New-Look AGL Misses, Up Y-Y - Analyst Blog
February 22 2012 - 9:06AM
Zacks
Energy services holding company AGL Resources
Inc. (GAS) reported weaker-than-expected fourth quarter
2011 results, hurt by warm weather and low natural gas prices.
The company – which became the largest domestic natural gas-only
distribution entity with about 4.5 million customers across seven
states following the December 2011 acquisition of Naperville,
Illinois-based Nicor Inc. – announced earnings per share (excluding
merger-related expenses) of 87 cents, below the Zacks Consensus
Estimate of 92 cents.
However, compared with the year-earlier period, AGL’s adjusted
earnings per share rose by a penny (from 86 cents to 87 cents) due
to the inclusion of Nicor Gas.
Total operating revenues, at $790.0 million, were shy of the
Zacks Consensus Estimate of $925.0 million but were up from the
year-ago level of $665.0 million.
For its fiscal year ended December 31, 2011, AGL reported profit
of $2.92 per share on revenues of $2,338.0 million.
Segmental Performance
Distribution Operations: The segment earnings
before interest and taxes (EBIT) for the most recent quarter was
$127.0 million, up from $94.0 million achieved during the fourth
quarter of 2010. The positive comparison can be attributed to
contributions from the inclusion of Nicor Gas.
Retail Operations: AGL’s ‘Retail’ segment
achieved an EBIT of $29.0 million versus income of $37.0 million in
the year-earlier period. The main reasons for the underperformance
were lower average customer usage, warm weather compared to the
year-earlier period and adverse inventory adjustments on account of
weak natural gas prices.
Wholesale Services: EBIT came in at $14.0
million, up $3.0 million year over year. The increase came on the
back of storage and
transportation hedge gains.
The earnings contribution from AGL’s other businesses –
Midstream Operations and Cargo
Shipping – were insignificant.
Guidance
Management gave its EPS guidance range for fiscal 2012 at
$2.80–$2.95.
Dividend Hike
Recently, AGL announced a 2.2% increase in its annual dividend
to $1.84 per share.
Rating & Recommendation
AGL Resources, which competes on a large scale with gas
distributors like Atmos Energy Corporation (ATO),
currently retains a Zacks #5 Rank (short-term Strong Sell rating).
We are also maintaining our long-term 'Underperform' recommendation
on the stock.
ATMOS ENERGY CP (ATO): Free Stock Analysis Report
AGL RESOURCES (GAS): Free Stock Analysis Report
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