UGI Corporation’s UGI strategic investment plans will help upgrade and replace its aging infrastructure, thereby boosting customer reliability and performance. Given its growth opportunities and strong return on equity (ROE), UGI makes for a solid investment option in the Zacks Utility sector.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) company a strong investment pick at the moment.
UGI’s Growth Projections & Surprise History
The Zacks Consensus Estimate for UGI’s fiscal 2024 earnings per share (EPS) has increased 0.3% in the past 30 days to $2.93.
The consensus estimate for fiscal 2025 EPS has increased 1% in the past 30 days to $3.14.
The company delivered a trailing four-quarter average earnings surprise of 99.13%.
UGI’s Return on Equity
ROE indicates how efficiently a company has been utilizing its funds to generate higher returns. Currently, UGI’s ROE is 15.65%, higher than the industry’s average of 9.33%. This indicates that the company has been utilizing its funds more constructively than its peers in the utility gas distribution industry.
UGI’s Solvency Position
The time-to-interest earned ratio at the end of the fiscal third quarter was 3.2. The ratio, being greater than one, reflects the company’s ability to meet future interest obligations without difficulties.
Dividend History of UGI
The consistent strong performance of the company has enabled it to reward its shareholders through annual dividend rate hikes. The company has been paying dividends for the last 140 years. Currently, its quarterly dividend is 37.5 cents per share, resulting in an annualized dividend of $1.50. The current dividend yield of 6.21% is better than the industry’s average of 3.1%.
UGI’s Strategic Investments
UGI continues to make systematic capital investments to address various capital projects and further enhance the safety and reliability of natural gas production and storage facilities, along with replacing the aging infrastructure for modernizing the system. These additions and upgrades allow it to serve the expanding customer base efficiently. It expects to incur capital expenditure in the range of $3.7-$4.1 billion during the fiscal 2024-2027 period.
Price Performance of UGI Stock
In the past three months, shares of the company have risen 8.9% compared with the Zacks S&P 500 Composite’s 2.7% growth.
Image Source: Zacks Investment Research
Other Stocks to Consider
Other top-ranked stocks from the same sector are Clean Energy Fuels Corporation CLNE, TransAlta Corporation TAC and Northwest Natural Holding Company NWN. CLNE sports a Zacks Rank #1 (Strong Buy) at present while both TAC and NWN carry a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
CLNE delivered an average earnings surprise of 60.42% in the last four quarters. The Zacks Consensus Estimate for CLNE’s 2025 earnings indicates year-over-year growth of 58.3%.
TAC delivered an average earnings surprise of 97.99% in the last four quarters. The consensus estimate for TAC’s 2024 earnings has increased 4.2% in the past 60 days.
NWN delivered an average earnings surprise of 8.69% in the last four quarters. The Zacks Consensus Estimate for NWN’s 2025 earnings indicates year-over-year growth of 26.3%.
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