Ultrapar Participacoes SA (UGP) AI Stock Analysis

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Ultrapar Participacoes SA

(NYSE:UGP)

73Outperform

Ultrapar Participacoes SA's stock is supported by solid financial performance with consistent revenue growth and stable profitability. Positive technical indicators and attractive valuation metrics further enhance its investment appeal. However, challenges in one of its key divisions and mixed sentiment from the latest earnings call slightly temper the outlook. Overall, the stock is well-positioned in its industry, with a focus needed on overcoming operational challenges and enhancing profitability.

Positive Factors

Business Growth

Ultrapar's core fuel distribution business remains well-positioned to show good growth on the back of a healthier competitive landscape.

Earnings

Ipiranga delivered a stronger-than-expected margin.

Financial Health

Ultra's consolidated net debt decreased, indicating improved financial health.

Negative Factors

Debt

Ultrapar's net debt increased to R$8.0bn from R$7.7bn, as a result of the payment of dividends.

Equity Income

Hidrovias’ equity income contribution was way lower than expected.

Market Conditions

The lack of operational momentum in the short term, due to an oversupply and subdued demand environment, prevents a more bullish outlook on the stock.

Ultrapar Participacoes SA (UGP) vs. S&P 500 (SPY)

Market Cap

$3.17B

Dividend Yield3.67%

Average Volume (3M)2.15M

Price to Earnings (P/E)7.4

Beta (1Y)0.54

Revenue Growth-1.88%

EPS Growth-12.12%

CountryUS

Employees9,558

SectorEnergy

Sector Strength59

IndustryOil & Gas Refining & Marketing

Share Statistics

EPS (TTM)0.40

Shares Outstanding1,115,507,200

10 Day Avg. Volume2,366,637

30 Day Avg. Volume2,150,706

Financial Highlights & Ratios

PEG Ratio0.33

Price to Book (P/B)N/A

Price to Sales (P/S)0.16

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$3.47

Price Target Upside17.63% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering3

Ultrapar Participacoes SA Business Overview & Revenue Model

Company DescriptionUltrapar Participacoes SA (UGP) is a diversified Brazilian company engaged in multiple sectors, including fuel distribution, chemicals, and storage. The company's core operations revolve around its subsidiaries, which include Ipiranga, a leading fuel distribution network in Brazil; Oxiteno, a producer of specialty chemicals; and Ultracargo, a provider of liquid bulk storage solutions. Ultrapar's strategic focus on these sectors allows it to serve a wide range of industries, maintaining a robust presence in the Brazilian market.

How the Company Makes MoneyUltrapar Participacoes SA generates revenue primarily through its subsidiaries. Ipiranga, being one of the largest fuel distribution networks in Brazil, contributes significantly to the company's revenue by supplying fuel to retail and commercial customers through its extensive network of service stations. Oxiteno generates income by producing and selling a wide range of specialty chemicals used in various industries such as cosmetics, agriculture, and personal care. Ultracargo provides liquid bulk storage services, generating revenue by offering storage solutions for chemical and petrochemical products. The company also benefits from strategic partnerships and investments in logistics and infrastructure, enhancing its operational efficiency and market reach.

Ultrapar Participacoes SA Financial Statement Overview

Summary

Ultrapar Participacoes SA shows solid financial health with consistent revenue growth and stable profitability. Balance sheet improvements are seen in reduced leverage and strengthened equity, but there is a slight decline in return on equity. Cash flow generation is robust despite a decrease in free cash flow.

Income Statement

Positive

Ultrapar Participacoes SA has demonstrated consistent revenue growth, with a 6% increase from 2023 to 2024. The gross profit margin in 2024 is approximately 6.45%, while the net profit margin is 1.77%, reflecting a slight decrease from the previous year. The EBIT margin stands at 3.80%, indicating stable operational efficiency. Despite a slight decrease in net income, the company maintains solid profitability metrics.

Balance Sheet

Positive

The company's debt-to-equity ratio has improved to 1.04 in 2024 from 0.98 in 2023, demonstrating a reduction in leverage. The equity ratio has increased to 38.32%, showing strengthened equity position. However, the return on equity has decreased to 15.58%, reflecting a moderate decline in profitability on shareholders' equity.

Cash Flow

Positive

Free cash flow decreased from 2023 to 2024, impacting cash flow strength. Operating cash flow to net income ratio is 1.58, indicating efficient cash generation relative to net income. Free cash flow to net income ratio is 0.82, showing a slight decline, but overall cash flow management remains robust.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
133.50B	126.05B	143.63B	109.73B	81.24B
	Gross Profit
8.62B	9.32B	7.36B	4.90B	5.61B
	EBIT
5.07B	4.57B	3.76B	1.79B	1.81B
	EBITDA
5.06B	6.36B	4.48B	2.77B	3.05B
	Net Income Common Stockholders
2.36B	2.44B	1.80B	850.46M	893.38M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
4.62B	6.22B	6.14B	4.08B	7.69B
	Total Assets
39.56B	38.25B	36.44B	39.01B	36.25B
	Total Debt
15.79B	13.30B	13.28B	17.73B	19.21B
	Net Debt
13.72B	7.37B	7.66B	15.45B	16.55B
	Total Liabilities
23.73B	24.22B	24.27B	28.54B	26.34B
	Stockholders Equity
15.16B	13.51B	11.71B	10.07B	9.53B
Cash Flow		Free Cash Flow
1.95B	2.54B	785.74M	1.31B	1.99B
	Operating Cash Flow
3.74B	3.85B	2.00B	2.59B	3.14B
	Investing Cash Flow
-6.39B	-1.02B	7.90B	724.14M	-2.14B
	Financing Cash Flow
-1.23B	-2.49B	-6.91B	-3.36B	-592.33M

