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Bull of the Day: National Fuel Gas (NFG)

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Inflation has been banging up everybody. From higher prices at the pump to higher prices at the grocery store, we are all seeing the numbers and feeling the pinch. As consumers, it can feel like we are getting cheated. But before you get down on the inflation numbers, there is a way you can get even. Why not look at investing in companies that will benefit from the inflationary trends?

Stocks like today’s Bull of the Day, Zacks Rank #1 (Strong Buy) National Fuel Gas Company (NFG - Free Report) . National Fuel Gas Company operates as a diversified energy company. It operates through four segments: Exploration and Production, Pipeline and Storage, Gathering, and Utility.  As of September 30, 2021, it had proved developed and undeveloped reserves of 21,537 thousand barrels of oil and 3,723,433 million cubic feet of natural gas.

The Utility segment sells natural gas or provides natural gas transportation services to approximately 753,000 customers in Buffalo, Niagara Falls, and Jamestown, New York; and Erie and Sharon, Pennsylvania. The company markets gas to industrial, wholesale, commercial, public authority, and residential customers primarily in western and central New York, and northwestern Pennsylvania. As of September 30, 2021, the company also owned approximately 95,000 acres of timber property; and managed approximately 2,500 additional acres of timber cutting rights.

Zacks Investment Research
Image Source: Zacks Investment Research

The reason for the favorable ranks stems from the series of positive earnings estimate revisions coming from analysts. Over the last thirty days, two analysts have increased their earnings estimates for the current year and next year. The bullish sentiment has pushed up our Zacks Consensus Estimate from $5.68 to $6.00, while next year’s number is up from $6.59 to $7.37.

That’s 39.86% EPS growth this year and 22.86% next year. Sales growth is there as well with 30.29% sales growth this year and 11.93% sales growth next year. That helps this stock enjoy a PE of 10.5x earnings, cheaper than the industry average of 13.2x and the broad market’s 16.29x. The PEG Ratio comes in at 0.77x, making this a bargain with great growth numbers. Back to that industry average, the average growth in the industry is just 5% for the current year and 5.2% for next year.


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