Back to top

Analyst Blog

Energy services holding company AGL Resources Inc.’s (GAS - Analyst Report) wholly owned affiliate – AGL Capital Corporation – recently commenced a public offering of senior notes worth $500.0 million.  The notes, expected to be guaranteed by AGL Resources, will carry an interest rate of 4.40% and are set to mature in 2043.  

Management estimates the proceeds from the offering of the senior notes at roughly $493 million. The amount is expected to be utilized for corporate activities which include the payment of short-term debt for the commercial paper program. AGL Resources expects the offering to close on May 16, 2013.  

Recently, AGL Resources reported weaker-than-expected first quarter 2013 earnings which were hurt by low and volatile natural gas prices. Earnings per share of $1.31 came in below the Zacks Consensus Estimate of $1.35.  However, compared with the year-earlier period, AGL Resources’ earnings per share rose 12.9% – from $1.16 (excluding merger-related expenses) to $1.31 – amid higher energy use on the back of lower-than-expected temperatures, against the unusually warm winter last year.

Founded in 1856, Atlanta, Ga.-based AGL Resources is an energy services holding company whose principal business is gas distribution. Following the Dec 2011 acquisition of Naperville, Ill.-based Nicor Inc., AGL Resources has become the largest domestic natural gas-only distribution entity with about 4.5 million customers across seven states.   

On the flip side, operating results for AGL Resources are affected by weather conditions and may vary on a seasonal and quarterly basis. Natural gas distribution is usually a temperature-sensitive business with about half of all deliveries used for space heating. Usually, almost 75% of the deliveries and sales occur during the six-month period of October through March. Consequently, milder-than-normal weather conditions in the future could adversely affect the company’s operating results, cash flow and financial condition.

AGL Resources currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next 1 to 3 months.  

In the utility gas distribution sector, three firms that are expected to outperform the broader U.S. equity market over the next 1 to 3 months are Atmos Energy Corporation (ATO - Snapshot Report), Chesapeake Utilities Corporation (CPK - Snapshot Report) and Southwest Gas Corporation (SWX - Snapshot Report). All the three firms currently retain a Zacks Rank #2 (Buy).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
ERBA DIAGNO… ERB 3.80 +7.04%
BANCO DO BR… BDORY 14.74 +5.66%
AIR INDUSTR… AIRI 9.99 +4.15%
EQT MIDSTRE… EQM 98.14 +3.38%
WEATHERFORD… WFT 23.64 +3.10%