Spire Inc. SR benefits from its investments in strengthening and expanding its operations, enabling it to meet the rising demand from an expanding customer base. It utilizes technology to smoothly run its operations to save costs and improve services.

However, this Zacks Rank #3 (Hold) company faces risks related to dependence on its subsidiaries and stringent laws.

Tailwinds Favoring SR
 

SR intends to invest $790 million in fiscal 2025, which is an additional $100 million over its previous estimate for gas utilities. This capital plan is focused on reliability, new service connections and completion of Spire Missouri's advanced meter installations.

Spire has a capital investment plan of $7.4 billion over the next 10 years to strengthen its existing operations. SR expects this systematic investment to drive 7-8% rate base growth in the long term.

The company has registered a consistent increase in the average number of gas utility customers over the past few years. Spire continues to install ultrasonic meters across utilities to improve customer experience. SR has installed more than 350,000 advanced meters in fiscal 2024, bringing the total number of customers benefiting from this technology to 850,000.

The company is driving innovation through technological advancements. The use of modern technology not only helps Spire improve services but also lowers operational costs, which benefits customers. Spire collaborated with ONE Future to make its operations sustainable.

Headwinds for SR
 

The supply of natural gas to Spire Marketing's customers is dependent on the performance of its suppliers and the capacity of pipeline and storage operators to fulfill delivery obligations. Midstream also uses third-party pipelines and other facilities to provide distribution options to and from its operations. The company's financial performance may suffer if there is any disruption in the suppliers' performance.

Spire's activities are governed by numerous environmental laws and rules. Complying with the same increases operating costs, while failing to do so may result in the loss of necessary permits and licenses, as well as fines, penalties or company interruptions. The company's profitability may be significantly impacted by these charges.

SR Stock Price Movement
 

In the past six months, SR shares have rallied 14.6% against the industry’s decline of 3.5%.

Image Source: Zacks Investment Research

Stocks to Consider
 

Some better-ranked stocks from the same industry are UGI Corporation UGI, Southwest Gas SWX and New Jersey Resources NJR, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

UGI’s long-term (three to five years) earnings growth rate is 4.8%. It delivered an average earnings surprise of 74.82% in the last four quarters.

SWX’s long-term earnings growth rate is 6.6%. The Zacks Consensus Estimate for 2025 EPS implies an improvement of 17.1% from the previous year’s reported number.

The Zacks Consensus Estimate for NJR’s fiscal 2025 EPS calls for an improvement of 7.5% from the previous year’s reported number. The Zacks Consensus Estimate for its fiscal 2025 revenues is pegged at $1.84 billion, which implies a rise of 2.5%.

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Southwest Gas Corporation (SWX) : Free Stock Analysis Report

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This article originally published on Zacks Investment Research (zacks.com).

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