AGL Resources Hits New High on Solid Q1 Prospect - Analyst Blog

Energy services holding company, AGL Resources Inc. GAS hit a 52-week high of $51.63 on Apr 15. In the past three months, the company witnessed over 10% growth in share price, supported by robust trading volumes. The company recently crossed the psychologically important $50 per share mark for the first time.

This recent positive momentum is attributable to the bullish first quarter expectations announced last week. AGL Resources anticipates operating earnings from its wholesale services segment to significantly surpass earlier projections. Segment earnings are expected at $270.0 million, indicating a massive jump from $29.0 million reported a year ago. Segment EPS is expected to be $1.53 compared with 8 cents a year ago.

AGL Resources added that its distribution and retail operations could exceed estimates, on a combined basis. The better-than anticipated earnings data is due to increase in natural gas demand led by the unusually cold weather that persisted through the first quarter.

Other factors like a solid dividend yield of 3.88%, near-monopoly status in its area of operation, best-in-class cost control and recession-proof business model all work in favor of this premier electric utility firm.

With earnings release just around the corner (expected to report on Apr 29), brokerage firms are also showing confidence in AGL Resources. Over the last 30 days, current quarter estimates have grown nearly 21% to $1.85 per share. Currently, the company has an Earnings ESP of +2.16%, another sign of a beat in the upcoming earnings.

AGL Resources climbed the rank ladder from Zacks Rank #3 (Hold) a month ago to its current Zack Rank #1 (Strong Buy). Moreover, it belongs to a well positioned industry – Gas Distribution Utilities (Zacks Industry Rank of 22 out of more than 250 industries). All these factors support the recent bullishness and hint at further good news for AGL Resources.

Other Stocks to Consider

In addition to AGL Resources, investors interested in this industry may also consider Delta Natural Gas Company, Inc. DGAS, Chesapeake Utilities Corporation CPK and Gas Natural Inc. EGAS. While Delta Natural sports a Zacks Rank #1, Chesapeake Utilities and Gas Natural hold a Zacks Rank #2 (Buy).