A month has gone by since the last earnings report for Magellan Midstream Partners . Shares have added about 19.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Magellan Midstream due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Magellan Midstream Q3 Earnings and Revenues Beat Estimates
Magellan Midstreamreported adjusted earnings per unit of 97 cents, beating the Zacks Consensus Estimate of 85 cents, attributable to reduced expenses and higher commodity profits resulting from an additional sales volume. However, the bottom line fell 18.5% from the year-ago profit of $1.19. Lower refined products demand and a decline in commodity price due to coronavirus-induced disruptions hampered results.
Meanwhile, quarterly revenues of $598 million surpassed the Zacks Consensus Estimate of $565 million. However, the top line decreased from the year-ago sales of $657 million.
Segmental Performance
Refined Products: Revenues of $436.4 million were down from the year-ago period’s $490.8 million. Notably, total volumes shipped in the quarter under review were 119.2 million barrels compared with 136.4 million barrels a year ago. Operating margin from the segment declined to $239 million in the third quarter from $270 million in the corresponding period of 2019. The segment’s depreciation costs and general & administration expenses decreased year over year. Operating profit dropped 12.4% year over year to $169.9 million.
Crude Oil: Quarterly revenues grossed $163.6 million, down 2.2% year over year on the back of lower volumes. Total volumes shipped in the quarter were 45.1 million barrels, down from 79.2 million barrels a year ago. Operating margin contracted to $135.8 million from $156.4 million in the prior year. Operating profit of $96.7 million declined 23.6% year over year due to depressed volumes and margins.
DCF & Balance Sheet
Magellan Midstream’s distributable cash flow (DCF) for the third quarter summed $258.8 million, dropping 15.6% from the year-ago level.
Notably, on Oct 22, the partnership announced third-quarter cash distribution of $1.0275 per unit ($4.11 on an annualized basis), representing 1% annual growth. The amount is payable Nov 13 to its unitholders of record as of Nov 6.
As of Sep 30, 2020, the firm had cash and cash equivalents worth $8.5 million, and a long-term debt of $4.90 billion.
2020 Outlook
As the economy is on the mend from the coronavirus-caused oil price crash, management expects to generate distributable cash flows in the $1,000-$1,050 million range for the full year and plans to retain the current level of cash distribution for the rest of the year. Magellan Midstream projected fourth-quarter 2020 earnings per unit of 80 cents while the same for the full year is anticipated to be $3.60.
The firm plans to spend $400 million in the ongoing year and $40 million in 2021 on completing certain expansion projects.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -8.71% due to these changes.
VGM Scores
At this time, Magellan Midstream has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Magellan Midstream has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Magellan Midstream (MMP) Up 19.7% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Magellan Midstream Partners . Shares have added about 19.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Magellan Midstream due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Magellan Midstream Q3 Earnings and Revenues Beat Estimates
Magellan Midstreamreported adjusted earnings per unit of 97 cents, beating the Zacks Consensus Estimate of 85 cents, attributable to reduced expenses and higher commodity profits resulting from an additional sales volume. However, the bottom line fell 18.5% from the year-ago profit of $1.19. Lower refined products demand and a decline in commodity price due to coronavirus-induced disruptions hampered results.
Meanwhile, quarterly revenues of $598 million surpassed the Zacks Consensus Estimate of $565 million. However, the top line decreased from the year-ago sales of $657 million.
Segmental Performance
Refined Products: Revenues of $436.4 million were down from the year-ago period’s $490.8 million. Notably, total volumes shipped in the quarter under review were 119.2 million barrels compared with 136.4 million barrels a year ago. Operating margin from the segment declined to $239 million in the third quarter from $270 million in the corresponding period of 2019. The segment’s depreciation costs and general & administration expenses decreased year over year. Operating profit dropped 12.4% year over year to $169.9 million.
Crude Oil: Quarterly revenues grossed $163.6 million, down 2.2% year over year on the back of lower volumes. Total volumes shipped in the quarter were 45.1 million barrels, down from 79.2 million barrels a year ago. Operating margin contracted to $135.8 million from $156.4 million in the prior year. Operating profit of $96.7 million declined 23.6% year over year due to depressed volumes and margins.
DCF & Balance Sheet
Magellan Midstream’s distributable cash flow (DCF) for the third quarter summed $258.8 million, dropping 15.6% from the year-ago level.
Notably, on Oct 22, the partnership announced third-quarter cash distribution of $1.0275 per unit ($4.11 on an annualized basis), representing 1% annual growth. The amount is payable Nov 13 to its unitholders of record as of Nov 6.
As of Sep 30, 2020, the firm had cash and cash equivalents worth $8.5 million, and a long-term debt of $4.90 billion.
2020 Outlook
As the economy is on the mend from the coronavirus-caused oil price crash, management expects to generate distributable cash flows in the $1,000-$1,050 million range for the full year and plans to retain the current level of cash distribution for the rest of the year. Magellan Midstream projected fourth-quarter 2020 earnings per unit of 80 cents while the same for the full year is anticipated to be $3.60.
The firm plans to spend $400 million in the ongoing year and $40 million in 2021 on completing certain expansion projects.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -8.71% due to these changes.
VGM Scores
At this time, Magellan Midstream has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Magellan Midstream has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.