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Category: Stock Market and Spire Inc
Date: 9 May 2020 Stock Price: $73.46 We take a look at the 2nd quarter earnings release of their 2020 fiscal year of Spire, a company that operates in the energy provision sector serving over 1.7 million customers making it the 5th largest energy supplier in the US.
Beginning in March, we set in motion a broad range of proactive steps to address the coronavirus health crisis and its economic impact on our customers, while passionately protecting the health and safety of our employees and communities." |
About Spire Inc
At Spire Inc. (NYSE: SR) we believe energy exists to help make people’s lives better. It’s a simple idea, but one that’s at the heart of our company. Every day we serve 1.7 million homes and businesses making us the fifth largest publicly traded natural gas company in the country. We help families and business owners fuel their daily lives through our gas utilities serving Alabama, Mississippi and Missouri. Our natural gas-related businesses include Spire Marketing, Spire STL Pipeline and Spire Storage. We are committed to transforming our business through growing organically, investing in infrastructure, and advancing through innovation
Overview of Spire Inc 2nd quarter 2020 earnings report
The data below refers to the most recent quarter unless specified otherwise
- Total Revenues: $715.5 million (down from $803.5 million from the same quarter of the previous year)
- Revenue decreased by -10.9% over the last 12 months
- Operating expenses: $505 million (up from $594 million for the same quarter of the previous year)
- Operating expenses decreased by -14.9% over the last 12 months
- Some margin pressure was experienced by Spire with their revenues declining at a faster rate than their operating costs
- Net earnings: $129.7 million (down from $154.3 million for the same quarter of the previous year)
- Diluted earnings per share: $2.54 (down from $3.04 for the same quarter of the previous year)
- PE ratio of Spire: 7.1
- Dividend declared: $0.6225
- Dividend yield of Spire: 3.4%
- Diluted weighted-average shares outstanding: 51.1 million (down from 50.8 million for the same quarter of the previous year)
- Cash and cash equivalents: $108.4 million
- Cash and cash equivalents per share: $2.12
- Cash and cash equivalents makes up 12.9% of Spire market capital
- Cash and cash equivalents makes up 1.3% of Spire total assets
- Inventories of Spire: $127.1 million
- Inventories makes up 1.6% of Spire total assets
- Accounts receivable: $353 million
- Accounts receivable makes up 4.4% of Spire total assets
- Stockholders equity in Spire Inc: $2.665 billion
- Stockholders equity per share in Spire: $52.15
- Spire is trading at 1.41 times its stockholders equity per share which is well outside the expected range of between 2 and 4 times that most firms tend to trade at.
- For perspective the average price to book value of firms in the S&P 500 is 3.34. Read more about the S&P500 here.
- Cash generated from operations: $321.7 million
- Cash generated from operations per share: $6.29
Spire Inc management commentary on their 2nd quarter 2020 earnings report
ST. LOUIS (May 8, 2020) - Spire Inc. (NYSE: SR) today reported results for its fiscal second quarter ended March 31, 2020. Highlights include:
“Our second quarter results were below our plans, largely driven by lower margins from warmer weather across our footprint. Heading into the second half of our fiscal year, we’re focused on continuing to safely and reliably serve our customers and support our communities, while upgrading our infrastructure and operating efficiently,” said Suzanne Sitherwood, president and chief executive officer of Spire. “Beginning in March, we set in motion a broad range of proactive steps to address the coronavirus health crisis and its economic impact on our customers, while passionately protecting the health and safety of our employees and communities. We’ve worked with our regulators to find supportive solutions for customers whose income has been interrupted, including suspending service disconnections and late payment fees. I’m especially proud of our DollarHelp program and how our employees and customers are rallying to support one another. It’s truly about people helping people.”
