Spire Inc. SR is a natural gas company efficiently serving more than 1.7 million customers in the United States. The company continues to expand business organically via making systematic investments to expand infrastructure and advance through innovation. More than 90% of its profits come from regulated operations, which provide a clear visibility of future earnings.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a strong investment pick at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for fiscal 2021 and 2022 earnings per share is pegged at $4.15 and $4.40, respectively. Estimates for fiscal 2021 and 2022 have increased 2% and 1.4%, respectively, in the past 60 days.
The Zacks Consensus Estimate for fiscal 2022 revenues is pegged at $1.90 billion, indicating year-over-year growth of 2.95%.
Long-Term Earnings Growth & Dividend Yield
Long-term (three to five years) earnings growth is currently pegged at 5%.
Currently, the company has a dividend yield of 3.54%, higher than the industry’s 2.85%. The company has increased annual dividend rate for 18 consecutive years and has been continuously paying dividend to customers for the past 76 years.
Regular Investments & Steady Customer Growth
Spire makes consistent investments to upgrade and maintain the existing infrastructure, as well as expand operations. The company anticipates investing $590 million in fiscal 2021 and more than $3 billion during the fiscal 2021-2025 time period. These investments will increase the reliability of gas services and enable it to serve an increasing customer base effectively. The company expects this systematic investment to drive 7-8% rate base growth over the long term.
Also, it has been registering a consistent increase in gas utility customer volumes over the last few years. At the end of fiscal 2020, its customer volumes increased 0.9% year over year. The company is expected to register customer growth in fiscal 2021. It is implementing advanced metering technology to enhance safety, provide improved services, and support the expanding customer base.
Advancement Via Innovation
Spire has launched the Innovation center with an objective of serving customers more efficiently. The company is driving innovation through technology upgrades and adoption of advanced technology. The usage of new technology is assisting it to improve service and efficiency, as well as lower operating costs, thereby benefiting customers.
In the past six months, the stock has gained 35% compared with the industry’s growth of 26.3%.
Other Stocks to Consider
Other top-ranked stocks in the same sector include Black Hills Corporation BKH, California Water Services Group CWT and NiSource Inc. NI, each currently having a Zacks Rank #2.
Black Hills, California Water Services and NiSource pay regular dividends, ensuring a steady income for investors. The current dividend yield of Black Hills, California Water Services and NiSource is 3.39%, 1.64%, and 3.66%, respectively.
The Zacks Consensus Estimate for 2021 earnings for Black Hills, California Water Services and NiSource has moved up 1.3%, 3.5% and 0.8%, respectively, in the past 60 days.
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NiSource, Inc (NI) : Free Stock Analysis Report
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