Spire Posts Q4 Beat; Shares Rise 1.7%

Spire Inc. (SR) reported stronger-than-expected fiscal Q4 results topping both earnings and revenue estimates. Shares of the natural gas service company gained 1.7% on November 22.

Based in Missouri, Spire Inc. is a public utility holding company and provides natural gas service through its regulated core utility operations, while engaging in non-regulated activities that provide business opportunities. (See Spire stock charts on TipRanks)

Upbeat Q4 Results

The company reported an adjusted loss of $0.26 per share, significantly outpacing analysts’ expectations of a loss of $0.71. The company reported a loss of $0.45 per share in the prior-year period.

Furthermore, Q4 revenues jumped 15.5% year-over-year to $290.2 million and exceeded consensus estimates of $253.3 million.

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Management Weighs In

Regarding an unprecedented order in the recently concluded Missouri rate review, Spire CEO, Suzanne Sitherwood, commented, “The order was inconsistent with the precedent established in previous rate cases and our practices based on that precedent. As a result, we’ve filed for reconsideration with the Missouri commission in an effort to achieve an outcome that’s fair and reasonable.”

Management stated, “We remain confident in our long-term ability to grow NEE per share 5-7% given our strategy that focuses on growing organically, investing in infrastructure and advancing through innovation.”

Fiscal Year 2022 Guidance and Outlook

Management said that the fiscal year 2022 will be a reset year for the company based on the ongoing uncertainty concerning the Missouri rate order.

Based on the company’s initial assessment of the net outcomes of the Missouri rate case, the company forecasts net economic earnings (NEE) in the range of $3.70 per share to $4.00 per share for fiscal 2022.

Wall Street’s Take/ Analysts Recommendation

Following the results announcement, Wells Fargo analyst Sarah Akers decreased the price target on Spire to $67 (6.9% upside potential) from $78 and reiterated a Hold rating.

Akers was disappointed by the muted initial 2022 EPS guidance provided by the company. The analyst is concerned about the impact of the case order on the cost of capital. However, she believes the capitalized overhead expense will be more of a timing issue.

Overall, the stock has a Hold consensus rating based on 1 Buy and 4 Holds. At the time of writing, the average Spire price target was $66.80, which implies 6.6% upside potential from current levels.

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