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Magellan Midstream Partners reported first-quarter 2023 adjusted net income of $1.32 per unit, which beat the Zacks Consensus Estimate of $1.21. The outperformance could be attributed to higher profit from Refined Products and Crude Oil segments in the reported period.
The bottom line also improved considerably from the year-ago quarter’s level of $1.08.
MMP’s revenues of $869.7 million rose about 28.9% from that recorded in the prior-year quarter. The figure also beat the Zacks Consensus Estimate of $804 million by 8.2%.
This outperformance could be attributed to higher transportation revenues from the Refined Products segment as well as higher terminal throughput fees, and tariff shipments in the Crude Oil segment.
Magellan Midstream Partners, L.P. Price, Consensus and EPS Surprise
Refined Products: The operating margin of this segment totaled $336.8 million compared with $235.4 million in the year-ago period. Transportation and terminal revenues improved 7.3% to $332.0 million on higher average transportation rates. The rates were largely driven by tariff increases and a higher volume of long-haul shipments.
Crude Oil: This segment’s operating margin of $109.3 million increased 5.5% from the year-ago quarter’s $103.6 million. This was due to higher overall transportation volumes on the Houston distribution system, and an increase in dock fee revenues related to higher throughput in the first quarter.
Distributable Cash Flow and Cost
Magellan’s discounted cash flow (DCF) for the first quarter increased 17.8% year over year to $312.6 million. Total costs and expenses totaled 570.2 million, up 16.8% from 488.1 million in the comparable period of 2022.
On May 27, the company announced first-quarter cash distribution of $1.0375 per unit or $4.19 on an annualized basis. The amount was paid on May 15 to its unitholders of record as of May 8.
Guidance
For 2023, MMP sets its DCF guidance at $1.22 billion. The company expects to increase refined product rates by an all-in average of approximately 11% on Jul 1, 2023.
Magellan projects free cash flow of $1.1 billion for full-year 2023 or $252 million after distributions.
The annual net income per unit is estimated at $4.95 for 2023, and $1.10 for the first quarter.
MMP anticipates to spend approximately $120 million in 2023.
Zacks Rank and Key Picks
Currently, Magellan carries a Zacks Rank #3 (Hold).
Evolution Petroleum: EPM is worth approximately $219.16 million. EPM currently pays investors $0.48 per share, or 7.38%, on an annual basis.
The company currently has a forward P/E ratio of 6.07. In comparison, its industry has an average forward P/E of 7.50, which means EPM is trading at a discount to the group.
Archrock: AROC is valued at around $1.55 billion. It delivered an average earnings surprise of 26.27% for the last four quarters and its current dividend yield is 6.06%.
Archrock is a provider of natural gas contract compression services and aftermarket services of compression equipment.
Ranger Energy Services: RNGR is valued at around $183.61 million. In the past year, its shares have gained 13.8%.
Ranger Energy Services currently has a forward P/E ratio of 5.30. In comparison, its industry has an average forward P/E of 11.60, which means RNGR is trading at a discount to the group.
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Magellan's (MMP) Q1 Earnings & Revenues Outpace Estimates
Magellan Midstream Partners reported first-quarter 2023 adjusted net income of $1.32 per unit, which beat the Zacks Consensus Estimate of $1.21. The outperformance could be attributed to higher profit from Refined Products and Crude Oil segments in the reported period.
The bottom line also improved considerably from the year-ago quarter’s level of $1.08.
MMP’s revenues of $869.7 million rose about 28.9% from that recorded in the prior-year quarter. The figure also beat the Zacks Consensus Estimate of $804 million by 8.2%.
This outperformance could be attributed to higher transportation revenues from the Refined Products segment as well as higher terminal throughput fees, and tariff shipments in the Crude Oil segment.
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: The operating margin of this segment totaled $336.8 million compared with $235.4 million in the year-ago period. Transportation and terminal revenues improved 7.3% to $332.0 million on higher average transportation rates. The rates were largely driven by tariff increases and a higher volume of long-haul shipments.
Crude Oil: This segment’s operating margin of $109.3 million increased 5.5% from the year-ago quarter’s $103.6 million. This was due to higher overall transportation volumes on the Houston distribution system, and an increase in dock fee revenues related to higher throughput in the first quarter.
Distributable Cash Flow and Cost
Magellan’s discounted cash flow (DCF) for the first quarter increased 17.8% year over year to $312.6 million. Total costs and expenses totaled 570.2 million, up 16.8% from 488.1 million in the comparable period of 2022.
On May 27, the company announced first-quarter cash distribution of $1.0375 per unit or $4.19 on an annualized basis. The amount was paid on May 15 to its unitholders of record as of May 8.
Guidance
For 2023, MMP sets its DCF guidance at $1.22 billion. The company expects to increase refined product rates by an all-in average of approximately 11% on Jul 1, 2023.
Magellan projects free cash flow of $1.1 billion for full-year 2023 or $252 million after distributions.
The annual net income per unit is estimated at $4.95 for 2023, and $1.10 for the first quarter.
MMP anticipates to spend approximately $120 million in 2023.
Zacks Rank and Key Picks
Currently, Magellan carries a Zacks Rank #3 (Hold).
Some better-ranked stocks for investors interested in the energy sector are Evolution Petroleum (EPM - Free Report) , sporting a Zacks Rank #1 (Strong Buy), and Archrock (AROC - Free Report) and Ranger Energy Services (RNGR - Free Report) , both holding a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Evolution Petroleum: EPM is worth approximately $219.16 million. EPM currently pays investors $0.48 per share, or 7.38%, on an annual basis.
The company currently has a forward P/E ratio of 6.07. In comparison, its industry has an average forward P/E of 7.50, which means EPM is trading at a discount to the group.
Archrock: AROC is valued at around $1.55 billion. It delivered an average earnings surprise of 26.27% for the last four quarters and its current dividend yield is 6.06%.
Archrock is a provider of natural gas contract compression services and aftermarket services of compression equipment.
Ranger Energy Services: RNGR is valued at around $183.61 million. In the past year, its shares have gained 13.8%.
Ranger Energy Services currently has a forward P/E ratio of 5.30. In comparison, its industry has an average forward P/E of 11.60, which means RNGR is trading at a discount to the group.