Pipeline operator Magellan Midstream Partners L.P. is set to release third-quarter 2017 results before the opening bell on Nov 2.
In the preceding three-month period, the Tulsa, OK-based partnership reported better-than-expected earnings on the back of solid contributions from all operating segments.
Magellan Midstream has an excellent record. The partnership has topped estimates in the last four quarters. Then partnership delivered an average positive earnings surprise of 6.58% in the said period.
Let’s see how things are shaping up for this announcement.
Which Way are Estimates Treading?
Let’s look at the estimate revisions in order to get a clear picture of what analysts are thinking about the company before earnings release.
The Zacks Consensus Estimate for 2017 earnings for the current quarter has been revised downward by a cent over the last 30 days. Further, the Zacks Consensus Estimate for 2017 for earnings have also moved south over the last 30 days.
Factors to Consider This Quarter
Magellan Midstream owns an attractive portfolio of energy infrastructure assets that generate stable and recurring fee- and tariff-based revenues. This includes the longest U.S. refined petroleum products pipeline system, access to almost 50% of refining capacity in the continental U.S. along with imports, and 85 petroleum terminals with more than 90 million barrels of storage. Fee-based activities account for about 88% of the total operating income of the partnership.
In particular, increasing cash flow from growth projects coming online, together with continued strong performance from Magellan Midstream’s fee-based businesses will drive earnings. Important pipeline projects of the partnership including Longhorn, Bridge Tex, and Double Eagle among others are expected to buoy the results in the quarter under review.
The partnership recently announced a cash distribution of 90.5 cents per unit ($3.62 per unit annualized), 1.7% higher than the previous payout, generating optimism about its quarterly performance this season.
However, higher operating expenses remain a concern. Moreover, Magellan Midstream has several ongoing projects which require large capital outlay. Delay in project completions and cost overruns are expected to hamper profitability for the partnership. The partnership’s non-fee based assets continue to be under pressure due to weak crude prices. These may result in reduced earnings and revenues for the firm.
Unit Performance
Units of Magellan Midstream have lost 0.3% during the third quarter as against the industry’s 5.8% decline.
Earnings Whispers
Our proven model does not conclusively show that Magellan Midstream will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat consensus estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
That is not the case here, as you will see below.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -1.71%. This is because the Most Accurate Estimate is pegged at 94 cents whereas the Zacks Consensus Estimate stands at 95 cents.
Zacks Rank: Magellan Midstream — which counts TC PipeLines, LP , Buckeye Partners L.P. and Enable Midstream Partners, LP. as its peers among others — has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Though a Zacks Rank #3 increases the predictive power of ESP, the partnership’s -1.71% ESP makes surprise prediction difficult.
Conversely, we caution against Sell-rated stocks (Zacks Ranks #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
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Magellan Midstream (MMP) Q3 Earnings: What's in the Cards?
Pipeline operator Magellan Midstream Partners L.P. is set to release third-quarter 2017 results before the opening bell on Nov 2.
In the preceding three-month period, the Tulsa, OK-based partnership reported better-than-expected earnings on the back of solid contributions from all operating segments.
Magellan Midstream has an excellent record. The partnership has topped estimates in the last four quarters. Then partnership delivered an average positive earnings surprise of 6.58% in the said period.
Magellan Midstream Partners L.P. Price and EPS Surprise
Magellan Midstream Partners L.P. Price and EPS Surprise | Magellan Midstream Partners L.P. Quote
Let’s see how things are shaping up for this announcement.
Which Way are Estimates Treading?
Let’s look at the estimate revisions in order to get a clear picture of what analysts are thinking about the company before earnings release.
The Zacks Consensus Estimate for 2017 earnings for the current quarter has been revised downward by a cent over the last 30 days. Further, the Zacks Consensus Estimate for 2017 for earnings have also moved south over the last 30 days.
Factors to Consider This Quarter
Magellan Midstream owns an attractive portfolio of energy infrastructure assets that generate stable and recurring fee- and tariff-based revenues. This includes the longest U.S. refined petroleum products pipeline system, access to almost 50% of refining capacity in the continental U.S. along with imports, and 85 petroleum terminals with more than 90 million barrels of storage. Fee-based activities account for about 88% of the total operating income of the partnership.
In particular, increasing cash flow from growth projects coming online, together with continued strong performance from Magellan Midstream’s fee-based businesses will drive earnings. Important pipeline projects of the partnership including Longhorn, Bridge Tex, and Double Eagle among others are expected to buoy the results in the quarter under review.
The partnership recently announced a cash distribution of 90.5 cents per unit ($3.62 per unit annualized), 1.7% higher than the previous payout, generating optimism about its quarterly performance this season.
However, higher operating expenses remain a concern. Moreover, Magellan Midstream has several ongoing projects which require large capital outlay. Delay in project completions and cost overruns are expected to hamper profitability for the partnership. The partnership’s non-fee based assets continue to be under pressure due to weak crude prices. These may result in reduced earnings and revenues for the firm.
Unit Performance
Units of Magellan Midstream have lost 0.3% during the third quarter as against the industry’s 5.8% decline.
Earnings Whispers
Our proven model does not conclusively show that Magellan Midstream will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat consensus estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
That is not the case here, as you will see below.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -1.71%. This is because the Most Accurate Estimate is pegged at 94 cents whereas the Zacks Consensus Estimate stands at 95 cents.
Zacks Rank: Magellan Midstream — which counts TC PipeLines, LP , Buckeye Partners L.P. and Enable Midstream Partners, LP. as its peers among others — has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Though a Zacks Rank #3 increases the predictive power of ESP, the partnership’s -1.71% ESP makes surprise prediction difficult.
Conversely, we caution against Sell-rated stocks (Zacks Ranks #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>