Ultrapar Participacoes SA Technical Analysis

Technical Analysis Sentiment

Negative

Last Price2.95

Price Trends

50DMA

2.90

Positive

100DMA

2.87

Positive

200DMA

3.38

Negative

Market Momentum

MACD

0.08

Positive

RSI

58.59

Neutral

STOCH

21.22

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For UGP, the sentiment is Negative. The current price of 2.95 is below the 20-day moving average (MA) of 3.04, above the 50-day MA of 2.90, and below the 200-day MA of 3.38, indicating a neutral trend. The MACD of 0.08 indicates Positive momentum. The RSI at 58.59 is Neutral, neither overbought nor oversold. The STOCH value of 21.22 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for UGP.

Ultrapar Participacoes SA Peers Comparison

Overall Rating

UnderperformOutperform

Sector (57)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
EC	81 Outperform	$18.97B	5.05	18.70%	17.45%	-1.24%	-16.75%
YPF	78 Outperform	$14.61B	5.00	22.65%	―	7.35%	―
PBR	76 Outperform	$79.44B	12.47	10.52%	20.11%	-10.81%	-70.65%
UGP	73 Outperform	$3.17B	7.42	16.54%	3.67%	-1.88%	-12.12%
MPC	67 Neutral	$37.72B	11.99	16.33%	2.87%	-6.70%	-57.85%
VLO	63 Neutral	$32.92B	12.21	10.86%	4.14%	-10.37%	-65.69%
Sector *	57 Neutral	$7.70B	4.18	-3.52%	8.32%	0.35%	-64.68%

* Energy Sector Average

Performance Comparison

UGP

Ultrapar Participacoes SA

2.95

-2.56

-46.46%

Ecopetrol SA

9.00

-1.77

-16.43%

MPC

Marathon Petroleum

121.07

-91.39

-43.02%

PBR

Petroleo Brasileiro SA- Petrobras

13.13

0.10

0.77%

VLO

Valero Energy

104.69

-70.99

-40.41%

YPF

YPF Sociedad Anonima

30.00

8.29

38.19%

Ultrapar Participacoes SA Earnings Call Summary

Earnings Call Date: Feb 26, 2025 | % Change Since: 7.27% | Next Earnings Date: May 7, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed sentiment, with notable achievements in Ultragaz and Ultracargo's performance and strong cash flow and investment in expansion. However, this was balanced by challenges in Ipiranga's performance, decreased recurring EBITDA, increased leverage, and ongoing issues with unlawful practices in the fuel industry.

Highlights

Ultragaz and Ultracargo Performance

Ultragaz's recurring EBITDA totaled RMB 441 million in the quarter, a 9% growth year-over-year. Ultracargo's EBITDA totaled RMB 169 million in the quarter, a 9% growth year-over-year, driven by an improved sales mix, higher tariffs from spot sales, and contractual adjustments.

Investment in Expansion

In 2024, RMB 2.230 billion was invested, with RMB 1.304 billion allocated to expansion, representing 59% of the total. Notable expansions include new Ultracargo terminals and infrastructure projects at Ipiranga.

Operational Cash Flow

Ultrapar maintained a strong operational cash flow generation of RMB 3.736 million in 2024, allowing for increased investment levels while maintaining financial leverage at comfortable levels.

Dividend Payments

Board of Directors approved additional dividend payments totaling RMB 769 million for 2024, reflecting a commitment to returning value to shareholders.

Lowlights

Decrease in Recurring EBITDA

Recurring EBITDA totaled RMB 1.284 billion in Q4 2024, a 23% decrease from Q4 2023, due to lower EBITDA at Ipiranga and the negative impact from the share of loss of Hidrovias.

Challenges in Ipiranga

Ipiranga's recurring EBITDA decreased by 27% year-over-year, mainly due to reduced margins impacted by unlawful practices in the industry and higher inventory levels.

Increase in Leverage

Leverage increased from 1.3x to 1.4x in the last quarter due to a lower LTM EBITDA, partially offset by a reduction in net debt.

Fuel Industry Challenges

Brazil's fuel industry faces challenges with unlawful activities causing significant negative impacts, including a 2.9 percentage point decrease in market share for lawful companies in 2024.

Company Guidance

During Ultrapar's fourth-quarter 2024 results conference call, the company provided guidance on various financial metrics and future expectations. The recurring EBITDA for the fourth quarter was RMB 1.284 billion, marking a 23% decrease from the same period in 2023, mainly due to lower EBITDA at Ipiranga and a RMB 104 million share of loss from Hidrovias. Annually, recurring EBITDA totaled RMB 5.375 billion, a 4% decline compared to 2023. Ultrapar's net income remained stable at RMB 2.526 billion for 2024, similar to 2023 figures, bolstered by higher extraordinary tax credits despite a lower recurring EBITDA from Ipiranga. The company declared additional dividends of RMB 493 million, with a total distribution of RMB 769 million for 2024. Operational cash generation slightly decreased by 2% to RMB 3.736 million due to higher working capital investment. Ultrapar's investments reached RMB 2.213 billion, a 14% increase, primarily driven by higher investments in Ultracargo. The company also highlighted challenges from unlawful practices in the fuel industry, impacting margins and competitive dynamics, but expects regulatory advancements to improve the competitive landscape. For 2025, Ultrapar plans to invest RMB 2.542 billion, with a focus on expansion.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.