on the back of better performances from Distribution Operations and Wholesale Services business units.

AGL Resources – which became the largest domestic natural gas-only distribution entity with about 4.5 million customers across seven states following the Dec 2011 acquisition of Naperville, IL-based Nicor Inc. – announced earnings per share of 24 cents, beating the Zacks Consensus Estimate of 14 cents.    

Moreover, AGL Resources’ earnings per share rose by whopping 166.7% from profit of 9 cents per share (excluding merger related expenses) in the third quarter of the previous year.

Total operating revenues, came in at $675.0 million, outpacing the Zacks Consensus Estimate of $618.0 million and the year-ago figure of $614.0 million.

Segmental Performance

Distribution Operations: The segment, comprising seven utilities, reported earnings before interest and taxes (EBIT) of $86.0 million, up from $80.0 million in the third quarter of 2012. The results were aided by increased usage and more customers.

Retail Operations: Comprising SouthStar Energy Services, Nicor Services, Nicor Solutions and Nicor Advanced Energy, this segment achieved an EBIT of $8.0 million, up from the year- ago profit of $5.0 million. New contracts of retail services along with favorable weather in Georgia supported the results.

Wholesale Services: The unit, which includes Sequent Energy Management, reported a loss of $2.0 million, significantly narrower than a loss of $23.0 million in the prior-year quarter. Better commercial activities aided the result.

Midstream Operations: This segment reported a loss of $1.0 million, against $1.0 million profit in the year-ago quarter. The results were hurt by increased operating cost.

Cargo Shipping: This segment generated a profit of $2.0 million in the reported quarter as against a loss of $1.0 million in the year-earlier period. Shipping of increased capacity along with reduced depreciation and amortization costs favored the results.

Guidance

AGL Resources’ management raised its 2013 earnings guidance to $2.55 - $2.65 per share (excluding wholesale services) from $2.40 - $2.50.

Zacks Rank

AGL Resources currently carries a Zacks Rank #1 (Strong Buy), implying that it is expected to significantly outperform the broader U.S. equity market over the next one to three months.

Apart from AGL Resources, one can look at natural gas distribution utilities like Questar Corp.  (STR - Analyst Report), Piedmont Natural Gas Co Inc (PNY - Snapshot Report) and New Jersey Resources Corp. (NJR - Snapshot Report) that offer value and are worth buying now. All the stocks sport a Zacks Rank #2 (Buy).

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