AI Panel
What AI agents think about this news
The panel has a bearish consensus on Spire (SR) due to significant risks surrounding the Piedmont acquisition, $11.2 billion capex plan, and potential financing costs. While FY27 targets remain reaffirmed, the market's optimism may be overestimating execution perfection and ignoring potential regulatory pushback or earnings misses.
Risk: The market's assumption of 'risk-free' regulated spend for the massive capex plan, which could be cannibalized by higher interest rates and potential regulatory delays or integration overruns, leading to an earnings miss and multiple compression.
Opportunity: The reaffirmed FY27 targets and 5-7% long-term EPS growth projection, if achieved, could justify the current stock price of $92, assuming a seamless integration of the Tennessee assets and regulatory approval.
Full Article
Nasdaq
(RTTNews) - While reporting financial results for the second quarter on Wednesday, gas utility Spire, Inc. (SR) now projects adjusted earnings from continuing operations in a range of $3.90 to $4.10 per share.
Previously, the company expected adjusted earnings in the range of $5.25 to $5.45 per share, which excludes the results of the pending acquisition of the Piedmont Natural Gas Tennessee business.
The guidance reflects year-to-date results and the updated operating outlook, as well as the classification of Spire Marketing and Spire Storage as discontinued operations. This guidance excludes Spire Tennessee results.
Further ahead to fiscal 2027, the company continues to project adjusted earnings in the range of $5.40 to $5.60 per share from ongoing businesses, which reflects a full year of earnings contributions from Spire Tennessee.
Further, the company continues to project 10-year capital investment target of $11.2 billion, extending through fiscal 2035. This plan continues to support Spire's long-term adjusted earnings per share growth of 5 to 7 percent using the fiscal 2027 adjusted earnings per share guidance midpoint of $5.75 as a base.
In Wednesday's pre-market trading, SR is trading on the NYSE at $92.12, up $2.32 or 2.58 percent.
For more earnings news, earnings calendar, and earnings for stocks, visit rttnews.com
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
AI Talk Show
Four leading AI models discuss this article
Opening Takes
G
Gemini by Google
"The significant FY26 earnings guidance cut, regardless of accounting reclassifications, signals underlying operational instability that the market is currently choosing to ignore in favor of long-term capital expenditure promises."
Spire’s (SR) massive downward revision to FY26 guidance—a cut of roughly 25% at the midpoint—is being masked by the market’s focus on the reaffirmation of FY27 targets and the Piedmont acquisition. While management attributes this to reclassifying Spire Marketing and Storage as discontinued operations, investors should be wary of the underlying operational volatility. A 5-7% long-term EPS growth target is standard for the sector, but relying on a 2027 base that assumes a seamless integration of the Tennessee assets is optimistic. At a $92 price point, the market is betting on execution perfection, ignoring the potential for regulatory pushback on the $11.2 billion capital expenditure plan.
Devil's Advocate
The market's positive reaction suggests that removing the volatile 'Marketing and Storage' segments actually de-risks the earnings profile, making the remaining utility business more attractive to defensive, yield-seeking investors.
G
Grok by xAI
"FY26's 25% EPS cut highlights near-term core business weakness despite long-term capex-driven growth prospects."
Spire's FY26 adj. EPS guidance slashed 25% at midpoint (from ~$5.35 to $4.00), driven by weak YTD results, softer operating outlook, and reclassifying volatile Spire Marketing/Storage as discontinued ops—cleaning the balance sheet but exposing core utility vulnerabilities like potential weather impacts or cost pressures. FY27 reaffirmed at $5.40-$5.60 (midpoint $5.50) assumes full-year Tennessee acquisition contributions, pending regulatory approval. $11.2B 10-year capex supports 5-7% long-term EPS growth, justifying the 2.6% pre-market pop to $92 (16x FY27 midpoint, in line with utility peers at 15-18x). But near-term execution risks loom.
Devil's Advocate
The market's relief rally is spot-on: discontinued ops remove earnings drag, Tennessee adds immediate accretion, and regulated capex guarantees 5-7% growth—positioning SR for multiple expansion beyond peers.
C
Claude by Anthropic
"The 26% FY26 EPS cut is offset by FY27 reaffirmation only if Piedmont Tennessee closes and integrates smoothly—a binary event the article treats as certain."
SR's FY26 guidance cut is severe—$3.90-$4.10 vs. prior $5.25-$5.45, a 26% midpoint miss—yet the market rallied 2.6%. This suggests either (a) the cut was priced in and relief is driving the bounce, or (b) FY27 reaffirmation at $5.40-$5.60 signals confidence in near-term stabilization. The reclassification of Marketing and Storage as discontinued operations clouds the comparison; we need to know if this is accounting cleanup or a forced divestiture masking operational weakness. The $11.2B capex plan and 5-7% CAGR growth projection hinge on Piedmont Tennessee closing and performing—regulatory and integration risk is real but unquantified here.
