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APU, FGP, SPH, and SGU: Analyzing Prospects for the Propane MLPs

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Part 10
APU, FGP, SPH, and SGU: Analyzing Prospects for the Propane MLPs PART 10 OF 10

How Wall Street Analysts View Propane MLPs

Analysts’ ratings for APU

Of the analysts surveyed by Reuters, 10% rated AmeriGas Partners (APU) a “buy,” 50% rated it a “hold,” and 40% rated it a “sell.” The consensus one-year price target for AmeriGas Partners is $45.00. This target implies a price return of 6% one year from the MLP’s current market price of $42.62.

How Wall Street Analysts View Propane MLPs

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Analyst recommendations for FGP

Ferrellgas Partners (FGP) has received “buy” ratings from 14% of the analysts covering the stock, “hold” ratings from 29% of these analysts, and “sell” ratings from the remaining 57% of the analysts surveyed. The consensus one-year price target for Ferrellgas Partners is $6.00. This target implies a price return of 17% one year from the MLP’s current market price of $5.15.

The chart above compares the analysts’ recommendations for APU, FGP, Star Gas Partners (SGU), and Suburban Propane Partners (SPH).

Analysts’ ratings for SPH

Of the analysts surveyed, 20% rated Suburban Propane Partners (SPH) a “buy,” 70% rated it a “hold,” and 10% rated SPH a “sell.” The consensus price target for Suburban Propane Partners in one year is $26.00 This target implies a price return of 7% one year from the MLP’s current market price of $24.27.

All the analysts surveyed rated Star Gas Partners (SGU) a “hold.” The consensus price target for SGU is $11.00, implying a price return of 2% from its current market price of $10.80.

Outlook

While the price return potential for these MLPs looks limited based on analyst recommendations, they still seem attractive for investors looking for regular distribution income.

However, the huge decline in natural gas prices and mild US winters over the last couple of years has impacted the demand for propane. Ferrellgas Partners slashed its distributions in 2016, and Suburban Propane is considering a cut in the next quarterly distribution.

Weather forecasts for the upcoming winter season appear supportive for the propane MLPs. However, how these MLPs adjust to the longer-term trends in propane usage remains to be seen.

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