March 23, 2009 - UGI Corp. (UGI-NYSE) through its subsidiaries, engages in the distribution and marketing of energy products and related services in the United States and internationally. The company operates in five segments: AmeriGasPropane, International Propane, Gas Utility, Electric Utility, and Energy Services.

The Gas Utility segment distributes natural gas to approximately 484,000 customers in 28 eastern and northeastern Pennsylvania counties through its distribution system of approximately 7,860 miles of gas mains.

The Electric Utility segment supplies electricity to approximately 62,000 customers in northeastern Pennsylvania through a system consisting of approximately 2,150 miles of transmission and distribution lines and 13 transmission substations.

The Energy Services segment engages in energy marketing in the United States; operating or owning interests in electric generation assets in Pennsylvania; operating and owning a natural gas liquefaction, storage, and vaporization facility, as well as propane-air mixing assets; operating and owning a propane import and storage facility in Chesapeake, Virginia; and managing natural gas pipeline and storage contracts.

UGI Corporation also operates and owns heating, ventilation, air conditioning, refrigeration, and electrical contracting service businesses serving customers in the Mid-Atlantic region. The company was founded in 1882 and is based in King of Prussia, Pennsylvania.

UGI, with the exception of one year, has steadily increased revenues and earnings since 1998. The exception came in 2006 when earnings slid 7 cents to $1.65, down from $1.72 in 2005. Over the last 10 years, sales averaged annual growth of 13.5% while earnings averaged 16% gains. In the last 5 years, revenues rose, on average, 12% a year while earnings increased by 14.5%. For the next 5 years, things slow down, with analysts predicting sales going up by 4.5% a year, on average, and earnings coming in at 6.5% higher each year. So the growth should continue, only at a slower pace. In this economy, finding growth, even small growth, is a challenge.

Earnings for the full year of 2009 should be $2.20 and next year, ahead by a nickel to $2.25. For the second quarter (ending in March), analysts see $1.24, ahead of last year's $1.17 in the second period, then 11 cents in June (not a very cold quarter), a little below last year's 14 cents.

The first quarter earnings of this year reflected colder weather and lower costs (ended December 31). Sales were up but not by much, to $1.778.5 billion, squeaking ahead of last year's first quarter of $1.764.7 billion. It's the earnings that caught everyone's eyes: up 30% compared to the same quarter last year, hitting 95 cents a share, well above the 74 cents in last year's first period.

UGI has been buying other companies, has lots of cash left over to buy more. Recently, it bought PPL Gas Utilities. With $175 million in the bank, it can go shopping for more.

The company requested a rate increase from its regulators to bump prices for delivery of gas in Pennsylvania. If approved, that will add about $38 million to total sales this year.

There's an annual dividend of 77 cents a share, takes 33% of earnings to pay. That gives a yield of 3.3%, a little below the average for most natural gas companies.

More numbers: Market cap is $2.55 billion. Forward P/E is 10.5. Price to Book is 1.8. For the last 12 months, Operating margin was 9.4% and Profit margin registered 3.8%. Current ratio is 1. Book Value is $13.04. Beta is a very low .42. Range for the last 52 weeks was $18.69, hit on October 10 of last year; high was on $28.87, achieved on June 26, 2008. There are 108 million shares outstanding and a float of 107.14 million. Institutions own 73% of the stock.

While this stock doesn't have a story to get an investor's blood boiling, it does have a solid growth pattern, one that should continue. Growth isn't what it once was, but the company is still increasing sales and earnings in an economy that doesn't give those to many companies. With a very low beta, investors haven't experienced the turbulence of the recent market. UGI should be of interest to many investors looking for a less volatile investment in the current storm.

- Company Web site: www.ugicorp.com

- Ted Allrich