UGI Corporation (NYSE:UGI) just released its latest quarterly results and things are looking bullish. It was overall a positive result, with revenues beating expectations by 4.7% to hit US$2.6b. UGI also reported a statutory profit of US$2.33, which was an impressive 33% above what the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Following the latest results, UGI's two analysts are now forecasting revenues of US$7.08b in 2021. This would be a modest 3.6% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to tumble 24% to US$3.24 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$7.15b and earnings per share (EPS) of US$2.98 in 2021. So the consensus seems to have become somewhat more optimistic on UGI's earnings potential following these results.
There's been no major changes to the consensus price target of US$46.75, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the UGI's past performance and to peers in the same industry. The analysts are definitely expecting UGI's growth to accelerate, with the forecast 7.4% annualised growth to the end of 2021 ranking favourably alongside historical growth of 3.7% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 2.0% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect UGI to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around UGI's earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for UGI going out as far as 2023, and you can see them free on our platform here.
It is also worth noting that we have found 2 warning signs for UGI that you need to take into consideration.
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