The firm said it lowered its rating on the retail propane distributor as it believes the stock is fully valued, and the company is in a long term structural decline.
Although Credit Suisse downgraded the company's rating, it increased its price target on AmeriGas stock by $1, to $45.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
"Our target price moves to $45 as we roll our model forward and slightly increase our distribution estimate. At $45, AmeriGas represents around a 6% total return, which is below the 26% median return for our coverage universe, justifying our downgrade," the firm said.
Shares of AmeriGas are lower by 0.83 to $45.25 in pre-market trading today.
Separately, TheStreet Ratings team rates AMERIGAS PARTNERS -LP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate AMERIGAS PARTNERS -LP (APU) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, expanding profit margins, increase in net income and increase in stock price during the past year. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 7.2%. Since the same quarter one year prior, revenues slightly increased by 5.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- AMERIGAS PARTNERS -LP has improved earnings per share by 7.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, AMERIGAS PARTNERS -LP increased its bottom line by earning $1.80 versus $1.43 in the prior year. This year, the market expects an improvement in earnings ($2.85 versus $1.80).
- 37.06% is the gross profit margin for AMERIGAS PARTNERS -LP which we consider to be strong. Regardless of APU's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -8.45% trails the industry average.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Gas Utilities industry average, but is greater than that of the S&P 500. The net income increased by 12.4% when compared to the same quarter one year prior, going from -$54.06 million to -$47.35 million.
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: APU Ratings Report