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MPLX LP (MPLX) Down 7.1% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for MPLX LP (MPLX - Free Report) . Shares have lost about 7.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is MPLX LP due for a breakout? 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 catalysts.

MPLX Beats Q3 Earnings & Revenues Estimates

MPLX reported third-quarter earnings of 74 cents per unit, beating the Zacks Consensus Estimate of 71 cents. The bottom line also improved from the year-ago earnings of 61 cents per unit.

Total quarterly revenues of $2,559 million beat the Zacks Consensus Estimate of $2,233 million. The top line also increased from third-quarter 2020 sales of $2,247 million.

MPLX reported strong third-quarter results backed by increased contributions from logistics and storage operations as well as the gathering and processing business. Increased pipeline throughputs and natural gas liquids prices buoyed third-quarter results.

Segmental Highlights

MPLX’s adjusted EBITDA from the Logistics and Storage segment increased from $893 million a year ago to $904 million. Higher revenues and lower operating expenses aided the segment. Total pipeline throughputs for the third quarter came in at 5.5 million barrels per day (bpd), marking a 17% increase from the year-ago period.

Adjusted EBITDA from the Gathering and Processing segment was recorded at $485 million, up from $442 million in the prior-year quarter. The segment benefited from higher natural gas liquid prices and lower operating expenses, partially offset by reduced processed and fractionated volumes. While gathered volumes remained flat at 5.4 billion cubic feet per day (Bcf/d) with the year-ago period, processed volumes of 8.4 Bcf/d marked a 2% decrease.

Costs and Expenses

For third-quarter 2021, total costs and expenses were recorded at $1,528 million, up from the year-ago quarter’s $1,348 million. Expenses related to operations increased to $752 million from $508 million in the prior-year quarter.

Cash Flow

Distributable cash flow attributable to MPLX for third-quarter 2021 was $1,191 million, providing 1.61X distribution coverage, up from $1,067 million in the year-ago quarter. Distribution per unit was $1.28 for the reported quarter, up from 68.75 cents in the year-ago period.

Free cash flow for the quarter under review increased to $1,055 million from $944 million recorded in the corresponding period of 2020.

Balance Sheet

As of Sep 30, 2021, the partnership’s cash and cash equivalents were $39 million, up sequentially from $8 million. Its total debt amounted to $19.6 billion, marginally down from the second quarter’s $19.7 billion, while debt to capitalization was 60.3%.

Outlook

For 2021, the partnership expects total capital spending of $650 million, lower than the previously mentioned $800 million. As such, fourth-quarter growth capital will likely be in the range of $200-$210 million, while maintenance capital will be around $50 million. It expects to continue generating excess free cash flow, which will enhance financial flexibility, including the ability to return incremental capital to unitholders.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

VGM Scores

At this time, MPLX LP has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise MPLX LP has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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