What happened
Shares of UGI (UGI 2.90%) tumbled more than 10% by 11 a.m. EST on Tuesday. Weighing on the utility stock were its fourth-quarter results and outlook for fiscal 2020.
So what
UGI reported a loss of $51.5 million, or $0.27 per share, for its fiscal fourth quarter. That missed the analysts' consensus estimate by $0.20 per share. The main issue was higher costs associated with two acquisitions it completed during the quarter: the buyout of its former MLP AmeriGas, and Columbia Midstream Group.
Image source: Getty Images.
These deals will help drive UGI's earnings in fiscal 2020. In the company's view, its adjusted earnings should range from $2.60 to $2.90 per share. That's a notable improvement from fiscal 2019, when adjusted earnings came in at $2.28 per share. But that forecast is well below the analysts' consensus estimate for $3.04 per share. While the company is assuming normal weather conditions as well as the return of some pipeline capacity, it sees the value of those volumes coming in at a reduced level.
Now what
While UGI isn't expecting to grow earnings as much as analysts expected next year, its fiscal 2020 should be much better than fiscal 2019. Because of that, the company had the confidence to increase its dividend by another 25%. That marked the 32nd straight year UGI boosted its payout, with the utility growing it at an impressive 9.4% rate over the last decade. That excellent history makes it a stock that dividend seekers might want to take a closer look at, especially in light of today's decline.
