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DCP Midstream Partners, LP (DCP) Up 7.6% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for DCP Midstream Partners, LP (DCP - Free Report) . Shares have added about 7.6% 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 the most recent earnings report in order to get a better handle on the important drivers.

DCP Midstream Q2 Earnings Beat Estimates

DCP Midstream reported second-quarter adjusted earnings of $1.77 per unit, beating the Zacks Consensus Estimate of $1.14. The bottom line reversed from the year-ago quarter’s loss of 12 cents per unit.

Total quarterly revenues of $4,269 million missed the Zacks Consensus Estimate of $4,490 million. However, the top line increased from $2,085 million in the year-ago quarter.

The strong quarterly earnings were primarily owing to increased NGL pipeline throughput. This was offset partially by higher operating and maintenance expenses.

Operations

Logistics and Marketing

The segment recorded adjusted EBITDA of $205 million in the second quarter, up from the year-ago period’s $194 million. Higher NGL pipeline throughput volumes aided the segment.

The average NGL pipeline throughput in the quarter was 720 thousand barrels per day (Mbpd), higher than the year-ago quarter’s 671 Mbpd. Fractionator throughputs were recorded at 51 Mbpd, in line with the year-ago quarter.

Gathering and Processing

The segment reported adjusted EBITDA of $335 million in the second quarter, up from $197 million in the year-ago quarter. Increased wellhead volumes aided the segment.

Average natural gas wellhead volumes in the quarter increased to 4,383 million cubic feet per day (MMcf/d) from the year-ago period’s 4,338 MMcf/d. NGL gross production totaled 427 Mbpd, up from 409 Mbpd.

Total Expenses

Purchases and related costs significantly increased year over year in the quarter under review. Operating and maintenance expenses rose to $189 million from $165 million in the second quarter of 2021.

Total operating costs and expenses were $3,981 million, up from the year-ago quarter’s figure of $2,169 million.

Financials

In second-quarter 2022, total expansion capital expenditures, acquisition and equity investments were $32 million. Sustaining capital in the quarter was $23 million. DCP generated an excess free cash flow of $254 million in the reported quarter.

At the end of the second quarter, the partnership reported long-term debt of $4,622 million. Cash and cash equivalents were $8 million. It had current debt of $505 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

The consensus estimate has shifted -7.51% due to these changes.

VGM Scores

At this time, DCP Midstream Partners, LP has a strong Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

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

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, DCP Midstream Partners, LP has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

DCP Midstream Partners, LP is part of the Zacks Oil and Gas - Production and Pipelines industry. Over the past month, Kinder Morgan (KMI - Free Report) , a stock from the same industry, has gained 2.9%. The company reported its results for the quarter ended June 2022 more than a month ago.

Kinder Morgan reported revenues of $5.15 billion in the last reported quarter, representing a year-over-year change of +63.5%. EPS of $0.27 for the same period compares with $0.23 a year ago.

For the current quarter, Kinder Morgan is expected to post earnings of $0.29 per share, indicating a change of +31.8% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

Kinder Morgan has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.


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