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Magellan's (MMP) Q4 Earnings Miss Estimates, Revenues Beat
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Magellan Midstream Partners, L.P. , a diversified energy infrastructure provider, reported fourth-quarter adjusted net income per unit of $1.06, underperforming the Zacks Consensus Estimate of $1.31 and the year-ago quarter’s earnings of $1.24 per unit. The reason of this underperformance was the low operating margin of the refined products segment that missed the Zacks Consensus Estimate.
However, Magellan Midstream’s revenues of $861 million rose about 6.5% from the fourth quarter of 2021 and beat the Zacks Consensus Estimate of $856 million by 0.6%. This was a result of higher average transportation rates that contribute to the transportation revenue for the refined products segment as well as higher terminal throughput fees, average rates on the Longhorn Pipeline, and tariff shipments for the crude oil segment.
In good news for investors, MMP declared a cash distribution of $4.17 per unit for 2022, greater than the year-ago figure of $4.13. Investors should know that MMP has increased its distribution for 21 consecutive years.
Magellan Midstream Partners, L.P. Price, Consensus and EPS Surprise
Refined Products: The operating margin of $302.5 million fell marginally from the year-ago period’s $302.7 million. This segment’s operating margin also missed the Zacks Consensus Estimate of $329 million, hampered by unfavorable mark-to-market adjustments.
Meanwhile, transportation and terminal revenues improved by 7.3% to $379.4 million, mostly as a result of increased quarterly transportation volumes and higher average transportation rates.
Crude Oil: The operating margin of $128.2 million increased by 23.6% from the year-ago quarter’s figure of $103.8 million and beat the Zacks Consensus Estimate of $111 million.
Meanwhile, transportation and terminal revenues increased by about 8.2% from the year-ago quarter’s figure to $123.8 million, while also beating the Zacks Consensus Estimate of $114 million due to higher terminal throughput fees as well as higher average Longhorn pipeline rates.
Increased shipments on the Houston distribution system, which moves at a reduced average tariff, partially due to a new pipeline connection in 2022, resulted in an increased overall volume shipment and a decreased average rate.
Distributable Cash Flow
Magellan Midstream’s DCF for the fourth quarter was $ 344.7 million, up 16.1% from last year’s figure of $296.8 million.
MMP increased its free cash flow after distributions in the fourth quarter of 2022 to $109.1 million, up from $70 million a year ago.
2023 Guidance
For 2023, MMP sets its DCF guidance at $1.18 billion, while net income should come at around $975 million.
MMP projects free cash flow (FCF) of $1.07 billion for the full-year 2023 or $216 million after distributions.
The annual net income per unit is estimated at $4.80 for 2023, with the first-quarter guidance of $1.20 per unit.
Zacks Rank and Key Picks
Magellan Midstream Partners, L.P. is a Tulsa, OK-based company that operates as a master limited partnership. It focuses on transportation, storage, and distribution of petroleum products. MMP is also involved in the ownership and operation of a diversified portfolio of energy infrastructure assets.
Currently, Magellan Midstream carries a Zacks Rank #2 (Buy). Apart from RIG, investors interested in the energy sector might look at stocks like ProPetro Holding (PUMP - Free Report) and Energy Transfer (ET - Free Report) both sporting a Zacks Rank #1 (Strong Buy) and Helmerich & Payne (HP - Free Report) holding a Zacks Rank #2.You can seethe complete list of today’s Zacks #1 Rank stocks here.
ProPetro Holding: PUMP currently has a forward P/E ratio of 4.43. In comparison, its industry has an average forward P/E of 25.40, which means PUMP is trading at a discount to the group.
ProPetro Holding is worth approximately $1.13 billion. Its shares have decreased by 20.8% in the past year.
Energy Transfer LP: Energy Transfer LP is valued at around $39.66 billion. ET delivered an average earnings surprise of 16.34% for the last four quarters, and its current dividend yield is 9.50%.
Energy Transfer LP currently has a forward P/E ratio of 8.95. In comparison, its industry has an average forward P/E of 14.20, which means Energy Transfer LP is trading at a discount to the group.
Helmerich & Payne: Helmerich & Payne is valued at around $4.78 billion. Helmerich & Payne, headquartered in Tulsa, OK, has a trailing four-quarter earnings surprise of roughly 130.98% on average.
Over the past 60 days, the Zacks Consensus Estimate for HP's fiscal 2023 earnings has been revised by 18.8%. In the past year, HP stock has increased by 36.3%.
