It has been about a month since the last earnings report for Magellan Midstream Partners (
MMP Quick Quote MMP - Free Report) . Shares have added about 3.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Magellan Midstream due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Magellan Q4 Earnings Beat Estimates, Sales Miss Mark Magellan Midstreamrecently reported fourth-quarter 2020 adjusted earnings per unit of 94 cents, beating the Zacks Consensus Estimate of 84 cents. The better-than-anticipated earnings are attributable to reduced expenses and additional revenues from the firm’s refined products pipeline system, resulting from shipments and average tariff rates beyond its expectations. However, the bottom line fell 28.2% from the year-ago profit of $1.31. Lower refined products demand and a decline in commodity price due to coronavirus-induced disruptions hampered results. Also, quarterly revenues of $586 million missed the Zacks Consensus Estimate of $628 million. Further, the top line decreased from the year-ago sales of $741 million. Segmental Performance Refined Products: Revenues of $445.5 million were down from the year-ago period’s $576.9 million.Notably, total volumes shipped in the quarter under review were 124.5 million barrels compared with 131 million barrels a year ago. Operating margin from the segment declined to $249.6 million in the fourth quarter from $296.3 million in the corresponding period of 2019. Crude Oil: Quarterly revenues grossed $142.3 million, down 14% year over year on the back of lower volumes. Total volumes shipped in the quarter were 62 million barrels, down from 78.1 million barrels a year ago. Operating margin contracted to $109.8 million from $153 million in the prior year. DCF & Balance Sheet Magellan Midstream’s distributable cash flow (DCF) for the fourth quarter summed $269.7 million, dropping 24.6% from the year-ago level. Notably, on Jan 26, the partnership announced fourth-quarter cash distribution of $1.0275 per unit ($4.11 on an annualized basis), representing 1% annual growth. The amount is payable Feb 12 to its unitholders of record as of Feb 5. As of Dec 31, 2020, the firm had cash and cash equivalents worth $13 million, and a long-term debt of $5 billion. 2021 Outlook As the economy is on the mend from the coronavirus-caused oil price crash, management expects to generate distributable cash flows of $1,020 million for the full year and also plans to retain the current level of cash distribution for the rest of the year. Magellan Midstream projected first-quarter 2021 earnings per unit of 75 cents while the same for the full year is anticipated to be $3.55. The firm plans to spend $75 million in the ongoing year on completing certain expansion projects. How Have Estimates Been Moving Since Then?
Estimates revision followed a downward path over the past two months.
Currently, Magellan Midstream has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Magellan Midstream has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.