Core Insights - UGI Corporation (UGI) is positioned as a strong investment option in the utility sector due to strategic investments in infrastructure modernization, disciplined capital allocation, and operational improvements [1] Growth Projections - The Zacks Consensus Estimate for fiscal 2025 earnings per share (EPS) has increased by 2.3% to $3.13 over the past 90 days [2] - Projected sales for fiscal 2025 are $7.81 billion, reflecting a year-over-year increase of 8.4% [2] - UGI's long-term earnings growth rate is estimated at 5.2%, with a trailing four-quarter average earnings surprise of 75.7% [2] Return on Equity - UGI's return on equity (ROE) stands at 16.21%, surpassing the industry average of 9.24%, indicating more effective utilization of funds compared to peers [3] Liquidity Position - The company's current ratio is 1.23, which is significantly better than the industry average of 0.63, suggesting sufficient short-term assets to cover liabilities [4] Debt Management - UGI's total debt to capital ratio is 58.34%, which is lower than the sector average of 60.33% [5] - The time-to-interest earned ratio is 2.5, indicating the company's capability to meet future interest obligations comfortably [5] Strategic Investments - UGI is making strategic investments to enhance safety and reliability in natural gas production and storage, with $160 million invested in the fiscal second quarter, 79% of which was allocated to natural gas businesses [6][7] - The company plans to invest $800-$900 million in fiscal 2025 and $3.7-$4.1 billion through fiscal 2027 to strengthen operations [7] Dividend History - UGI has a long-standing history of paying dividends for 141 years, with a 10-year compound annual growth rate (CAGR) of 6% from fiscal 2014-2024 [10] - The current dividend yield is 4.17%, outperforming the Zacks S&P 500 composite's yield of 1.19% [10] Share Price Performance - Over the past three months, UGI shares have increased by 8.5%, compared to the industry's growth of 1.9% [11]

Core Viewpoint - Atmos Energy Corporation (ATO) is positioned to benefit from increasing natural gas demand, supported by a growing customer base and planned investments to enhance pipeline reliability and operational performance [1][2]. Growth Outlook & Financial Performance - The Zacks Consensus Estimate for fiscal 2025 earnings per share (EPS) has risen by 0.3% to $7.24 over the past 60 days [3]. - Fiscal 2025 sales are projected at $4.80 billion, reflecting a year-over-year increase of 15.3% [3][8]. - ATO's long-term earnings growth rate is estimated at 7.2%, with an average earnings surprise of 2.59% over the last four quarters [3]. Investment Returns - ATO's return on invested capital (ROIC) stands at 3.25%, outperforming the industry average of 2.62% [4][8]. - The company's total debt to capital ratio is 39.30%, which is better than the industry average of 50.49% [9]. Strategic Investments & Customer Expansion - ATO plans to invest $3.7 billion in capital expenditures for fiscal 2025 and a total of $24 billion from fiscal 2025 through 2029 to enhance infrastructure and operational capabilities [5][8]. - In the fiscal second quarter of 2025, ATO allocated approximately $225 million to expand its customer base, adding nine new industrial customers with an expected annual load of 8 billion cubic feet (Bcf) [6]. Shareholder Returns - ATO currently pays a quarterly dividend of 87 cents per share, leading to an annualized dividend of $3.48 and a dividend yield of 2.29% [7]. - The company aims to increase its dividend by 6-8% annually through fiscal 2026, pending board approval [7]. Stock Performance - Over the past six months, ATO shares have increased by 10.9%, compared to the industry's growth of 3.1% [10].

Industry Overview - Natural gas distribution companies transport natural gas from production regions to consumers across the U.S., utilizing extensive underground pipeline networks [1] - The industry is transitioning towards cleaner energy, with natural gas serving as a critical bridge fuel for decarbonization goals [1] - The U.S. has 3,353 trillion cubic feet of natural gas and operates a 2.6-million-mile pipeline network, but faces challenges from aging infrastructure and competition from alternative energy sources [3] Future Outlook - U.S. Energy Information Administration (EIA) projects an increase in domestic dry natural gas production in 2025, particularly in the Permian and Eagle Ford regions [4] - LNG export volumes are expected to rise by 22.7% year-over-year in 2025 and 9.6% in 2026, highlighting the importance of gas pipelines for transportation to export terminals [4] - Interest rates have declined by 100 basis points, benefiting capital-intensive utilities planning infrastructure upgrades [5] Investment Opportunities - Natural gas utilities are investing approximately $37 billion annually to enhance the reliability of distribution and transmission systems, indicating long-term growth potential [6] - The Zacks Utility Gas Distribution industry ranks 52, placing it in the top 21% of the 244 Zacks industries, reflecting strong near-term prospects [7][8] Performance Metrics - The Gas Distribution industry has outperformed the S&P 500 and the Utility sector over the past year, with an 18.1% gain compared to 10.8% for the S&P 500 [9] - The industry is currently trading at a trailing 12-month EV/EBITDA ratio of 11.12X, lower than the S&P 500's 16.96X and the sector's 15.09X, suggesting a potential valuation opportunity [12] Company Highlights - **Atmos Energy Corporation (ATO)**: Plans to invest $3.7 billion in fiscal 2025, with a current dividend yield of 2.23% and long-term earnings growth projected at 7.19% [18][19] - **UGI Corporation**: Expected to invest $3.7-$4.1 billion through fiscal 2027, with a dividend yield of 4.12% and long-term earnings growth of 5.2% [22][23] - **ONE Gas Inc. (OGS)**: Aims to invest $4 billion through 2029, with a dividend yield of 3.64% and long-term earnings growth of 5.6% [26][27] - **Northwest Natural Holding Company (NWN)**: Plans to invest $2.5-$2.7 billion through 2030, with a dividend yield of 3.64% [30][31]

