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Magellan (MMP) Q4 Earnings Beat Estimates as Demand Rebounds
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Diversified energy infrastructure provider Magellan Midstream Partners, L.P. reported fourth-quarter adjusted net income per unit of $1.24, above the Zacks Consensus Estimate of $1.12 and the year-earlier quarter’s earnings of 94 cents per unit.
The outperformance reflects higher transportation volumes, as the economy re-opens amid a sharp pick-up in travel demand, to go with increased drilling activities spurred by the commodity price revival.
MMP’s revenues of $809.3 million rose 45.1% from the fourth quarter of 2020 and beat the Zacks Consensus Estimate by 10.4%.
Magellan Midstream Partners, L.P. Price, Consensus and EPS Surprise
Refined Products: Operating margin of $302.7 million was up from the year-ago period’s $237.7 million. Transportation and terminals revenues improved 12.6% to $353.6 million on record transportation volumes, which continues to rebound from 2020’s pandemic-led dip, plus contributions from MMP’s Texas pipeline expansion projects. A mid-year tariff hike in 2021 also buoyed current-period results. There was also a significant rise in product margin on the back of higher profitability and blending sales volume.
Crude Oil: Operating margin of $103.8 million decreased 5.4% from the fourth quarter of 2020 to $103.8 million as transportation and terminals revenues fell due to overall lower tariff rates on Magellan Midstream’s pipeline systems, reduction in volumes shipped through the Houston distribution system and a dip in storage sales.
Distributable Cash Flow
Magellan Midstream’s distributable cash flow (DCF) for the fourth quarter was up 10% year over year to $296.8 million. In 2021, DCF increased from $1 billion to $1.1 billion, with DCF coverage coming at a solid 1.24 times.
On Jan 25, MMP announced fourth-quarter cash distribution of $1.0375 per unit ($4.15 on an annualized basis), which was unchanged sequentially. The amount will be paid out on Feb 14 to its unitholders of record as of Feb 7. For 2021, management raised its distribution by 2 cents to $4.13 per unit, signifying 20 straight annual payout hikes since its 2001 IPO.
2022 Guidance
The partnership assumes a 4% improvement in total refined products shipments for 2022 over 2021. Free cash flow is expected to be $1.46 billion, or 575 million post distributions. Meanwhile, Magellan Midstream expects to generate a DCF of $1.075 billion, slightly down year over year, primarily due to lower earnings related to asset divestments.
Zacks Rank & Stock Picks
Magellan Midstream currently carries a Zacks Rank #3 (Hold).
Vermilion Energy: Vermilion Energy is valued at around $2.6 billion. The Zacks Consensus Estimate for VET’s 2022 earnings has been revised 45% upward over the past 60 days.
Vermilion Energy delivered a four-quarter average earnings surprise of 54.4%, including a 100% beat in Q3. VET shares have gained around 228% in a year.
Murphy USA: Murphy USA is valued at around $4.8 billion. The consensus estimate for MUSA’s 2022 earnings has been revised 19.6% upward over the past 60 days.
MUSA beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 24.6%. Murphy USA has rallied around 60.2% in a year.
ExxonMobil: ExxonMobil has a projected earnings growth rate of 25.7% this year. The Zacks Consensus Estimate for XOM’s 2022 earnings has been revised 15% upward over the past 60 days.
ExxonMobil beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 5.8%. XOM shares have gained around 75.1% in a year.
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Magellan (MMP) Q4 Earnings Beat Estimates as Demand Rebounds
Diversified energy infrastructure provider Magellan Midstream Partners, L.P. reported fourth-quarter adjusted net income per unit of $1.24, above the Zacks Consensus Estimate of $1.12 and the year-earlier quarter’s earnings of 94 cents per unit.
The outperformance reflects higher transportation volumes, as the economy re-opens amid a sharp pick-up in travel demand, to go with increased drilling activities spurred by the commodity price revival.
MMP’s revenues of $809.3 million rose 45.1% from the fourth quarter of 2020 and beat the Zacks Consensus Estimate by 10.4%.
Magellan Midstream Partners, L.P. Price, Consensus and EPS Surprise
Magellan Midstream Partners, L.P. price-consensus-eps-surprise-chart | Magellan Midstream Partners, L.P. Quote
Operational Performance
Refined Products: Operating margin of $302.7 million was up from the year-ago period’s $237.7 million. Transportation and terminals revenues improved 12.6% to $353.6 million on record transportation volumes, which continues to rebound from 2020’s pandemic-led dip, plus contributions from MMP’s Texas pipeline expansion projects. A mid-year tariff hike in 2021 also buoyed current-period results. There was also a significant rise in product margin on the back of higher profitability and blending sales volume.
Crude Oil: Operating margin of $103.8 million decreased 5.4% from the fourth quarter of 2020 to $103.8 million as transportation and terminals revenues fell due to overall lower tariff rates on Magellan Midstream’s pipeline systems, reduction in volumes shipped through the Houston distribution system and a dip in storage sales.
Distributable Cash Flow
Magellan Midstream’s distributable cash flow (DCF) for the fourth quarter was up 10% year over year to $296.8 million. In 2021, DCF increased from $1 billion to $1.1 billion, with DCF coverage coming at a solid 1.24 times.
On Jan 25, MMP announced fourth-quarter cash distribution of $1.0375 per unit ($4.15 on an annualized basis), which was unchanged sequentially. The amount will be paid out on Feb 14 to its unitholders of record as of Feb 7. For 2021, management raised its distribution by 2 cents to $4.13 per unit, signifying 20 straight annual payout hikes since its 2001 IPO.
2022 Guidance
The partnership assumes a 4% improvement in total refined products shipments for 2022 over 2021. Free cash flow is expected to be $1.46 billion, or 575 million post distributions. Meanwhile, Magellan Midstream expects to generate a DCF of $1.075 billion, slightly down year over year, primarily due to lower earnings related to asset divestments.
Zacks Rank & Stock Picks
Magellan Midstream currently carries a Zacks Rank #3 (Hold).
Some better-ranked players in the energy space are Vermilion Energy (VET - Free Report) , Murphy USA (MUSA - Free Report) and ExxonMobil (XOM - Free Report) . All the companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Vermilion Energy: Vermilion Energy is valued at around $2.6 billion. The Zacks Consensus Estimate for VET’s 2022 earnings has been revised 45% upward over the past 60 days.
Vermilion Energy delivered a four-quarter average earnings surprise of 54.4%, including a 100% beat in Q3. VET shares have gained around 228% in a year.
Murphy USA: Murphy USA is valued at around $4.8 billion. The consensus estimate for MUSA’s 2022 earnings has been revised 19.6% upward over the past 60 days.
MUSA beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 24.6%. Murphy USA has rallied around 60.2% in a year.
ExxonMobil: ExxonMobil has a projected earnings growth rate of 25.7% this year. The Zacks Consensus Estimate for XOM’s 2022 earnings has been revised 15% upward over the past 60 days.
ExxonMobil beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 5.8%. XOM shares have gained around 75.1% in a year.