- Net income of $133.6 million ($2.54 per diluted share), compared to $154.6 million ($3.04 per share) in the prior year
- Net economic earnings* of $144.0 million ($2.75 per share), down from $147.9 million ($2.90 per share) a year ago, reflecting warmer than normal weather
- Increased our FY20 capital expenditures plan to $640 million and launched our 5-year capital plan through 2024 totaling $2.8 billion
“Our second quarter results were below our plans, largely driven by lower margins from warmer weather across our footprint. Heading into the second half of our fiscal year, we’re focused on continuing to safely and reliably serve our customers and support our communities, while upgrading our infrastructure and operating efficiently,” said Suzanne Sitherwood, president and chief executive officer of Spire. “Beginning in March, we set in motion a broad range of proactive steps to address the coronavirus health crisis and its economic impact on our customers, while passionately protecting the health and safety of our employees and communities. We’ve worked with our regulators to find supportive solutions for customers whose income has been interrupted, including suspending service disconnections and late payment fees. I’m especially proud of our DollarHelp program and how our employees and customers are rallying to support one another. It’s truly about people helping people.”
Dividends
The Spire board of directors has declared a quarterly common stock dividend of $0.6225 per share, payable July 2, 2020, to shareholders of record on June 11, 2020. We have continuously paid a cash common stock dividend since 1946, with 2020 marking the 17th consecutive year of increasing dividends on an annualized basis. The board also declared the regular quarterly dividend of $0.36875 per depositary share on Spire’s 5.90 percent Series A Cumulative Redeemable Preferred Stock payable August 17, 2020, to holders of record on July 24, 2020.
Guidance and Outlook
We have updated our expected fiscal 2020 capital investment, increasing it by $30 million to $640 million, with $560 million earmarked for our gas utilities and $80 million for our gas-related businesses. We have also updated our 5-year capital expenditure plan to now include 2024, with total investment expected to be $2.8 billion and supporting utility rate base growth of 7-8 percent over that time period. We affirm our annual long-term NEE per share growth target of 4-7 percent. At this time, we are not providing fiscal 2020 earnings guidance due to the uncertainty over the resolution of ISRS cases in Missouri.
While we have seen limited financial impact from the coronavirus during the first half of our fiscal year, we do anticipate that the combination of higher costs, lower demand and the economic slowdown resulting from the health crisis could adversely impact us for the remainder of calendar 2020. We have taken many actions to ensure our team, customers and communities are both safe and positioned to begin to recover successfully. We are monitoring the potential impacts of the coronavirus, including lower demand and fees and higher bad debts and other operating costs, and we are pursuing operational efficiencies and potential regulatory mechanisms to offset those impacts. We will share our latest view on our earnings call noted below
The Spire board of directors has declared a quarterly common stock dividend of $0.6225 per share, payable July 2, 2020, to shareholders of record on June 11, 2020. We have continuously paid a cash common stock dividend since 1946, with 2020 marking the 17th consecutive year of increasing dividends on an annualized basis. The board also declared the regular quarterly dividend of $0.36875 per depositary share on Spire’s 5.90 percent Series A Cumulative Redeemable Preferred Stock payable August 17, 2020, to holders of record on July 24, 2020.
Guidance and Outlook
We have updated our expected fiscal 2020 capital investment, increasing it by $30 million to $640 million, with $560 million earmarked for our gas utilities and $80 million for our gas-related businesses. We have also updated our 5-year capital expenditure plan to now include 2024, with total investment expected to be $2.8 billion and supporting utility rate base growth of 7-8 percent over that time period. We affirm our annual long-term NEE per share growth target of 4-7 percent. At this time, we are not providing fiscal 2020 earnings guidance due to the uncertainty over the resolution of ISRS cases in Missouri.
While we have seen limited financial impact from the coronavirus during the first half of our fiscal year, we do anticipate that the combination of higher costs, lower demand and the economic slowdown resulting from the health crisis could adversely impact us for the remainder of calendar 2020. We have taken many actions to ensure our team, customers and communities are both safe and positioned to begin to recover successfully. We are monitoring the potential impacts of the coronavirus, including lower demand and fees and higher bad debts and other operating costs, and we are pursuing operational efficiencies and potential regulatory mechanisms to offset those impacts. We will share our latest view on our earnings call noted below
Spire Inc (NYSE: SR) stock price history
The image below, obtained from Google, shows the stock price history of Spire (NYSE: SR) over the last 5 years. And its been a pretty average time for Spire stockholders. 5 years ago the stock of Spirewas trading at around $53 a stock and its currently trading at $73.46. That's a return of 38.6% provided to Spire stockholders over the last 5 years.