Core Viewpoint - Southwest Gas (SWX) is positioned as a strong investment option in the Zacks Utility Gas Distribution industry due to its consistent infrastructure investments, customer growth, and effective debt management [1] Growth Forecast & Surprise History - The Zacks Consensus Estimate for SWX's 2025 earnings per share (EPS) has increased by 5.1% to $3.72 over the past 60 days [2] - The 2026 sales estimate is projected at $5.13 billion, reflecting a year-over-year growth of 6% [2] - SWX's long-term earnings growth rate is forecasted at 9.9%, with an average earnings surprise of 6% over the last four quarters [2] Debt Profile Overview - Southwest Gas has a total debt to capital ratio of 57.36%, which is better than the sector average of 59.23%, indicating a stronger financial position and lower reliance on borrowed funds [3] Strategic Capital Allocation Plan - The company plans to invest $4.3 billion in capital from 2025 to 2029 to meet the growing demand for energy solutions [4] - For 2025, capital expenditure is estimated at $880 million, aimed at customer growth, system enhancements, and pipe replacement initiatives [4] Customer Base Growth - Southwest Gas serves a diverse customer base across Arizona, Nevada, and California, having installed 40,000 first-time meter sets in the 12 months ending March 31, 2025 [5] - The company anticipates a 1.4% annual increase in customers through 2029, which is expected to enhance its performance [5] Return to Shareholders - The company has been consistently increasing shareholder value through dividends, currently paying a quarterly dividend of 62 cents per share, leading to an annualized dividend of $2.48 [6] - The current dividend yield stands at 3.36%, outperforming the Zacks S&P 500 Composite average of 1.25% [6] Stock Performance - In the past month, SWX shares have increased by 4.3%, compared to the industry's growth of 1.4% [9]

Core Viewpoint - UGI Corporation's planned investments are expected to enhance its aging infrastructure and improve overall performance, making it a strong investment option in the utility sector due to growth opportunities and a solid return on equity (ROE) [1] Group 1: Growth Projections - The Zacks Consensus Estimate for fiscal 2025 earnings per share (EPS) has increased by 3.3% to $3.13 [2] - The Zacks Consensus Estimate for fiscal 2025 sales is projected at $7.81 billion, reflecting a year-over-year increase of 8.4% [2] - UGI's long-term earnings growth rate is estimated at 5.2%, with a trailing four-quarter average earnings surprise of 75.7% [2] Group 2: Financial Health - UGI's current ratio stands at 1.23, surpassing the industry average of 0.63, indicating sufficient short-term assets to cover liabilities [3] - The company's ROE is 16.21%, significantly higher than the industry average of 9.24%, demonstrating effective utilization of funds [4] - UGI's total debt to capital ratio is 58.34%, better than the sector's average of 59.23%, and the time-to-interest earned ratio is 2.5, indicating strong ability to meet interest obligations [5] Group 3: Dividend Performance - UGI has a long history of paying dividends for 141 years, with a current quarterly dividend of 37.5 cents per share, leading to an annualized dividend of $1.50 [6] - The compound annual growth rate (CAGR) for UGI's 10-year dividend is 6% for fiscal 2014-2024, and the current dividend yield is 4.1%, above the industry's average of 3.28% [6] Group 4: Strategic Investments - UGI plans to invest $800-$900 million in fiscal 2025 and up to $4.1 billion by 2027 to modernize its infrastructure [8][10] - These investments aim to enhance safety and reliability in natural gas production and storage, as well as replace aging infrastructure to efficiently serve an expanding customer base [9] - UGI has added over 6,600 residential heating and commercial customers year to date [9]