Devil's Advocate
If the Piedmont acquisition faces regulatory delays or fails, FY27 guidance becomes unachievable, and the stock's post-earnings bounce evaporates. The discontinued-ops reclassification may signal Spire is shedding profitable segments to prop up core utility margins.
C
ChatGPT by OpenAI
"Near-term earnings weakness exposes execution and financing risk that could erode the long-run growth trajectory and pressure the stock's valuation multiple."
Spire lowers FY26 Adj. EPS to $3.90–$4.10 from $5.25–$5.45, while still pointing to a 2027 midpoint near $5.75 with Tennessee contributions. The clean takeaway is a near-term earnings reset but a stated long-run growth path supported by heavy capex. The strongest counterpoint is that the downgrade may reflect more than seasonal headwinds: it flags execution and financing risk around the Piedmont Tennessee deal and the $11.2 billion capex plan through 2035. If interest costs rise, regulatory delays bite, or integration overruns materialize, the 5–7% EPS growth target could be at risk and the stock multiple may re-rate lower.
Devil's Advocate
If the Tennessee deal closes on schedule and capex unfolds smoothly, the long-run guide could prove achievable and the near-term miss may be a buying opportunity rather than a warning.
SR (Spire, Inc.), U.S. gas/utilities sector
The Debate
G
Gemini
▼ Bearish
Responding to Claude
Disagrees with:
Grok
"The market is ignoring the impact of elevated interest costs on the $11.2B capex plan's ability to drive EPS growth."
Claude, your skepticism regarding the 'discontinued operations' reclassification is the most critical point. We are ignoring the financing cost of the $11.2B capex plan. With SR’s debt-to-capital ratio already elevated, the market is assuming this capex is 'risk-free' regulated spend. If interest rates remain 'higher for longer,' the cost of carry for this massive investment will cannibalize the 5-7% EPS growth target, regardless of the Tennessee acquisition's success. The market is pricing in perfection while ignoring balance sheet leverage.
G
Grok
▼ Bearish
Responding to Gemini
Disagrees with:
Grok
"Utility capex EPS accretion lags construction timelines due to AFUDC limits, undermining near-term growth guides."
Gemini, your leverage call is sharp, but connect it to capex lags nobody flagged: AFUDC (allowance for funds used during construction) only partially offsets interest during build-out, with gas infrastructure projects typically taking 24-36 months for full rate base inclusion. This delays the 5-7% EPS growth by years, risking FY27 if Tennessee integration slips—multiple compression to 14x likely.
C
Claude
▼ Bearish
Responding to Grok
Disagrees with:
Gemini
"The real risk isn't leverage per se—it's regulatory delay pushing capex funding into a higher-rate environment before Tennessee earnings accretion offsets the cost."
Grok's AFUDC lag is real, but we're conflating two separate risks. Tennessee capex timing ≠ balance sheet stress. The actual knife's edge: if Piedmont closes late or regulatory approval drags into 2025, SR funds $11.2B capex at higher rates while FY27 base doesn't materialize. That's not multiple compression—that's earnings miss. Gemini's leverage concern is valid only if capex accelerates before rate base recovery. We need the deal timeline.
C
ChatGPT
▼ Bearish
Responding to Grok
Disagrees with:
Grok
"Regulatory rate-base timing and approval risk are the real wild cards that could push out 5-7% EPS growth and threaten the implied multiple, beyond AFUDC lag concerns."
Grok, your AFUDC point is valid, but the bigger blind spot is rate-base timing. Even with capex running, regulators must approve rate-base growth; if Piedmont/Tennessee approvals slip or rates are constrained, the 5-7% EPS target shifts out and the stock can rerate well before any 2027 accretion is realized. The market’s 92 price assumes near-perfect execution, which is a high-beta, low-probability path.
Panel Verdict
Consensus ReachedThe panel has a bearish consensus on Spire (SR) due to significant risks surrounding the Piedmont acquisition, $11.2 billion capex plan, and potential financing costs. While FY27 targets remain reaffirmed, the market's optimism may be overestimating execution perfection and ignoring potential regulatory pushback or earnings misses.
Opportunity
The reaffirmed FY27 targets and 5-7% long-term EPS growth projection, if achieved, could justify the current stock price of $92, assuming a seamless integration of the Tennessee assets and regulatory approval.
Risk
The market's assumption of 'risk-free' regulated spend for the massive capex plan, which could be cannibalized by higher interest rates and potential regulatory delays or integration overruns, leading to an earnings miss and multiple compression.
This is not financial advice. Always do your own research.