UGI CORPORATION (UGI): what the price assumes

boothcheck covers UGI CORPORATION (UGI) but does not put one priced-in number on it: here the defensible answer is the evidence rather than a point estimate. boothcheck publishes no house fair value, target price, or buy/sell rating. Narrative composed 2026-06-28.

Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/UGI

Headline

FieldValue
TickerUGI
CompanyUGI CORPORATION
Current price$35.55/sh
CompositionUtility - Residential 14% / Utility - Commercial & Industrial 5% / Utility - Large delivery service 3% / Utility - Off-system sales and capacity releases 1% / Utility - Other 0% / LPG - Retail 52% / LPG - Wholesale 3% / Energy Marketing 14% / Midstream - Pipeline 3% / Midstream - Peaking 0% / Midstream - Other 0% / Other (LPG/non-utility) 4%

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Multiple paid12x operating income

The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.

Solve inputs: computed at a 6.7% cost of capital with 4% terminal growth over a 5-year stage.

Reconcile: at the x-ray's 9.3% required return this reads ~1.3%/yr; the models below use their own rates.

How unusual the bet is: within-range

ReferenceValue
vs own history-0.44σ
cohort percentile (of 72 peers)7
implied end-window share0%

Valuation X-Ray

The price is supported by asset-based and earnings-power value, while growth-DCF lands below the price. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset0.98x5justifies
Earnings1.16x3expensive
Relative0
Growth1.74x3expensive

Families that justify the price: Asset, Earnings Families that call it expensive: Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 5.8%); the inversion above states its own rate.

Per-Model Detail (n=11)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$0.00noFCF base $0.2B, growth 0% (input: historical growth), terminal g 0.5%, WACC 5.8%, 5yr projection
DCF Exit MultipleGrowth$25.651.39xyesExit EV/EBITDA: 5.7x / 7.7x / 9.7x (bear / base = today's held flat / bull), 5yr
Relative ValuationRelativenoP/E 20x (static sector reference · 2026-04), scenarios: 17.0x / 20.0x / 23.0x (bear / base = reference held flat / bull), EV/EBITDA 13x
Simple DDMGrowthno
Two-Stage DDMGrowth$3.3610.58xyesStage 1: -38% for 5yr, Stage 2: 3.5% perpetual
Simple Excess ReturnAsset$32.321.10xyesBV/sh $25.28, ROE (TTM) 11.8%, ke 9.3%
Two-Stage Excess ReturnAsset$36.350.98xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$20.431.74xyesRev $7.4B, growth 0% (input: historical growth; tapered), Terminal P/S: 0.9x / 1.0x / 1.2x (bear / base = today's held flat / bull, cap 8x)
Growth-Adjusted P/ERelativeno
Margin TrajectoryGrowthno
Earnings Power ValueEarnings$35.371.00xyesNormalized EBIT (5y avg op income, one-time charges added back) $1.04B × (1−21%) / WACC 5.8% → EPV (no growth)
Residual IncomeAsset$37.160.96xyesBV $25.28 + 5yr PV of (ROE (TTM) 11.8% − Kₑ 9.3%) × BV; BV grows 7.7%/yr
Graham NumberAsset$40.120.89xyes√(22.5 × EPS $2.83 × BVPS $25.28) — Graham's conservative floor
EV/EBITDA RelativeRelativenoEBITDA $1.70B × sector EV/EBITDA 13.0x
FCF YieldEarnings$0.013554.50xyesFCF $238.0M / Kₑ 9.3% — zero-growth perpetuity (excluded from median)
SBC-Adj FCF YieldEarningsno
Ben Graham FormulaEarnings$2.3715.00xyesEPS $2.83 × (8.5 + 2×-5.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$23.761.50xyesBV $25.28 × (ROIC 5.5% / WACC 5.8%)
P/Sales SectorRelativenoRevenue $7.36B × sector P/S 2.5x
PEG Fair ValueRelativeno
Earnings YieldEarnings$30.591.16xyesEPS $2.83 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelativeno
Clinical Phase NPVGrowthno
MertonAssetno
V5 Mechanicalno

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

UnitRoleValuation basisRevenueReported profitValue evidenceStatus
Utilitiesoperatingenterprise$1.7b$403.0m operating-incomewithheldunresolved no unit value
Midstream & Marketingoperatingenterprise$1.2b$293.0m operating-incomewithheldunresolved no unit value
UGI Internationaloperatingenterprise$2.1b$314.0m operating-incomewithheldunresolved no unit value
AmeriGas Propaneoperatingenterprise$2.3b$166.0m operating-incomewithheldunresolved no unit value

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

FieldValue
Net debt$6.5b
Net debt / NOPAT (after-tax)7.24x
Net debt / operating income (pre-tax)5.70x
Interest coverage2.6x
Share count CAGR (dilution)0.8%
Burning cashno

Bullet Takeaways

Bull Case

Read UGI for what stage it is in, because that frames how the numbers should be weighed. This is a mature, income-oriented energy company, not a growth story, and its value rests on a stable regulated base plus a turnaround. The anchor is the Pennsylvania gas utility, which the 10-K describes as serving customers "in eastern and central Pennsylvania and in portions of one Maryland county" alongside the Mountaineer regulated gas business. Regulated utilities earn an allowed return on a growing rate base, and the filing notes the PA Gas Utility is authorized to implement a distribution-system improvement charge once its net property, plant, and equipment reaches roughly $6.2 billion, a regulatory mechanism that lets the utility recover infrastructure investment between rate cases. That is the slow, dependable compounding a mature utility provides.

