Energy services holding company,
AGL Resources Inc
), reported weak fourth-quarter 2013 earnings, owing to
significant increase in operating cost.
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The company announced earnings per share of 68 cents, failed to
meet the Zacks Consensus Estimate of 91 cents. Moreover, the
figure also decreased 25.3% from the year-ago adjusted profit.
Total operating revenue of $1,329.0 million surpassed the Zacks
Consensus Estimate of $1,192.0 million and was also up from the
year-ago level of $1,218.0 million. Increase in demand owing to
an extreme drop in temperature during the quarter supported the
For its fiscal year ended Dec 31, 2013, AGL Resources reported
per share adjusted profits of $2.61 failed to beat the Zacks
Consensus Estimate of $2.80 but improved from the 2012 adjusted
earnings of $2.51 per share. Operating revenues of $4,617.0
million were 17.7% above the prior-year level and also surpassed
the Zacks Consensus Estimate of $4,480.0 million.
This segment, comprising seven utilities, witnessed earnings
before interest and taxes (EBIT) of $169.0 million, higher than
$158.0 million obtained in the fourth quarter of 2012. Hike in
demand owing to an extreme fall in temperature in the quarter
aided the results.
Consisting of SouthStar Energy Services, Nicor Services, Nicor
Solutions and Nicor Advanced Energy, this segment achieved an
EBIT of $47.0 million against a profit of $37.0 million in the
year-earlier period. The results were supported by lower than
normal temperature during the fourth quarter 2013.
This segment, which includes Sequent Energy Management, reported
a loss of $28.0 million against a profit of $10.0 million
recorded in the prior-year quarter. Losses from mark-to-market
activities owing to hedge positions hampered the results.
This segment, mainly comprising natural gas storage facilities,
reported loss of $11.0 million as compared to a profit of $4.0
million obtained during the fourth quarter of 2012. Impairment
loss incurred by the company for the closure of Sawgrass storage
development affected the results negatively.
This segment generated EBIT of $9.0 million in the reported
quarter, in line with the year-ago reported earnings.
ncreased Operating Cost
AGL Resources' fourth-quarter 2013 operating expenses came at
$1,146.0 million, reflecting a significant increase of 12.9% as
compared to the year-ago quarter.
AGL Resources declared a quarterly dividend of 49 cents per
share, reflecting a year-over-year hike of roughly 4.3%. The new
dividend will be paid on Mar 1, 2014 to the shareholders of
record as of Feb 14, 2014.
Excluding wholesale services, management guided earnings of $2.70
to $2.80 per share for 2014.
AGL Resources currently retains a Zacks Rank #4 (Sell), implying
that it is expected to underperform the broader U.S. equity
market over the next one to three months.
Meanwhile, one can look at better-ranked players in the utility
gas distribution sector like
Atmos Energy Corporation
National Fuel Gas Company
). All the stocks hold a Zacks Rank #2 (Buy).