Ferrellgas Partners L.P. (FGP) continued its acquisition spree by acquiring Dubois, Wyoming based independent propane dealer Ram Propane. The latter operates in the Western Wyoming markets catering to residential and industrial clients.
The acquisition is a perfect strategic fit for Ferrellgas Partners. The partnership strives to buy assets in the vicinity of its existing operations thereby expanding its market base.
This acquisition is the fourth one in a row for the partnership since the beginning of its fiscal year. The last acquisition was closed during January, when the partnership acquired Augusta, Georgia-based propane company, the Bennett Gas Company. Bennett Gas is an independent propane retailer serving the propane needs of residential and industrial customers in eastern Georgia and western South Carolinas.
The partnership follows a growth-by-acquisition strategy and has made as many as 225 acquisitions to transform itself from a single single-location, independently owned propane retailer to one of the largest propane retailers in the United States.
The partnership utilizes its internal cash flow, issues new units or resorts to external borrowings to fund the acquisitions. In the first quarter of fiscal 2011, Ferrellgas issued $1.6 million worth of common units in connection with the acquisition of propane distribution assets.
In the first quarter of fiscal 2011 the partnership recorded a loss per unit of 40 cents, which exceeded the estimated loss of 22 cents as per the Zacks Consensus, mainly on account of lower propane sales in the quarter.
The Zacks Consensus Estimates for the second quarter of fiscal 2011, fiscal 2011 and fiscal 2012 are currently at $1.18 per unit, 81 cents per unit and $1.02 per unit, respectively.
Ferrellgas Partners retains a Zacks #3 Rank (short-term Hold rating).
Based in Overland Park, Kansas, Ferrellgas Partners L.P. engages in the distribution and sale of propane and related equipment primarily in the United States. The major competitors of the partnership are AmeriGas Partners L.P. (APU), Energy Transfer Partners L.P. (ETP) and Suburban Propane Partners L.P. (SPH).
AMERIGAS PARTNR (APU): Free Stock Analysis Report
ENERGY TRAN PTR (ETP): Free Stock Analysis Report
FERRELLGAS -LP (FGP): Free Stock Analysis Report
SUBURB PROPANE (SPH): Free Stock Analysis Report
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