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UGI to Gain From Strategic Acquisitions & Cost Reduction Actions
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UGI Corporation (UGI - Free Report) is expanding operations through strategic acquisitions, which will likely drive its performance. UGI’s capital investments help in system upgradation by replacement of aging infrastructure.
However, this Zacks Rank #4 (Sell) stock faces competition from other clean sources and risks related to the seasonality of its business.
Tailwinds
UGI continues to make systematic capital investments to address the infrastructural need for various capital projects, increase the safety and reliability of natural gas production and storage facilities, and replace the aging infrastructure for system modernization.
After investing $674 million in fiscal 2021, UGI invested $835 million in fiscal 2022. Capital expenditure totaled nearly $650 million in the year-to-date period. These investments will assist the company in achieving its long-term annual earnings per share (EPS) growth target of 6-10%.
UGI is benefiting from the strategic acquisitions of Stonehenge and Mountaineer. In 2022, it completed the acquisition of Stonehenge. This is in sync with the utility’s growth strategies that include the expansion of midstream natural gas gathering assets within the Appalachian region.
The company is focused on sustainable cost savings and efficiencies to offset inflationary pressures, create more capital headroom and drive shareholders' value. This initiative will be carried out by streamlining centralized processes for effective operations for better cost control, leveraging technological improvements, digital innovation and increased efficiency.
Headwinds
The company runs a seasonal business. A decrease in the demand for energy products and services due to warmer-than-normal winter season can lower its profitability. In addition, unprecedented volatility in commodity prices in Europe had a negative impact on average LPG per unit and energy marketing margins in the UGI International segment.
UGI's energy products and services face competition from other energy sources, some of which are cheaper for an equivalent energy value.
ATO’s long-term (three to five year) earnings growth rate is 7.48%. The Zacks Consensus Estimate for ATO’s fiscal 2023 EPS indicates a year-over-year increase of 8.2%.
MDU’s long-term earnings growth rate is 5.77%. It delivered an average earnings surprise of 14.2% in the previous four quarters.
ED’s long-term earnings growth rate is 2%. It delivered an average earnings surprise of 8.2% in the previous four quarters.
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UGI to Gain From Strategic Acquisitions & Cost Reduction Actions
UGI Corporation (UGI - Free Report) is expanding operations through strategic acquisitions, which will likely drive its performance. UGI’s capital investments help in system upgradation by replacement of aging infrastructure.
However, this Zacks Rank #4 (Sell) stock faces competition from other clean sources and risks related to the seasonality of its business.
Tailwinds
UGI continues to make systematic capital investments to address the infrastructural need for various capital projects, increase the safety and reliability of natural gas production and storage facilities, and replace the aging infrastructure for system modernization.
After investing $674 million in fiscal 2021, UGI invested $835 million in fiscal 2022. Capital expenditure totaled nearly $650 million in the year-to-date period. These investments will assist the company in achieving its long-term annual earnings per share (EPS) growth target of 6-10%.
UGI is benefiting from the strategic acquisitions of Stonehenge and Mountaineer. In 2022, it completed the acquisition of Stonehenge. This is in sync with the utility’s growth strategies that include the expansion of midstream natural gas gathering assets within the Appalachian region.
The company is focused on sustainable cost savings and efficiencies to offset inflationary pressures, create more capital headroom and drive shareholders' value. This initiative will be carried out by streamlining centralized processes for effective operations for better cost control, leveraging technological improvements, digital innovation and increased efficiency.
Headwinds
The company runs a seasonal business. A decrease in the demand for energy products and services due to warmer-than-normal winter season can lower its profitability. In addition, unprecedented volatility in commodity prices in Europe had a negative impact on average LPG per unit and energy marketing margins in the UGI International segment.
UGI's energy products and services face competition from other energy sources, some of which are cheaper for an equivalent energy value.
Stocks to Consider
Some better-ranked stocks from the same sector are Atmos Energy Corp. (ATO - Free Report) , MDU Resources (MDU - Free Report) and Consolidated Edison (ED - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ATO’s long-term (three to five year) earnings growth rate is 7.48%. The Zacks Consensus Estimate for ATO’s fiscal 2023 EPS indicates a year-over-year increase of 8.2%.
MDU’s long-term earnings growth rate is 5.77%. It delivered an average earnings surprise of 14.2% in the previous four quarters.
ED’s long-term earnings growth rate is 2%. It delivered an average earnings surprise of 8.2% in the previous four quarters.