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UGI Corp Updates 3 Key Risk Factors
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UGI Corp Updates 3 Key Risk Factors

Shares of distributor and marketer of energy products and services, UGI Corp. (UGI) have gained 24% over the past 12 months. Recently, UGI Energy Services, a subsidiary of UGI, agreed to acquire Stonehenge Appalachia, LLC for a consideration of ~$190 million from Stonehenge Energy Holdings, LLC. The acquisition provides UGI with stable cash flows owing to long-term contracts with minimum volume commitments.

Additionally, the company has also entered into a 15-year agreement with Vertimass to use the latter’s catalytic technology, to produce renewable fuels from renewable ethanol in Europe and the U.S.

UGI’s upcoming earnings for the first quarter are expected on February 2. Consensus estimates point to earnings per share of $1.25 for this period. With these developments in mind, let us take a look at the changes in UGI’s key risk factors that investors should know.

Risk Factors

According to the TipRanks Risk Factors tool, UGI Corp’s top risk category is Production, contributing 28% to the total 32 risks identified. In its recent annual report, the company has added three key risk factors.

UGI noted that according to its amended and restated bylaws, the sole and exclusive forum for certain types of actions and proceedings against the company will be a state court located in Montgomery County, Pennsylvania. If no state court located within such county has jurisdiction over such proceedings, then the sole forum will be at the Federal U.S. District Court for the Eastern District of Pennsylvania. This factor may deter lawsuits against UGI’s directors, officers, or UGI.

The company also noted that the enactment of proposed or future legislation (including any reversal of recent tax legislation) could adversely affect the it.

Finally, UGI highlighted that it is dependent on the smooth functioning of the global supply chain for expanding and maintaining its services. The recent increase in equipment, material, and other resources’ prices has adversely affected UGI and could lead to higher prices for the company’s customers.

Compared to a sector average of 11%, UGI’s Macro & Political risk factor is at 19%.

Hedge Fund Activity

According to TipRanks data, the Wall Street’s top hedge funds have decreased holdings in UGI Corp by 260.4 thousand shares in the last quarter, indicating a negative hedge fund confidence signal in the stock based on activities of five hedge funds in the recent quarter.

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