Why Is UGI (UGI) Down 2.5% Since Last Earnings Report?

It has been about a month since the last earnings report for UGI (UGI). Shares have lost about 2.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is UGI due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

UGI Corporation Q1 Earnings Beat Estimates, Sales Lag

UGI Corporation reported first-quarter fiscal 2024 earnings per share of $1.20, surpassing the Zacks Consensus Estimate of $1.12 by 7.1%. The bottom line improved 5.2% from the year-ago quarter’s earnings of $1.14.

Total Revenues

Revenues of $2.12 billion missed the Zacks Consensus Estimate of $2.97 billion by nearly 28.77%. The top line also declined by 23% from the year-ago quarter’s figure of $2.75 billion.

Segmental Results

AmeriGas Propane: Revenues of $629 million were down 17.8% from the year-ago quarter. Retail gallons sold during the quarter declined 13% year over year. This was due to warmer weather and continued customer attrition.

UGI International: Revenues totaled nearly $725 million, down 17.33% from the year-ago level. This was because temperatures were warmer than normal and colder than the prior-year period, and operating and administrative expenses increased.

Midstream & Marketing: Revenues of $394 million were down 41.1% year over year.

UGI Utilities: Sales of $493 million were down 16.7% from that registered in the year-ago period. The decline was due to warmer weather, partially offset by customer growth.

Corporate & Other: This segment incurred a loss of $120 million, narrower than the prior-year quarter’s loss of $145 million.

Highlights of the Release

Despite warmer-than-normal weather across its service territories, a 77% increase in EBIT was seen in UGI International. This can be attributed to the continued exit of the non-core energy marketing business, higher LPG volumes and increased unit margins.

Liquidity came in at approximately $1.5 billion as of Dec 31, 2023, which is sufficient to meet near-term obligations.

UGI Corporation received approval from the West Virginia Public Service Commission for Mountaineer's gas rate case. The settlement permitted a $13.9 million annual distribution rate increase, effective Jan 1, 2024, which will boost the company’s earnings.

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

Currently, UGI has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, UGI has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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