On Aug 29, 2016, we issued an updated research report on Buckeye Partners, L.P. . Strategic acquisitions and organic growth projects continue to drive the partnership’s performance in the domestic as well as international arena. However, intensifying competition and stringent government regulations are persistent headwinds.
Recently, Buckeye Partners reported second-quarter 2016 earnings from continuing operations of $1.07 per unit, beating the Zacks Consensus Estimate of 95 cents by 12.6%. Quarterly earnings also surged 50.7% year over year. However, Buckeye Partners’ total revenue came in at $777.1 million, missing the Zacks Consensus Estimate of $800 million by 2.9%. Quarterly revenues also fell 2.5% from the year-ago figure.
Buckeye holds an attractive portfolio of diverse refined petroleum-product transportation assets in key geographical markets. All of the partnership’s assets are secured by 7–10 year minimum volume commitments and storage, thereby adding stability to its long-term earnings.
Meanwhile, Buckeye frequently acquires assets in a similar line of business as its own in order to focus on its core business. Since 2010, the partnership has invested over $7 billion in acquisitions and organic growth projects. Through acquisitions, it has added storage capacity of 80 million barrels. Moreover, the acquisitions of 65 domestic and international terminals have provided the partnership with added resources to serve its customers.
The partnership started developing the Michigan Ohio pipeline and the terminal expansion project, and plans to complete construction by fourth-quarter 2016. It is presently exploring additional opportunities to increase its capacity to move products west to east. Buckeye is assessing $2 billion of potential investment opportunities capable of generating long-term value for its unitholders.
However, Buckeye’s operations are subject to stringent environmental laws, which expose it to the risks of increasing cost of operations and compliance costs. In addition, new pipelines being built by major integrated oil and gas companies could intensify competition in the pipeline business. Buckeye’s rate structures are subject to review and regulation by the FERC.
Zacks Rank and Key Picks
Buckeye Partners carries a Zacks Rank #3 (Hold). Some better-ranked stocks in same industry include CONE Midstream Partners LP , Enbridge Energy Partners, L.P. and TC PipeLines, LP . While CONE Midstream and Enbridge Energy sport a Zacks Rank #1 (Strong Buy), TC PipeLines carries a Zacks Rank #2 (Buy).
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Buckeye (BPL) Gains from Strategic Buyouts, Risks Persist
On Aug 29, 2016, we issued an updated research report on Buckeye Partners, L.P. . Strategic acquisitions and organic growth projects continue to drive the partnership’s performance in the domestic as well as international arena. However, intensifying competition and stringent government regulations are persistent headwinds.
Recently, Buckeye Partners reported second-quarter 2016 earnings from continuing operations of $1.07 per unit, beating the Zacks Consensus Estimate of 95 cents by 12.6%. Quarterly earnings also surged 50.7% year over year. However, Buckeye Partners’ total revenue came in at $777.1 million, missing the Zacks Consensus Estimate of $800 million by 2.9%. Quarterly revenues also fell 2.5% from the year-ago figure.
Buckeye holds an attractive portfolio of diverse refined petroleum-product transportation assets in key geographical markets. All of the partnership’s assets are secured by 7–10 year minimum volume commitments and storage, thereby adding stability to its long-term earnings.
Meanwhile, Buckeye frequently acquires assets in a similar line of business as its own in order to focus on its core business. Since 2010, the partnership has invested over $7 billion in acquisitions and organic growth projects. Through acquisitions, it has added storage capacity of 80 million barrels. Moreover, the acquisitions of 65 domestic and international terminals have provided the partnership with added resources to serve its customers.
BUCKEYE PARTNRS Price
BUCKEYE PARTNRS Price | BUCKEYE PARTNRS Quote
The partnership started developing the Michigan Ohio pipeline and the terminal expansion project, and plans to complete construction by fourth-quarter 2016. It is presently exploring additional opportunities to increase its capacity to move products west to east. Buckeye is assessing $2 billion of potential investment opportunities capable of generating long-term value for its unitholders.
However, Buckeye’s operations are subject to stringent environmental laws, which expose it to the risks of increasing cost of operations and compliance costs. In addition, new pipelines being built by major integrated oil and gas companies could intensify competition in the pipeline business. Buckeye’s rate structures are subject to review and regulation by the FERC.
Zacks Rank and Key Picks
Buckeye Partners carries a Zacks Rank #3 (Hold). Some better-ranked stocks in same industry include CONE Midstream Partners LP , Enbridge Energy Partners, L.P. and TC PipeLines, LP . While CONE Midstream and Enbridge Energy sport a Zacks Rank #1 (Strong Buy), TC PipeLines carries a Zacks Rank #2 (Buy).
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>