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Growth & Income

Earnings momentum for Macquarie Infrastructure Company (MIC - Snapshot Report) has been on the rise due to higher sales volume and prices for aviation fuel and gas products. This Zacks #2 Rank (Buy), provider of liquid storage and handling (among other services) also offers a healthy dividend yield of 5.9%.

Second Quarter Results

On August 1, Macquarie Infrastructure reported second quarter 2012 earnings of 24 cents per share, reversing the year-ago loss of 5 cents. Total revenue increased 4.6% year over year to $258.5 million, riding on expanded volumes of products sold and higher energy prices.

Macquarie Infrastructure expects free cash flow for 2012 to be $3.70 per share, up from the earlier guidance range of $3.50 to $3.60. The expected rise in free cash flow is attributable to strong operating results for IMTT and The Gas Company, as well as reductions in interest expense at Atlantic Aviation.

Earnings Estimates Move Higher

The Zacks Consensus Estimate for 2012 has moved higher by 1.1% to $3.65 per share in the last 60 days, while the Zacks Consensus Estimate for 2013 edged up 0.5% to $4.05 in the same period.

Stable Dividend

Macquarie Infrastructure has consistently paid dividends since 2004, barring a suspension during the economic crisis of 2009 to 2010. The company raised its quarterly dividend rate to 62.5 cents in August 2012 from the prior payout of 20 cents. The current annualized rate of $2.50 reflects a dividend yield of 5.9%.

Stretched Valuation

Shares of Macquarie Infrastructure are trading at roughly 11.7 times the full year 2012 estimate with the PEG ratio at 1.01 times. The price-to-book is at 2.79x, an 8.6% premium to the peer group average of 2.57x. The price-to-sales is at 1.95x, a 156.6% premium to the peer group average of 0.76x.

The company has a trailing 12-month ROE of 5.5%, compared with the peer group average of 11.7%.

Following the earnings release, shares of Macquarie Infrastructure have fared relatively better than the simple moving averages for 200 days of $36.21.

Macquarie Infrastructure Company LLC has an infrastructure business in the United States and also operates liquid storage and handling services in the United States and Canada. The market capital is $2.0 billion and it has 2,059 employees. The company competes with AmeriGas Partners LP (APU).


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