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Magellan's (MMP) Q4 Earnings Miss Estimates, Revenues Beat
Magellan Midstream Partners, L.P. , a diversified energy infrastructure provider, reported fourth-quarter adjusted net income per unit of $1.06, underperforming the Zacks Consensus Estimate of $1.31 and the year-ago quarter’s earnings of $1.24 per unit. The reason of this underperformance was the low operating margin of the refined products segment that missed the Zacks Consensus Estimate.
However, Magellan Midstream’s revenues of $861 million rose about 6.5% from the fourth quarter of 2021 and beat the Zacks Consensus Estimate of $856 million by 0.6%. This was a result of higher average transportation rates that contribute to the transportation revenue for the refined products segment as well as higher terminal throughput fees, average rates on the Longhorn Pipeline, and tariff shipments for the crude oil segment.
In good news for investors, MMP declared a cash distribution of $4.17 per unit for 2022, greater than the year-ago figure of $4.13. Investors should know that MMP has increased its distribution for 21 consecutive years.
Magellan Midstream Partners, L.P. Price, Consensus and EPS Surprise
Magellan Midstream Partners, L.P. price-consensus-eps-surprise-chart | Magellan Midstream Partners, L.P. Quote
Operational Performance
Refined Products: The operating margin of $302.5 million fell marginally from the year-ago period’s $302.7 million. This segment’s operating margin also missed the Zacks Consensus Estimate of $329 million, hampered by unfavorable mark-to-market adjustments.
Meanwhile, transportation and terminal revenues improved by 7.3% to $379.4 million, mostly as a result of increased quarterly transportation volumes and higher average transportation rates.
Crude Oil: The operating margin of $128.2 million increased by 23.6% from the year-ago quarter’s figure of $103.8 million and beat the Zacks Consensus Estimate of $111 million.
Meanwhile, transportation and terminal revenues increased by about 8.2% from the year-ago quarter’s figure to $123.8 million, while also beating the Zacks Consensus Estimate of $114 million due to higher terminal throughput fees as well as higher average Longhorn pipeline rates.
Increased shipments on the Houston distribution system, which moves at a reduced average tariff, partially due to a new pipeline connection in 2022, resulted in an increased overall volume shipment and a decreased average rate.
Distributable Cash Flow
Magellan Midstream’s DCF for the fourth quarter was $ 344.7 million, up 16.1% from last year’s figure of $296.8 million.
MMP increased its free cash flow after distributions in the fourth quarter of 2022 to $109.1 million, up from $70 million a year ago.
2023 Guidance
For 2023, MMP sets its DCF guidance at $1.18 billion, while net income should come at around $975 million.
MMP projects free cash flow (FCF) of $1.07 billion for the full-year 2023 or $216 million after distributions.
The annual net income per unit is estimated at $4.80 for 2023, with the first-quarter guidance of $1.20 per unit.
Zacks Rank and Key Picks
Magellan Midstream Partners, L.P. is a Tulsa, OK-based company that operates as a master limited partnership. It focuses on transportation, storage, and distribution of petroleum products. MMP is also involved in the ownership and operation of a diversified portfolio of energy infrastructure assets.
Currently, Magellan Midstream carries a Zacks Rank #2 (Buy). Apart from RIG, investors interested in the energy sector might look at stocks like ProPetro Holding (PUMP - Free Report) and Energy Transfer (ET - Free Report) both sporting a Zacks Rank #1 (Strong Buy) and Helmerich & Payne (HP - Free Report) holding a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
ProPetro Holding: PUMP currently has a forward P/E ratio of 4.43. In comparison, its industry has an average forward P/E of 25.40, which means PUMP is trading at a discount to the group.
ProPetro Holding is worth approximately $1.13 billion. Its shares have decreased by 20.8% in the past year.
Energy Transfer LP: Energy Transfer LP is valued at around $39.66 billion. ET delivered an average earnings surprise of 16.34% for the last four quarters, and its current dividend yield is 9.50%.
Energy Transfer LP currently has a forward P/E ratio of 8.95. In comparison, its industry has an average forward P/E of 14.20, which means Energy Transfer LP is trading at a discount to the group.
Helmerich & Payne: Helmerich & Payne is valued at around $4.78 billion. Helmerich & Payne, headquartered in Tulsa, OK, has a trailing four-quarter earnings surprise of roughly 130.98% on average.
Over the past 60 days, the Zacks Consensus Estimate for HP's fiscal 2023 earnings has been revised by 18.8%. In the past year, HP stock has increased by 36.3%.