The numbers a mature company should be judged on are the regulated earnings and the capital-return capacity, and both are intact. Fiscal 2026 second-quarter total reported segment EBIT reached $688 million, driven by higher base rates at the Pennsylvania gas utility and effective margin management in the global LPG businesses despite warmer weather. Year-to-date adjusted EPS of $3.35 shows the core engine is producing. The price is supported by the asset-value and earnings-power methods, which is the correct profile for a regulated, asset-heavy business: you are buying a stream of regulated returns, not a growth multiple.

There is also genuine optionality layered on the utility base. UGI announced a partnership with Prime Data Centers to build major natural gas infrastructure in Pennsylvania's northern tier, positioning the company to serve the surge in data-center power demand, a structural tailwind for gas infrastructure. It agreed to sell its electric division for about $470 million, simplifying toward its core gas and LPG franchises, and the AmeriGas propane turnaround is progressing. A mature company that is pruning non-core assets, investing behind data-center gas demand, and fixing its propane unit is doing the unglamorous work that keeps a regulated business compounding.

Bear Case

The variable with the most leverage on UGI is the combination of structural demand decline and the leverage funding it. The propane and LPG businesses face a slow erosion that the company itself names: the 10-K flags that "energy efficiency and technology advances, as well as price induced customer conservation, may result in reduced demand" for its energy products. Propane is a fuel customers use less of over time as they conserve, switch to natural gas or electricity, and as warmer winters reduce heating demand. The Q2 results already reflected warmer weather, and a business whose volumes drift down structurally has to run hard just to stay flat. The AmeriGas turnaround is an attempt to manage that decline, but a turnaround is an admission that the base business needed fixing.

The leverage is the second exposure, and it is significant. UGI carries net debt of about $6.5 billion, near six times trailing operating income, with interest coverage around 2.6 times. For a regulated utility that level of debt is normal, but it ties the company to the interest-rate environment, and the coverage ratio leaves less cushion than a lower-levered peer. The recent guidance cut, to $2.75 to $2.90 in adjusted EPS from $2.90 to $3.15, came partly from delayed Midstream growth investments and lower Appalachian production volume, a reminder that the non-regulated segments are more volatile than the utility and that growth investment timing can slip. When a levered company's growth segments stumble, the debt does not wait.

Regulation cuts both ways, and it is the macro variable the price may underweight. The utility's returns depend on regulators granting adequate rate increases, and the same final order that authorized the improvement charge carried, in the filing's words, "concerns regarding its impact on low-income customers". Rate cases are political, and a regulator under pressure on affordability can deny or trim the returns the utility needs to earn on its growing rate base. The price embeds a return roughly in line with what UGI earns, but if regulated returns are squeezed while propane volumes decline and leverage stays high, the modest premium the price carries becomes harder to support. This is a defensive name, but defensive is not the same as without risk.

Valuation

UGI is a value-and-asset-supported name, and the methods we use to triangulate confirm it. The asset-value methods land right around the price, the earnings-power anchor is close to it, and the peer-multiple lens reads it as cheaper than the broader utility and midstream comparables. Only the growth-cash-flow methods say expensive, which is expected for a mature, low-growth business: discounting modest future growth at a utility's cost of capital produces a value below a price that is being supported by current assets and earnings instead. The pattern says this is a stable income asset valued on what it owns and earns, not a growth bet.

What the price requires, in plain terms, is for UGI to sustain roughly its current operating economics, a mid-teens operating margin on a stable regulated base plus the LPG and midstream segments. The inversion reads the embedded assumption as within range rather than stretched, consistent with a defensive utility-plus-distribution business. The most relevant comparison is to regulated-utility and midstream peers, against which UGI's multiple looks undemanding, reflecting both the propane-decline overhang and the recent guidance cut. The methods agree this is fairly to modestly cheaply priced for what it is; the question is durability of the regulated returns and the propane stabilization, not a re-rating.

Solvency is the constraint that frames the downside and belongs at the close. Net debt of about $6.5 billion at roughly six times operating income is standard for a regulated utility funded by long-lived assets, but interest coverage near 2.6 times is on the thinner side, and the leverage ties the dividend and the rate-base investment program to the cost of debt. The $470 million electric-division sale and the disciplined capital allocation help at the margin. The decisive point for this name is whether the regulated returns and the AmeriGas turnaround hold the earnings base steady while leverage is worked down, because a defensive income stock loses its appeal if the income itself comes under pressure.

Catalysts

Fiscal 2026 has been a year of softer guidance against steady regulated performance. UGI reported second-quarter GAAP diluted EPS of $2.33 and adjusted diluted EPS of $2.09, with year-to-date adjusted EPS of $3.35 and total reported segment EBIT of $688 million for the quarter, helped by higher Pennsylvania base rates and margin management in global LPG despite warmer weather.

The guidance revision is the headline. UGI cut fiscal 2026 adjusted EPS guidance to $2.75 to $2.90, down from the $2.90 to $3.15 range set in November 2025, citing the timing of Midstream and Marketing growth investments and lower Appalachian production volume. The reduction is about timing and volume in the non-regulated segments rather than the regulated utility.

The forward catalysts are a mix of structural and transactional. The Prime Data Centers partnership to build natural-gas infrastructure in Pennsylvania's northern tier positions UGI for data-center power demand, the agreed $470 million sale of the electric division simplifies the portfolio, and AmeriGas continues its transformation, including launching online propane cylinder sales via Amazon in select cities. The data-center infrastructure ramp and the propane stabilization are the two developments that most directly bear on whether the earnings base resumes growth.

Peer Cohorts (Per Segment, With Filing Citations)

Utilities (reported)

Midstream & Marketing (reported)

UGI International (reported)

AmeriGas Propane (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

UGI Q2 fiscal 2026 results, May 6 2026 · UGI Q2 fiscal 2026 disclosures, 2026 · UGI Q2 fiscal 2026 guidance, May 6 2026

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