|Bid||0.00 x 1000|
|Ask||0.00 x 1300|
|Day's range||28.82 - 29.42|
|52-week range||23.10 - 29.65|
|PE ratio (TTM)||21.43|
|Earnings date||1 Aug 2018|
|Forward dividend & yield||1.71 (6.12%)|
|1y target est||32.05|
Of the 18 analysts covering Magellan Midstream Partners (MMP), six recommend “strong buy,” five recommend “buy,” five recommend “hold,” and two recommend “sell.” Their mean price target of $74.90 for Magellan Midstream Partners implies an 11% upside to its current price of $67.73.
Kinder Morgan (KMI) reported its second-quarter results on July 18 after the markets closed. The company reported an EPS of -$0.08. The reported loss was driven by a non-cash impairment charge of $600 million related to certain gathering and processing assets in Oklahoma. Excluding the impact of certain one-off items, Kinder Morgan’s adjusted EPS was $0.21.
Of the 23 analysts covering Plains All American Pipeline (PAA), four recommend “strong buy,” six recommend “buy,” 12 recommend “hold,” and one recommends “strong sell.” Their mean price target of $26.30 for Plains All American implies a 12% upside to Plains All American’s current price of $23.40.
Of the 17 analysts covering ONEOK (OKE), five recommend “strong buy,” four recommend “buy,” and eight recommend “hold.” Their mean price target for ONEOK is $69.60, which implies a ~1% downside to ONEOK’s current price of $70.
Of the 16 analysts covering MPLX (MPLX), seven recommend “strong buy,” eight recommend “buy,” and one recommends “hold.” Their mean price target for MPLX is $41.60, which implies a 23% upside to its current price of $33.77.
Analysts are fairly bullish on Enterprise Products Partners (EPD), the largest midstream company by market capitalization. Of the 24 analysts covering Enterprise Products Partners, 13 recommend “strong buy” and 11 recommend “buy.”
By securing another new project, this energy infrastructure giant is keeping its growth engine running at full speed.
Enterprise Products Partners L.P. (EPD) today announced it is planning to develop an offshore crude oil export terminal off the Texas Gulf Coast. The terminal would be capable of fully loading Very Large Crude Carriers (“VLCC”), which have capacities of approximately 2 million barrels and provide the most efficient and cost-effective solution to export crude oil to the largest international markets in Asia and Europe. Enterprise has started front-end engineering and design (“FEED”) and preparing applications for regulatory permitting.
Of the analysts surveyed by Reuters covering Kinder Morgan (KMI), 71% rate the stock as a “buy,” while the remaining 29% rate the stock as a “hold.” The mean target price for Kinder Morgan provided by surveyed analysts is $20.7, which implies an upside of 15% from Kinder Morgan’s current price of $18.03. As the above graph shows, more analysts recommend Kinder Morgan as a “strong buy” than the analysts in July 2017.
According to data released on July 11, the short interest in Kinder Morgan (KMI) stock fell from ~43.1 million shares on June 15 to 33.2 million shares on June 29. The short interest in Kinder Morgan as a percentage of its float is 1.7%. The short interest was 2.3% in mid-June. A fall in the short interest indicates that fewer investors expect Kinder Morgan’s stock price to fall more than the investors that expected a fall in mid-June.
Kinder Morgan (KMI) is scheduled to release its second-quarter earnings on July 18. Analysts expect the company’s EPS to be $0.2 per share—43% higher than the adjusted EPS of $0.14 for the second quarter of 2017. The estimated second-quarter EPS represents a 9% sequential decline. Kinder Morgan beat its EPS estimates in three out of the last ten quarters.
So far in this series, we’ve looked at MLPs’ performance in the first half of this year, as well as their project announcements, capital market activity, major developments, and fund flow. In this article, we’ll analyze MLP’s valuation based on their yield spreads and EV1-to-EBITDA multiples.
Last year, most MLPs focused on completing existing projects and ramping up projects placed into service, and few new projects or expansions were announced. However, the pace of new project announcements picked up early this year, particularly among midstream MLPs. Most new projects are focused on expanding crude oil pipeline infrastructure, NGL (natural gas liquid) pipelines, natural gas processing capacity, and NGL export capacity.
