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DCP Midstream Partners, LP (DCP) Up 3.9% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for DCP Midstream Partners, LP (DCP - 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 DCP Midstream Partners, LP 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.

DCP Midstream Q2 Earnings & Revenues Miss Estimates

DCP Midstream, LP reported second-quarter 2021 adjusted loss of 12 cents per unit, missing the Zacks Consensus Estimate of earnings of 57 cents and declining from the year-ago profit of 15 cents.

Revenues of $2,085 million missed the Zacks Consensus Estimate of $2,914 million. The top line, however, increased from $1,274 million in the year-ago quarter.

The partnership’s lower-than-expected results were owing to a decline in NGL pipelines throughput volumes. This was offset partially by increased wellhead volumes in the North.

Operations

Logistics and Marketing

The segment recorded adjusted EBITDA of $194 million for the second quarter, down from the year-ago period’s $213 million. Lower NGL pipelines throughput volumes affected the segment. The negatives were partially offset by higher Southern Hills volumes.

Average NGL pipelines throughput for the quarter was 671 thousand barrels per day (Mbpd), lower than the year-ago level of 676 Mbpd. Fractionator throughput was recorded at 51 Mbpd, in line with the year-ago level.

Gathering and Processing

The segment reported adjusted EBITDA of $197 million for the second quarter, up from $158 million a year ago. Increased wellhead volumes in the North and favorable commodity prices aided the segment. A decline in Permian volumes partially negated the positives.

Average natural gas wellhead volumes for the quarter declined to 4,338 million cubic feet per day (MMcf/d) from the year-ago period’s 4,487 MMcf/d. NGL gross production increased to 409 Mbpd from 376 Mbpd in the year-ago quarter.

Total Expenses

Purchases and related costs significantly increased year over year for the quarter under review. Operating and maintenance expense rose to $165 million from $148 million in the second quarter of 2020.

Total operating costs and expenses for the second quarter were $2,169 million, up from the year-ago figure of $1,280 million.

Financials

For second-quarter 2021, total expansion capital expenditure and equity investments were $11 million. Sustaining capital for the quarter was $17 million. It generated excess free cash flow of $132 million in the second quarter.

At the end of second-quarter 2021, the partnership reported long-term debt of $5,388 million. Cash and cash equivalents were $5 million. It had current debt of $354 million, reflecting a debt to capitalization of 50.2%.

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Backed by strong results in the first half of this year, the partnership now expects to deliver toward the high end of its financial guidance for 2021.

By 2030, the partnership is planning to lower its Scope 1 and 2 greenhouse gas emissions by 30%. DCP Midstream added that by 2050, it is expecting to achieve net zero emissions.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

Currently, DCP Midstream Partners, LP 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 top 40% 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.

Outlook

DCP Midstream Partners, LP has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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