Investment Thesis
UGI Corp demonstrates strong profitability with 25.4% operating margins and 17.1% net margins, supported by positive free cash flow of $339M and solid interest coverage of 6.1x. However, the 152% net income growth against minimal 2% revenue growth raises sustainability concerns and suggests non-recurring items, while weak liquidity ratios (1.00x current, 0.87x quick) indicate tight working capital management typical of stress scenarios.
Strengths
- Exceptional operating margin of 25.4% and net margin of 17.1% demonstrate pricing power and operational efficiency
- Robust free cash flow generation of $339M provides capital flexibility and dividend capacity
- Moderate leverage at 1.10x debt-to-equity with strong interest coverage of 6.1x supports debt sustainability
- Essential utility business model in gas & services sector provides stable demand profile
Risks
- Liquidity position concerning with current ratio of 1.00x and quick ratio of 0.87x, below industry standards and vulnerable to working capital disruptions
- 152% net income growth versus 2% revenue growth is unsustainable and suggests one-time gains, non-recurring items, or operational items unlikely to repeat
- Significant long-term debt of $6.0B relative to $5.4B equity limits financial flexibility and refinancing options
- Modest organic revenue growth of 2% indicates limited organic expansion opportunity
Key Metrics to Watch
- Sustainability of net income growth and breakdown of recurring vs. non-recurring components in next reporting period
- Working capital trends and ability to maintain liquidity above critical thresholds
- Free cash flow generation consistency and capital expenditure requirements
- Debt reduction progress and refinancing schedule maturity
Financial Metrics
Revenue
4.8B
Net Income
817.0M
EPS (Diluted)
$3.68
Free Cash Flow
339.0M
Total Assets
16.1B
Cash
494.0M
Profitability Ratios
Gross Margin
N/A
Operating Margin
25.4%
Net Margin
17.1%
ROE
15.1%
ROA
5.1%
FCF Margin
7.1%
Balance Sheet & Liquidity
Current Ratio
1.00x
Quick Ratio
0.87x
Debt/Equity
1.10x
Debt/Assets
66.3%
Interest Coverage
6.06x
Long-term Debt
6.0B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-08T12:53:19.399511 |
Data as of: 2026-03-31 |
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