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Ferrellgas Partners to Gain From Strategic Acquisitions

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We issued an updated research report on Ferrellgas Partners, L.P. (FGP - Free Report) . The partnership is a leading distributor of propane and related equipment in the United States.

Units of Ferrellgas Partners have declined 26.4% in the last month compared with the industry's fall of 4.7%.

What’s Driving the Stock?

Ferrellgas Partners distributes propane to customers in the entire United States. The partnership registered retail propane customer growth of 24,500, up 4% from prior-year levels.                 

The partnership is expanding tank exchange Blue Rhino business. The expansion of the business is mandatory as it is less weather dependent and provides visibility for future earnings. The partnership’s current Blue Rhino tank exchange sales locations have increased in excess of 12% from the start of the fiscal year to more than 53,800 locations. Approximately 25% of gallon sales growth can be attributed to weather and 20% to approximately 10,000 new customers added in the quarter.

Ferrellgas Partners is working on strategy to expand business through strategic acquisitions and organic initiatives. The acquisition of Diamond Propane, a propane retailer that serves residential, agricultural, industrial and commercial customers in and around St. Lawrence County, is expected to be immediately accretive to the partnership’s earnings and expand its operations in northern New York. The acquisition of Co-Op Butane, Inc will enable the partnership to expand business in St. Tammany and Washington parishes in eastern Louisiana. Over time, it added nearly 300 companies into the Ferrellgas family.

However, competition with other energy sources, sudden increase in wholesale propane price and dependency on particular group of vendors may weigh on Ferrellgas Partners.

Zacks Rank & Key Picks

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

A few better-ranked stocks from the same industry are Sunoco LP (SUN - Free Report) , Phillips 66 Partners LP (PSXP - Free Report) and CrossAmerica Partners LP (CAPL - Free Report) . CrossAmerica Partners sports a Zacks Rank #1,  while Sunoco and Phillips 66 Partners carry a Zacks Rank#2 (Buy).

The Zacks Consensus Estimate of 2019 earnings for CrossAmerica Partners moved up 91.2% in the past 90 days. The company pulled off positive earnings surprise of 436.67% in the last four quarters.

The Zacks Consensus Estimate of 2019 earnings for Sunoco moved up 12.4% in the past 90 days. The company delivered average positive earnings surprise of 18.39% in the last four quarters.

The Zacks Consensus Estimate of 2019 earnings for Phillips 66 Partners moved up 10.5% in the past 90 days. The company came up with average positive earnings surprise of 6.03% in the last four quarters.

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