UGI Earnings Preview

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Investors are bracing for the worst and waiting to see if UGI (NYS: UGI) will fall short of Wall Street forecasts for the third consecutive quarter. The company will unveil its latest earnings on Wednesday, Jan. 25. UGI is a domestic and international retail distributor of propane and butane, natural gas, and electric service through regulated local distribution utilities.

What analysts say:

  • Buy, sell, or hold?: Half of analysts think investors should stand pat on UGI while the remaining half rate the stock as a buy. Analysts like UGI better than competitor Vectren overall. Zero out of seven analysts rate Vectren a buy compared to one of two for UGI. That rating hasn't budged in three months as analysts have remained steady in their opinion of the stock.
  • Revenue Forecasts: On average, analysts predict $2.16 billion in revenue this quarter. That would represent a rise of 22% from the year-ago quarter.
  • Wall Street Earnings Expectations: The average analyst estimate is earnings of $1.05 per share. Estimates range from $1.05 to $1.06.

What our community says:
CAPS All-Stars are strongly backing the stock, with 94.2% granting it an "outperform" rating. The greater community is in line with the All-Stars, as 95.1% give it a rating of "outperform." Fools feel positively about UGI, though the message boards have been quiet lately with only 38 posts in the past 30 days. Even with a robust four out of five stars, UGI's CAPS rating falls a little short of the community's upbeat outlook.

Management:
Revenue has now gone up for three straight quarters. The company's gross margin shrank by 92 percentage points in the last quarter. Revenue rose 16.7% while cost of sales rose 128% to $1.96 billion from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The company's net margins are down on a year-over-year basis for the last three quarters. Net margins reflect what percentage of revenue becomes profit. Here are UGI's reported margins for the last four quarters:

Quarter

Q4

Q3

Q2

Q1

Gross Margin

(88.6%)

33.9%

34.7%

16.5%

Net Margin

(2.2%)

(0.7%)

6.9%

6.4%

One final thing: If you want to keep tabs on UGI movements, and for more analysis on the company, make sure you add it to your Watchlist.

At the time this article was published Motley Fool newsletter services have recommended buying shares of UGI.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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