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Monday, November 29, 2021

Does Spire Inc (NYSE:SR) Stock Collapse Indicate a Buying Opportunity?

The shares of Spire Inc (NYSE:SR), a natural gas utility, has been witnessing a sell-off along with the rest of the gas utility sector. The energy, oil, and gas sector has hit a new low with top companies like Chevron (NYSE:CVX) and Exxon Mobil (NYSE:XOM) facing downfall due to the option of alternative energy solutions. 

NYSE:SR’s Earnings for Q3 FY 2020

The fiscal third quarter 2020 report for the June 2020 quarter-end was released by Spire Inc(NYSE:SR) on 5th August. The earnings-per-share (EP) profit of the company was recorded to be $.0.7 which excluded non-recurring items. 

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The year-over-year (YoY) revenues dropped to $321.1 million. Spiral Inc (NYSE:SR) faced a net loss of -$92 million for the quarter. This indicates impairment charges of -$149 million for Spire Storage and a -$8 million for commercial compressed natural gas CNG fueling stations in Greer, SC. As diesel prices decline, it has become unfavorable to convert class eight trucks. Spiral Inc has already started retracting from the Greer facility and will be done away within a year. 

About Spire Inc(NYSE:SR)

Suzanne Sitherwood, CEO of Spire opined that since Coronavirus started in February, winter, the prime time for natural gas heating, the industry is facing loss. 

The 5th largest publicly traded natural gas company, Spire Inc is known to serve 1.8 million households. Its business is spread across Alabama, Mississippi, and Missouri. During the quarter, two of these places were Coronavirus hotspots. 

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For the quarter, $453.8 million were generated by Spre Inc in cash, an increase of 3% YoY. When Missouri regulatory ruled disallowance of some expenses concerning infrastructure upgrade, Spire inc (NYSE:SR) refunded its one-time $15million refund to customers. 

The emergence of electronification has also raised doubts over the utility of electric heating over gas heating. However, the company stated that the usage of natural gas is more energy-saving than the conversion of natural gas to electricity. 

Spiral Inc doubled its storage commitment as it incurred loss due to a fall in demand in March due to the pandemic. If the gas is not used in winter, the cost of fixed storage will increase. 

According to Spire Inc (NYSE:SR); the yearly fiscal EPS, 2020 could range from $3.70 to $3.75 as opposed to analysts forecasting $3.71. The company is anticipating an impact of approximately $6.2 million or $0.09 per share caused due to hiked debt costs and a plunge in commercial demand.

The previous due balances of customers increased by $3.8 million in the quarter. Spire is aiming to introduce enhanced payment options. The FY2020 Capex was raised to $650 million by the company. 

Spire Inc( NYSE:SR) was bumped up from a ‘buy’ rating to ‘hold rating’ by Stifel on 30th September 2020. It is certain that nimble traders seeking to capitalize price reversions have pullback opportunities.

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