Spire stock is trading at very close to the midpoint between its 52 week high and its 52 week low which to us is a clear indication that the short term sentiment and momentum of Spire's stock is neutral at this point in time.
Spire stock is trading at very close to the midpoint between its 52 week high and its 52 week low which to us is a clear indication that the short term sentiment and momentum of Spire's stock is neutral at this point in time.
Recent Google search trends for Spire stock price and SR stock price
The graphic below shows the Google search trends for SR stock price and Spire stock price over the last 12 months in the United States. As it shows there isn't really a lot of interest in this company's stock price as the searches are rather erratic
Recent coverage of Spire Inc
The extract below shows recent coverage of Spire Inc as obtained from Nasdaq.com
(RTTNews) - Spire Inc. (SR) reported that its second-quarter net income available to common shareholders declined to $129.7 million or $2.54 per share from $154.3 million or $3.04 per share in the prior year. The earnings decrease reflected lower Gas Utility earnings primarily due to the impact of warmer weather, a decrease in the value of investments in certain benefit plans, slightly higher operating and maintenance expenses, combined with lower results from Gas Marketing.
Net economic earnings for the second quarter of fiscal 2020 was $144.0 million or $2.75 per share down from $147.9 million or $2.90 per share last year. The lower net economic earnings per share reflected lower earnings as well as the impact of preferred and common stock issued over the last twelve months of $0.08 per share. Analysts polled by Thomson Reuters expected the company to report earnings of $2.95 per share for the second-quarter. Analysts' estimates typically exclude special items.Total operating revenues for the quarter declined to $715.5 million from $803.5 million last year. Analysts expected revenues of $783.02 million for the quarter.
Read the full article here
(RTTNews) - Spire Inc. (SR) reported that its second-quarter net income available to common shareholders declined to $129.7 million or $2.54 per share from $154.3 million or $3.04 per share in the prior year. The earnings decrease reflected lower Gas Utility earnings primarily due to the impact of warmer weather, a decrease in the value of investments in certain benefit plans, slightly higher operating and maintenance expenses, combined with lower results from Gas Marketing.
Net economic earnings for the second quarter of fiscal 2020 was $144.0 million or $2.75 per share down from $147.9 million or $2.90 per share last year. The lower net economic earnings per share reflected lower earnings as well as the impact of preferred and common stock issued over the last twelve months of $0.08 per share. Analysts polled by Thomson Reuters expected the company to report earnings of $2.95 per share for the second-quarter. Analysts' estimates typically exclude special items.Total operating revenues for the quarter declined to $715.5 million from $803.5 million last year. Analysts expected revenues of $783.02 million for the quarter.
Read the full article here
Spire Inc (NYSE: SR) latest stock valuation
So based on Spire Inc. 1st quarter 2020 earnings report and their fiscal guidance/ outlook provide what do we value Spire Inc stock at? Based on their earnings reported our valuation model provides a target price (full value price) for Spire Inc at $79.20 per stock
We therefore believe that the stock of Spire Inc stock is slightly undervalued. We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price, which in this case is $79.20. A good entry price into Spire Inc stock would therefore be at $71.30 or below.
We expect the stock of Spire to kick up from current levels to levels closer to our target price (full value price) in coming weeks and months as we believe the stock is undervalued and offers good long term value.
We therefore believe that the stock of Spire Inc stock is slightly undervalued. We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price, which in this case is $79.20. A good entry price into Spire Inc stock would therefore be at $71.30 or below.
We expect the stock of Spire to kick up from current levels to levels closer to our target price (full value price) in coming weeks and months as we believe the stock is undervalued and offers good long term value.
Next earnings release of Spire Inc
It is expected that Spire Inc will release their 3rd quarter 2020 earnings release in early August 2020