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Why Is Nustar (NS) Down 4% Since the Last Earnings Report?

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A month has gone by since the last earnings report for Nustar Energy L.P. (NS - Free Report) . Units have lost nearly 4% in that time frame, underperforming the market.

Will the recent positive trend continue leading up to the stock’s next earnings release, or is it 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 catalysts.

Fourth-Quarter 2016 Results

NuStar Energy reported fourth-quarter loss of $0.31 per limited partner unit. The Zacks Consensus Estimate was of earnings of $0.54 per limited partner unit.  

Also, the partnership had posted earnings of $0.61 in the year-ago quarter. The year-over-year deterioration can be attributed to underperformance by the Storage and Pipeline businesses.

Quarterly revenues of $472 million beat the Zacks Consensus Estimate of $437 million and also came in well above the year-ago level of $465 million.

Quarterly Distribution

Last week, NuStar announced a quarterly distribution of $1.095 per unit ($4.38 per unit annualized), flat both sequentially and on an annualized basis. The distribution is payable on Feb 13, to unitholders on record as of Feb 8, 2016.

Per NuStar’s earnings release, distributable cash flow (DCF) available to limited partners for the fourth quarter was $87.7 million (providing 1.02x distribution coverage) compared with $89.6 million (providing 1.05x distribution coverage).

Segmental Performance

Pipeline: Total quarterly throughput volume in the segment was 921,048 barrels per day (Bbl/d), down 6.6% from the year-ago period. Throughput volumes in the crude oil pipelines plunged 14% from the year-ago quarter to 374,170 Bbl/d, whereas refined product pipelines throughput was down 0.8% to 546,878 Bbl/d.

Throughput revenues declined 6% year over year to $122,721 million. The segment’s operating income of $61.5 million  was lower than the year-ago figure of $68.4 million, primarily due to a decrease in throughput volumes from crude oil pipelines.

Storage: Throughput volumes in the Storage segment fell 11.1% year over year to 789,369 Bbl/d. This led to a 4.4% decline in the unit’s quarterly revenues to $148 million from $154.8 million in the fourth quarter of 2015.

The segment’s operating income of $48.3 million was 13.9% lower than $56.1 million earned in the year-ago quarter. Lower throughput and storage terminal revenues were responsible for the downside.

Fuels Marketing: The unit reported operating income of $3.1 million compared with the year-ago income of $2.8 million. Results improved due to increase in product sales and other revenues.

Costs & Expenses

The partnership incurred total costs of $386.4 million, down 5.3% year over year. Operating expenses came in at $113.1 million, down 3.8% from the year-ago period.

Balance Sheet

As of Dec 31, 2016, the partnership had total debt of $3,068 million, which represents a debt-to-capitalization ratio of 65.6%.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed an upward trend in fresh estimates. There have been two upward revisions for the current quarter.

Nustar Energy L.P. Price and Consensus

 

Nustar Energy L.P. Price and Consensus | Nustar Energy L.P. Quote

VGM Scores

At this time, Nustar's stock has a poor Growth Score of 'F', however its momentum is doing a lot better with an 'A'. Charting a somewhat similar path, 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.

Based on our styles scores, the stock is more suitable for momentum investors than value investors.

Outlook

The stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.




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