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AGL Resources Earnings Miss Estimates in Q4, Improve Y/Y

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AGL Resources Inc., an energy services holding company, reported lower-than-expected fourth-quarter 2015 earnings primarily due to warmer temperatures in several service areas. This was partially compensated by contributions from the company’s Distribution and Retail businesses.

The company announced earnings per share of 72 cents – excluding merger expenses, goodwill impairment and wholesale services − which failed to beat the Zacks Consensus Estimate of 78 cents. However, the bottom line improved from the year-ago adjusted profit of 66 cents.


Total operating revenues of $962 million came in below the year-ago figure of $1,445 million. 

Segmental Performance

Distribution Operations: The segment, comprising seven utilities, reported earnings before interest and taxes (EBIT) of $160 million, up from $153 million in the fourth-quarter of 2014.

Retail Operations: Comprising SouthStar Energy Services, Nicor Services, Nicor Solutions and Nicor Advanced Energy, this segment reported an EBIT of $37 million against just $30 million a year ago.

Wholesale Services: The unit, which includes Sequent Energy Management, earned $42 million in the quarter, sliding from $114 million in the corresponding quarter of 2014.

Midstream Operations: This segment, mainly comprising natural gas storage facilities, incurred a loss of $3 million, same as the year-ago quarter.   

Operating Expenses

The company’s total operating cost was $746 million, reflecting a decrease of 35.6% from $1,158 million in the year-ago quarter. 

Zacks Rank

AGL Resources’ large and stable customer profile, consistent dividend growth and strong liquidity position augurs well. As a result, the company currently carries a Zacks Rank #2 (Buy), implying that the stock will outperform the broader U.S. equity market over the next one to three months.

Meanwhile, some other stocks that warrant a look in the energy space include Murphy USA Inc. (MUSA - Free Report) , Tesoro Corporation and Valero Energy Corporation (VLO - Free Report) . Murphy USA sports a Zacks Rank #1 (Strong Buy) while Tesoro and Valero Energy carry a Zacks Rank #2.  

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