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Antero Midstream (AM) Declines 5% Despite Q3 Earnings Beat

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Antero Midstream Corporation (AM - Free Report) reported third-quarter 2020 adjusted earnings per share of 25 cents, beating the Zacks Consensus Estimate of 23 cents. The bottom line, however, declined from the year-ago quarter’s 39 cents.

Quarterly revenues of $233 million beat the Zacks Consensus Estimate of $224 million but declined from $244 million in the year-ago quarter.

The better-than-expected results were owing to higher daily compression volumes of natural gas. Despite the earnings beat and increased free cash flow guidance, the stock fell more than 5% since the earnings announcement on Oct 28. It seems that investors are worried since the coronavirus pandemic has somewhat dented demand for the company’s midstream assets.

Antero Midstream Corporation Price, Consensus and EPS Surprise

 

Antero Midstream Corporation Price, Consensus and EPS Surprise

Antero Midstream Corporation price-consensus-eps-surprise-chart | Antero Midstream Corporation Quote

Operational Performance

During third-quarter 2020, average daily compression volumes were recorded at 2,821 million cubic feet (MMcf/D), up 16% from the year-ago level of 2,434 MMcf/D. On a per-Mcf basis, compression fee was 20 cents, up 5% from prior-year quarter’s 19 cents.

In the quarter, high pressure gathering volumes totaled 3,008 MMcf/D, up from the year-ago quarter’s 2,662 MMcf/D. On a per-Mcf basis, average gathering high pressure fee was 21 cents, in line with the prior-year level.

Low pressure gathering volumes averaged 3,051 MMcf/D, up from the third-quarter 2019 figure of 2,698 MMcf. On a per-Mcf basis, average gathering low pressure fee was 33 cents, flat with the prior-year level.

Fresh water delivery volumes came in at 111 MBbls/D, down from the prior-year level of 141 MBbls/D. On a per-barrel basis, average fresh water distribution fee was $3.96 per barrel in the third quarter, improving from the prior-year level of $3.90.

Operating Expenses

Direct operating expenses in the quarter were recorded at $38.1 million.

Balance Sheet

As of Sep 30, Antero Midstream had cash and cash equivalents of almost $2.4 million. As of the same date, the company had $3,121.8 million of long-term debt and a long-term debt-to-capitalization ratio of 0.56.

DCF

Distributable cash flow was $189.5 million, with coverage of 1.3x.

Guidance

The company is planning to invest capital in the range of $200 million to $210 million in 2020. This shows a modest drop from the prior projection of $200 million to $215 million.

Alongside, the company raised its free cash flow guidance for 2020 to $485-$495 million from $445-$475 million.

Zacks Rank & Stock to Consider

The company currently has a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked players in the energy space include Sunoco LP (SUN - Free Report) , Matador Resources Company (MTDR - Free Report) and Antero Resources Corporation (AR - Free Report) . All the stocks carry a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Sunocohas seen upward estimate revisions for its 2020 bottom line in the past 30 days.

Matador has seen upward estimate revisions for its 2020 bottom line in the past 30 days.

Anterohas seen upward estimate revisions for 2020 bottom line in the past 30 days.

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