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Ferrellgas Partners (FGP) Q1 Earnings: What Lies Ahead?

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Ferrellgas Partners, LP (FGP - Free Report) will release first-quarter fiscal 2018 financial results, before the market opens on Dec 7.

Last quarter, the partnership reported a negative earnings surprise of 26.67%. In the trailing four quarters, it recorded an average negative surprise of 21.40%. Let’s see how things are shaping up prior to this announcement.

Factors to Consider

Ferrellgas Partners has been taking initiatives to drive growth through notable acquisitions. Impressively, it has completed over 240 acquisitions till August 2017, growing from a single-location, independently owned propane retailer to a publicly traded organization.

Toward this, the partnership acquiredtwo Tennessee propane retailers, Lindsey Propane and Sevier County Propane in the month of August to provide better services to its customersin central and eastern parts of Tennessee.

Further, the partnership expanded its business in Virginia by buying Service Plus Propane, Inc., an independent propane retailer based in South Hill, VA in September 2017. This acquisition will further expand its operation in eastern region of the country. Notably, both these transactions became immediately accretive to the company’s operations, as per management’s expectation.

We expect such inorganic initiatives will enable Ferrellgas Partners to deliver improved revenue as well as earnings performance in first-quarter fiscal 2018. In line with this, the Zacks Consensus Estimate for fiscal first quarter revenue stands at $647.7 million, reflecting an annual increase of 11.8%, while that for earnings reflected an annual improvement of 66.7%.

However, in past few quarters, lower contributions from midstream operations have hampered the company’s overall result. In particular, the loss of one of its largest customers, the Jamex TLA, has been a major setback. With no hint from the company toward improvement in these operations any time soon, we may expect to witness similar lower contributions from midstream operations in the upcoming results as well. Moreover, increasing wholesale cost of propane may hurt the stock’s fiscal first-quarter results.

Earnings Whispers

Our proven model does not conclusively show that Ferrellgas Partners is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here, as you will see below.

Zacks ESP:Ferrellgas Partners has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 28 cents.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank:Ferrellgas Partners carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ferrellgas Partners’ Zacks Rank #3, when combined with a 0.00% ESP, makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement.

Ferrellgas Partners, L.P. Price and EPS Surprise

Peer Releases

Investors can consider other stocks from the same industry such as Genesis Energy, L.P. (GEL - Free Report) , Boardwalk Pipeline Partners L.P. (BWP - Free Report) and Sunoco LP (SUN - Free Report) that have already released their earnings.

Genesis Energy delivered positive earnings surprise of 69.23% in third-quarter 2017.

Boardwalk Pipeline delivered positive earnings surprise of 3.85% in third-quarter 2017.

Sunoco delivered positive earnings surprise of 191.43% in third-quarter 2017.

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