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Ferrellgas (FGP) Acquires Diamond Propane, Expands Operations

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Ferrellgas Partners L.P. announced the buyout of Diamond Propane, Inc, based in Potsdam, NY. Diamond Propane is a propane retailer that serves residential, agricultural, industrial and commercial customers in and around St. Lawrence County. The acquisition is expected to be immediately accretive to earnings and expand Ferrellgas’ operation in northern New York.

Expansion via Acquisition

Along with organic growth, Ferrellgas looks for strategic acquisitions of other propane operators to expand footprint across the United States. Notably, the company made nearly 240 acquisitions in its 75 years of service. We expect that the partnership to make more such acquisitions.

Growth of Blue Rhino business

Ferrellgas is expanding the tank exchange Blue Rhino business, as it is less dependent on weather and provides visibility for future earnings. Currently, the numbers of Blue Rhino tank exchange locations are 52,000, which reflect an addition of 5,000 locations compared with the levels in the beginning of 2018.

Moreover, new Blue Rhino production plants in Alabama and California are expected to be online by fiscal 2018. The locations of the plants will reduce fleet mileage by several miles per plant and lower fuel and vehicle repair costs. This will enable the partnership to save $1-$1.5 million per year in operating expenses.

Price Movement

In the past 12 months, the stock has lost 25.4% compared with the 1.5% decline of the industry .


 

Zacks Rank and Stocks to Consider

Ferrellgas Partners has a Zacks Rank #5 (Strong Sell).

A few better-ranked players in the sector are Devon Energy (DVN - Free Report) , Murphy Oil Corporation (MUR - Free Report) and Cheniere Energy, Inc (LNG - Free Report) . Murphy Oil sports a Zacks Rank #1 (Strong Buy). Devon Energy and Cheniere Energy carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Murphy Oil delivered a positive earnings surprise of 4.55% in the last earnings report. Its 2018 estimates have increased 21.9% to $1.67 in the last 60 days.

Devon Energy delivered a positive earnings surprise of 5.26% in the last earnings report. Its 2018 estimates have surged 36.6% to $1.83 in the last 60 days.

Cheniere Energy delivered a positive earnings surprise of 90.32% in the last earnings report. Its 2018 estimates have moved up 7.8% to $1.93 in the last 60 days.

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