On Apr 14, 2015, Zacks Investment Research upgraded electric utility firm AGL Resources Inc. GAS to a Zacks Rank #3 (Hold).

Why the Upgrade?

AGL Resources is a premier electric utility firm with relatively low risk earnings growth and increasing dividend. Last month, the company made a favorable announcement wherein it revised its 2015 earnings estimates higher. The company expects 2015 earnings per share (EPS) to range between $2.85 and $3.10, up from the prior guidance range of $2.70–$2.90. The company added that earnings from the wholesale services segment are anticipated to be in the $80 million–$110 million range, significantly higher than the previous guidance of $50 million.  

AGL Resources stated that colder-than-normal weather in the first two months of the year has resulted in improved performance by its distribution and retail businesses. Also, better-than-expected performance by its wholesale business supports the new guidance.

Additionally, in February, the company had increased its quarterly dividend by 4.1% to 51 cents per share. The consistent payment and growth in payouts indicate the company’s financial strength.

Moreover, positioned in a niche industry with high barriers to entry, this energy services holding company enjoys near-monopoly status in its area of operation.

Adding to the bullishness is the fact that several brokerage firms have revised earnings estimates higher for both the current quarter and the current year. First-quarter 2015 earnings estimate of $1.49 per share is also ahead of the year-ago quarter reported earnings of $1.37.

Other Stock Picks

Better-ranked players from the utility-gas distribution industry include Atmos Energy Corporation ATO, Chesapeake Utilities Corporation CPK and Vectren Corporation VVC. All these stocks hold a Zacks Rank #2 (Buy).