Spire to Benefit From Its Investment in Infrastructure & Acquisition

Spire Inc. SR has been focusing on systematic investments in infrastructure upgradation, acquisition of complementary assets to expand its operations and enhance service reliability. 

The company’s long-term (three to five years) earnings growth rate is projected at 10.54%.

Tailwinds

SR plans to invest $809 million in fiscal 2026 in the different regions it operates.
The capital expenditure plan includes $535 million for Missouri; $170 million for Alabama, Gulf and Mississippi; $90 million for Tennessee; and $14 million for Midstream.

SR has also planned a systematic long-term investment of nearly $4.8 billion during 2026-2030 and anticipates its 10-year capital investment to be $11.2 billion. Out of the total investment, 70% is devoted to strengthening system safety and reliability, and about 19% is allocated to supporting customer expansion.

SR’s acquisitions are in line with its long-term growth objectives; through these acquisitions, the company expands its regulated utility footprint while broadening its geographic reach. Spire plans to acquire the Tennessee natural gas operations of Piedmont Natural Gas, a subsidiary of Duke Energy, for $2.48 billion. The acquisition includes nearly 3,800 miles of pipelines and will add more than 200,000 customers to Spire, significantly expanding its service territory into the fast-growing Nashville metro area.

Headwinds

SR is a holding company, which is operating through its units. The units hold major assets and perform all the operations. If these subsidiaries are unable to perform well, then the company will face difficulty to meet its financial obligations like dividend distribution and debt repayment.

SR operations are subjected to various environmental laws and regulations. The company must follow environmental regulations, which increases its operating costs, and failure to comply could result in lost permits, fines, penalties, or operational disruptions. These expenses and risks can have a significant impact on the business.

Price Performance

Over the past year, SR shares have risen 19.6%, which beat the industry’s growth of 9.2%.

Zacks Rank & Other Stocks to Consider

SR currently has a Zacks Rank #2 (Buy). Some other top-ranked stocks in the same sector are Ameren Corporation AEE, Dominion Energy, Inc. D and OGE Energy Corp. OGE, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ameren, Dominion Energy, and OGE Energy delivered an average earnings surprise of 0.22%, 12.72% and 10.45%, respectively, over the last four quarters.

The Zacks Consensus Estimate for 2025 earnings per share of Ameren and Dominion Energy has moved up 0.60% and 0.29%, respectively, in the past 60 days.

The consensus mark for OGE Energy’s 2025 EPS has remained constant at $2.28 over the same time frame.

 

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

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