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AmeriGas Partners LP Stock Downgraded (APU)

NEW YORK ( TheStreet) -- AmeriGas Partners (NYSE: APU) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and disappointing return on equity.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 5.6%. Since the same quarter one year prior, revenues rose by 27.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • 41.90% is the gross profit margin for AMERIGAS PARTNERS -LP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 11.60% is above that of the industry average.
  • Even though the current debt-to-equity ratio is 1.36, it is still below the industry average, suggesting that this level of debt is acceptable within the Gas Utilities industry. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.95 is weak.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, APU has underperformed the S&P 500 Index, declining 15.92% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
  • AMERIGAS PARTNERS -LP's earnings per share declined by 13.1% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, AMERIGAS PARTNERS -LP reported lower earnings of $1.51 versus $1.78 in the prior year. For the next year, the market is expecting a contraction of 100.0% in earnings ($0.00 versus $1.51).

AmeriGas Partners, L.P., through its subsidiary, AmeriGas Propane, L.P., operates as a retail and wholesale distributor of propane gas in the United States. The company has a P/E ratio of 19.6, below the average utilities industry P/E ratio of 34.5 and above the S&P 500 P/E ratio of 17.7. AmeriGas has a market cap of $3.49 billion and is part of the utilities sector and utilities industry. Shares are down 19% year to date as of the close of trading on Tuesday.

You can view the full AmeriGas Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

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