MLPs recovered slightly in the week ending July 6 after sluggishness in the previous two weeks. The Alerian MLP Index (^AMZ), which includes 50 energy MLPs, rose 0.4% last week and ended at 263.9. Out of the total 94 MLPs, 57 ended in the green, three remained unchanged, and 34 ended in the red last week.
Of the four MLPs that we’re discussing in this series, Enterprise Products Partners (EPD) received the most “buy” recommendations from the analysts surveyed by Reuters. All of the analysts surveyed by Reuters rated Enterprise Products Partners as a “buy.” In comparison, 94% of the analysts covering MPLX (MPLX) rated it as a “buy.” Nearly 76% of the analysts covering Energy Transfer Partners (ETP) rated it as a “buy.”
The short interest in Plains All American Pipeline (PAA) rose to 12.6 million shares on June 15 from 10.0 million shares on May 31. A rise in the short interest indicates that more investors expect the stock price to fall in the near future. Notably, investors’ expectations could be wrong. The short interest in Plains All American Pipeline as a percentage of its float is 3.0%—higher than its five-year average of ~1.6%.
Enterprise Products Partners L.P. (EPD) (“Enterprise”) announced today that the board of directors of its general partner declared an increase in the quarterly cash distribution paid to limited partners with respect to the second quarter of 2018 to $0.43 per common unit, or $1.72 per unit on an annualized basis. The quarterly distribution will be paid Wednesday, August 8, 2018, to unitholders of record as of the close of business Tuesday, July 31, 2018. This distribution, which represents a 2.4 percent increase over the distribution declared with respect to the second quarter of 2017, is the partnership’s 56th consecutive quarterly distribution increase and the 65th overall distribution increase since Enterprise’s initial public offering in 1998.
Currently, Energy Transfer Partners’ (ETP) net debt-to-adjusted EBITDA stands at ~5.1x—the highest among the four MLPs that we’re discussing in this series. We’re also analyzing Enterprise Products Partners (EPD), MPLX (MPLX), and Plains All American Pipeline (PAA). MPLX’s ratio is the lowest at 3.5x. Enterprise Products Partners’ ratio stands at ~4.2x.
Enterprise Products Partners (EPD) spent $3.4 billion on capital projects in 2017. For 2018, the company expects to invest nearly $3.3 billion in growth capital projects. The projects should contribute to Enterprise Products Partners’ future earnings. In May, the company started construction on its ethylene export terminal. Read Enterprise Products Partners Is Up 6% This Year: What’s Ahead? to learn more.
Enterprise Products Partners L.P. announced today that its affiliate, Enterprise TE Products Pipeline Company LLC, is conducting an open season to gauge shipper support for incremental volumes of ultra-low sulfur diesel and motor gasoline on the company’s existing 14-inch diameter pipeline that originates in Seymour, Indiana and terminates in the Chicago, Illinois area.
MPLX’s (MPLX) DCF (distributable cash flow) grew 43% in 2017 over 2016—the highest growth among the four MLPs that we’re discussing in this series. The growth was driven by contributions from logistics and storage assets acquired from Marathon Petroleum (MPC). MPLX acquired assets from Marathon Petroleum in February. The acquired assets and growth projects should continue to drive the company’s future earnings growth.
Energy Transfer Partners (ETP) is trading at a high yield of ~11.8%. MPLX (MPLX) and Enterprise Products Partners (EPD) are trading at attractive yields of 7.3% and 6.2%, respectively. Plains All American Pipeline (PAA) is trading at a yield of ~5.1%. In comparison, the Alerian MLP Index’s yield stands at ~7.9%. Currently, MLPs offer an attractive spread over the US ten-year Treasury yield, which stood at 2.84% on July 5.
Enterprise Products Partners (EPD) is trading at a forward EV-to-EBITDA multiple of ~13x—lower than its five-year average multiple of 14.4x, which indicates possible undervaluation. Similarly, Energy Transfer Partners (ETP) is trading at a forward EV-to-EBITDA multiple that’s lower compared to its five-year average.