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Magellan Midstream Partners, L.P. (MMP) Soars to 52-Week High, Time to Cash Out?
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Have you been paying attention to shares of Magellan Midstream Partners ? Shares have been on the move with the stock up 13.1% over the past month. The stock hit a new 52-week high of $54.14 in the previous session. Magellan Midstream Partners has gained 16.2% since the start of the year compared to the 40% move for the Zacks Oils-Energy sector and the 30.5% return for the Zacks Oil and Gas - Production Pipeline - MLB industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 27, 2022, Magellan Midstream reported EPS of $1.29 versus consensus estimate of $1.14.
For the current fiscal year, Magellan Midstream is expected to post earnings of $4.46 per share on $3.09 billion in revenues. This represents a -7.08% change in EPS on a 11.72% change in revenues. For the next fiscal year, the company is expected to earn $4.89 per share on $3.17 billion in revenues. This represents a year-over-year change of 9.75% and 2.54%, respectively.
Valuation Metrics
Magellan Midstream may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Magellan Midstream has a Value Score of C. The stock's Growth and Momentum Scores are C and A, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 12.1X current fiscal year EPS estimates, which is not in-line with the peer industry average of 12.1X. On a trailing cash flow basis, the stock currently trades at 8.9X versus its peer group's average of 7.4X. Additionally, the stock has a PEG ratio of 3.51. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Magellan Midstream currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Magellan Midstream passes the test. Thus, it seems as though Magellan Midstream shares could have potential in the weeks and months to come.
How Does MMP Stack Up to the Competition?
Shares of MMP have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Plains All American Pipeline, L.P. (PAA - Free Report) . PAA has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of B, and a Momentum Score of A.
Earnings were strong last quarter. Plains All American Pipeline, L.P. beat our consensus estimate by 20%, and for the current fiscal year, PAA is expected to post earnings of $1.18 per share on revenue of $59.28 billion.
Shares of Plains All American Pipeline, L.P. have gained 9.5% over the past month, and currently trade at a forward P/E of 10.14X and a P/CF of 5.09X.
The Oil and Gas - Production Pipeline - MLB industry is in the top 35% of all the industries we have in our universe, so it looks like there are some nice tailwinds for MMP and PAA, even beyond their own solid fundamental situation.
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Magellan Midstream Partners, L.P. (MMP) Soars to 52-Week High, Time to Cash Out?
Have you been paying attention to shares of Magellan Midstream Partners ? Shares have been on the move with the stock up 13.1% over the past month. The stock hit a new 52-week high of $54.14 in the previous session. Magellan Midstream Partners has gained 16.2% since the start of the year compared to the 40% move for the Zacks Oils-Energy sector and the 30.5% return for the Zacks Oil and Gas - Production Pipeline - MLB industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 27, 2022, Magellan Midstream reported EPS of $1.29 versus consensus estimate of $1.14.
For the current fiscal year, Magellan Midstream is expected to post earnings of $4.46 per share on $3.09 billion in revenues. This represents a -7.08% change in EPS on a 11.72% change in revenues. For the next fiscal year, the company is expected to earn $4.89 per share on $3.17 billion in revenues. This represents a year-over-year change of 9.75% and 2.54%, respectively.
Valuation Metrics
Magellan Midstream may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Magellan Midstream has a Value Score of C. The stock's Growth and Momentum Scores are C and A, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 12.1X current fiscal year EPS estimates, which is not in-line with the peer industry average of 12.1X. On a trailing cash flow basis, the stock currently trades at 8.9X versus its peer group's average of 7.4X. Additionally, the stock has a PEG ratio of 3.51. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Magellan Midstream currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Magellan Midstream passes the test. Thus, it seems as though Magellan Midstream shares could have potential in the weeks and months to come.
How Does MMP Stack Up to the Competition?
Shares of MMP have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Plains All American Pipeline, L.P. (PAA - Free Report) . PAA has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of B, and a Momentum Score of A.
Earnings were strong last quarter. Plains All American Pipeline, L.P. beat our consensus estimate by 20%, and for the current fiscal year, PAA is expected to post earnings of $1.18 per share on revenue of $59.28 billion.
Shares of Plains All American Pipeline, L.P. have gained 9.5% over the past month, and currently trade at a forward P/E of 10.14X and a P/CF of 5.09X.
The Oil and Gas - Production Pipeline - MLB industry is in the top 35% of all the industries we have in our universe, so it looks like there are some nice tailwinds for MMP and PAA, even beyond their own solid fundamental situation.