On Mar 21, Zacks Investment Research upgraded
The Laclede Group Inc.
) to a Zacks Rank #1 (Strong Buy).
ATMOS ENERGY CP (ATO): Free Stock Analysis
CHESAPEAKE ENGY (CHK): Free Stock Analysis
LACLEDE GRP INC (LG): Free Stock Analysis
SOUTHWEST GAS (SWX): Free Stock Analysis
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Why the Upgrade?
The company has been performing well and has registered earnings
surprises in the last three quarters with an average beat of
52.07%. Net income in the first quarter of fiscal 2013 improved
13% year over year on the back of higher income from its Gas
Utility segment. The long-term expected earnings growth rate for
this stock is 3.0%.
The company has been working to maintain a strong financial
position with its current ratio presently at 1.45. Laclede Group
was able to lower its long-term debt by 100 basis point to 37%.
Net cash from operating activities in the first quarter of fiscal
2013 was up 6.5% y/y to $37.5 million.
The Laclede Group is set to acquire all the assets and
liabilities of Missouri Gas Energy and New England Gas Company
from Southern Union Company for $1.035 billion. This
acquisition is a big positive for the company and its customer
base would reach 1.2 million from 630,000 presently. The
transaction is expected to close before the end of the third
quarter of calendar 2013.
The Laclede Group continues to invest in development and
maintenance of its existing systems. The first quarter of fiscal
2013 saw capital investment increasing 51.4% year over year to
$27.7 million. Technology platform upgrades and the accelerated
replacement of parts of its distribution system will allow the
group to serve its customers better.
The Zacks Consensus Estimate for fiscal 2013 of $2.86 per share
reflects year-over-year growth of 2.5%. For fiscal 2014, the
Zacks Consensus Estimate of $3.02 per share reflects projected
growth of 5.5% year over year.
Other Stocks to Consider
Other than The Laclede Group Inc., a few other natural gas
utilities are also performing well and have a favorable Zacks
Rank. We note that in the U.S. usage of natural gas is on the
rise due to its clean burning nature and wide availability.
The stocks worth considering are
Southwest Gas Corporation
Chesapeake Utilities Corporation
Atmos Energy Corporation
). All of them presently have a Zacks Rank #2 (Buy).