• Energy and Income Advisor
  • Conrads Utility Investor
  • Capitalist Times
  • Twitter
  • Seeking Alpha
  • Roger S. Conrad

Finding Certainty amid Uncertainty

By Elliott H. Gue on Mar. 23, 2015

AmeriGas Partners has zero exposure to movements in oil prices and has a long track record of delivering steady cash flow and distribution growth through bolt-on acquisitions in the highly fragmented propane distribution market.

When propane prices spiked in the Midwest and Northeast during the 2013-14 polar vortex, AmeriGas Partners’ quarterly results didn’t skip a beat—a testament to the master limited partnership’s (MLP) economies of scale and execution.

The mild winter weighed on propane volumes in the MLP’s fiscal first quarter ended Dec. 31, 2014, while the margin-boosting effects of the precipitous drop in propane price won’t be felt until its fiscal third quarter, when the distributor starts to build its inventories for the 2015-16 winter.

Accordingly, management lowered its cash flow guidance for the fiscal year to between $635 million and $665 million; the midpoint of this range would result in a 2 percent decline from the previous year’s record earnings before interest, taxes, depreciation and amortization (EBITDA).

Nevertheless, we don’t expect the MLP to deviate from its long track record of raising its distribution by 4 percent to 5 percent annually. AmeriGas Partners should benefit from lower propane prices in 2015 and 2016, which should help to bolster volumes and margins. The firm’s fiscal second quarter, however, could disappoint.

 

Energy & Income Advisor

Your complete guide to energy investing, from growth stocks to high-yielders.

In October 2012, renowned energy expert Elliott Gue launched the Energy & Income Advisor, a twice-monthly investment advisory that's dedicated to unearthing the most profitable opportunities in the sector, from growth stocks to high-yielding utilities, royalty trusts and master limited partnerships.

Subscribe today to receive a sample issue of EIA
  • Live Chat with

    Elliott and Roger on Sep. 26, 2017

  • Portfolios & Ratings

    • Model Portfolios

      Balanced portfolios of energy stocks for aggressive and conservative investors.

    • Coverage Universe

      Our take on more than 50 energy-related equities, from upstream to downstream and everything in between.

    • MLP Ratings

      Our assessment of every energy-related master limited partnership.

    • International Coverage Universe

      Roger Conrad’s coverage of more than 70 dividend-paying energy names.

    Experts

    • Roger S. Conrad

      Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor

    • Elliott H. Gue

      Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor

    • Peter Staas

      Managing Editor: Capitalist Times and Energy & Income Advisor