Back to top

Image: Bigstock

Spire Gains From Strategic Investments and Expanding Customer Base

Read MoreHide Full Article

Key Takeaways

  • Spire expects to invest $840 million in FY25 as part of a $7.4 billion expansion capital strategy.
  • Spire serves 850K customers with advanced meters, improving accuracy and customer engagement.
  • SR expects long-term rate-based growth of 7-8%, driven by systematic infrastructure investments.

Spire Inc. (SR - Free Report) benefits from investments in strengthening and extending its operations, allowing it to fulfill rising demand from an increasing consumer base. It uses technology to carry out its operations efficiently, lowering costs and improving services.

However, this Zacks Rank #3 (Hold) company faces risks related to its dependence on suppliers’ performance and stringent laws.

Positive Drivers for Spire

SR intends to invest $840 million in fiscal 2025, up from the previous guidance of $790 million. This capital plan is focused on reliability, new service connections and completion of Spire Missouri's advanced meter installations. Spire has a capital investment plan of $7.4 billion over the next 10 years. SR expects this systematic investment to drive 7-8% rate-based growth in the long term.

Spire continues to install ultrasonic meters across utilities to enhance customer experience. SR deployed more than 350,000 advanced meters in fiscal 2024, bringing the total number of customers who benefit from this technology to 850,000. 

Spire is actively increasing its customer base through acquisitions. This strategy allows Spire to broaden its geographic reach and serve more customers while improving its existing infrastructure. In January 2024, Spire finalized the acquisition of MoGas and Omega pipeline systems, adding almost 263 miles of interstate natural gas pipes to their network. This acquisition allows Spire to better serve its growing customer base in St. Louis, MO.

Factors That May Hinder Spire

The supply of natural gas to Spire Marketing's customers is dependent on the performance of its suppliers and the capacity of pipeline and storage operators to fulfill delivery obligations. Midstream also uses third-party pipelines and other facilities to provide distribution options to and from its operations. The company's financial performance may suffer if there is any disruption in the suppliers' performance.

Spire's activities are governed by numerous environmental laws and rules. Complying with the same increases operating costs, while failing to do so may result in the loss of necessary permits and licenses, as well as fines, penalties or company interruptions. The company's profitability may be significantly impacted by these charges.

SR Stock Price Movement

In the past six months, SR shares have rallied 6.3% against the industry’s decline of 3.4%.

Zacks Investment Research
Image Source: Zacks Investment Research

Stocks to Consider

Some better-ranked stocks from the same industry are UGI Corporation (UGI - Free Report) , Southwest Gas (SWX - Free Report) and New Jersey Resources (NJR - 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.

UGI’s long-term (three to five years) earnings growth rate is 5.2%. It delivered an average earnings surprise of 75.67% in the last four quarters.

SWX’s long-term earnings growth rate is 9.9%. It delivered an average earnings surprise of 6% in the last four quarters.

The Zacks Consensus Estimate for NJR’s fiscal 2025 earnings per share calls for an improvement of 9.9%. The Zacks Consensus Estimate for its fiscal 2025 revenues is pegged at $1.96 billion, which implies a rise of 9%.

Published in