Magellan Midstream Partners L.P. delivered a comprehensive beat in the third-quarter earnings season, on the back of stellar show from its refined products and crude oil units, along with reduced expenses.
Magellan Midstream posted adjusted earnings per unit of $1.10, surpassing the Zacks Consensus Estimate of $1.02. Further, the bottom line surged from the year-ago profit of 87 cents/unit. The pipeline operator’s revenues of $638 million also surpassed the Zacks Consensus Estimate of $611 million. The top line also increased 11.3% from the third quarter of 2017.
Importantly, Magellan Midstream’s distributable cash flow (DCF) in third-quarter 2018 came in at $281.8 million, up 19.8% from the year-ago quarter.
Segmental Analysis
Refined products: Robust demand for refined products drove transportation and terminals revenues to $300 million in the quarter, up from the prior-year figure of $289 million. Operating expenses were down around $6 million to a total of $112.3 million in the quarter under review. Product margin increased 512% on a year-over-year basis to stand at $23 million, primarily on the back of higher product sales revenues. Operating margin from the Refined Products segment was $214.7 million compared with $173.8 million in the year-ago quarter.
Crude Oil: Increased shipments on the Longhorn pipeline drove transportation and terminal revenues to $145 million, reflecting a 25% increase from the year-ago level of $116.3 million. While operating expenses increased 45% to amount to $45.2 million, product margin turned around from the year-ago loss to stand at $1 million, on the back of lower cost of product sales. The segment’s operating margin increased 33% year over year to come in at $153.8 million in the quarter under review.
Marine Storage: Higher average storage rates led to increased transportation and terminals revenues, which came in at $44 million in the quarter. Operating margin also recorded year-over-year growth of 12% to stand at $29 million, on the back of higher sales and lower operating expenses.
2018 Guidance Raised
Driven by robust third-quarter results, management now expects to generate record distributable cash flow of approximately $1.2 billion for the full year, up from the prior guidance of $1.1 billion. Magellan Midstream now expects its fourth-quarter earnings per unit of $1.24. Full-year diluted net earnings per unit are now projected to be $5.70 vis a vis the previous guidance of $4.10.
Zacks Rank and Key Picks
Magellan Midstream currently carries a Zacks Rank #3 (Hold).
Investors interested in the energy sector can opt for some better-ranked stocks like Bonanza Creek Energy, Inc. , Hess Corporation (HES - Free Report) and Murphy Oil Corporation (MUR - Free Report) . While Bonanza Creek and Hess sport a Zacks Rank #1 (Strong Buy), Murphy Oil carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Bonanza Creek delivered average positive earnings surprise of 12.93% in the last four reported quarters.
Hess pulled off average positive earnings surprise of 230.48% in the trailing four reported quarters.
Murphy Oil recorded a positive earnings surprise in each of the trailing four quarters, with average beat of 76.16%.
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It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
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Magellan Midstream Partners L.P. delivered a comprehensive beat in the third-quarter earnings season, on the back of stellar show from its refined products and crude oil units, along with reduced expenses.
Magellan Midstream posted adjusted earnings per unit of $1.10, surpassing the Zacks Consensus Estimate of $1.02. Further, the bottom line surged from the year-ago profit of 87 cents/unit. The pipeline operator’s revenues of $638 million also surpassed the Zacks Consensus Estimate of $611 million. The top line also increased 11.3% from the third quarter of 2017.
Importantly, Magellan Midstream’s distributable cash flow (DCF) in third-quarter 2018 came in at $281.8 million, up 19.8% from the year-ago quarter.
Segmental Analysis
Refined products: Robust demand for refined products drove transportation and terminals revenues to $300 million in the quarter, up from the prior-year figure of $289 million. Operating expenses were down around $6 million to a total of $112.3 million in the quarter under review. Product margin increased 512% on a year-over-year basis to stand at $23 million, primarily on the back of higher product sales revenues. Operating margin from the Refined Products segment was $214.7 million compared with $173.8 million in the year-ago quarter.
Crude Oil: Increased shipments on the Longhorn pipeline drove transportation and terminal revenues to $145 million, reflecting a 25% increase from the year-ago level of $116.3 million. While operating expenses increased 45% to amount to $45.2 million, product margin turned around from the year-ago loss to stand at $1 million, on the back of lower cost of product sales. The segment’s operating margin increased 33% year over year to come in at $153.8 million in the quarter under review.
Marine Storage: Higher average storage rates led to increased transportation and terminals revenues, which came in at $44 million in the quarter. Operating margin also recorded year-over-year growth of 12% to stand at $29 million, on the back of higher sales and lower operating expenses.
2018 Guidance Raised
Driven by robust third-quarter results, management now expects to generate record distributable cash flow of approximately $1.2 billion for the full year, up from the prior guidance of $1.1 billion. Magellan Midstream now expects its fourth-quarter earnings per unit of $1.24. Full-year diluted net earnings per unit are now projected to be $5.70 vis a vis the previous guidance of $4.10.
Zacks Rank and Key Picks
Magellan Midstream currently carries a Zacks Rank #3 (Hold).
Investors interested in the energy sector can opt for some better-ranked stocks like Bonanza Creek Energy, Inc. , Hess Corporation (HES - Free Report) and Murphy Oil Corporation (MUR - Free Report) . While Bonanza Creek and Hess sport a Zacks Rank #1 (Strong Buy), Murphy Oil carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Bonanza Creek delivered average positive earnings surprise of 12.93% in the last four reported quarters.
Hess pulled off average positive earnings surprise of 230.48% in the trailing four reported quarters.
Murphy Oil recorded a positive earnings surprise in each of the trailing four quarters, with average beat of 76.16%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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