A month has gone by since the last earnings report for Energy Transfer Partners, L.P. . Shares have lost about 2.1% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted 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.
First-Quarter 2017 Earnings
Energy Transfer Partners reported first-quarter 2017 earnings of $0.09 per limited partner unit. The Zacks Consensus Estimate was of earnings of $0.32 per limited partner unit. However, the bottom line compared favorably with the year-ago quarter profit of $0.08 per limited partner unit.
The weaker-than-expected results were led by a 61% increase in total expenses in the reported quarter from the prior-year quarter. Post the earnings release, the units of the company fell 3%.
Quarterly revenues increased to $6,895 million from $4,481 million a year ago. However, the top line missed the Zacks Consensus Estimate of $6,968 million.
This is Energy Transfer Partner’s first earnings release as a combined entity after its merger with Sunoco Logistics Partners. The combined entity is called Energy Transfer Partners and all the financial results are based on the post merger effect.
Quarterly Cash Distribution
Last month, Energy Transfer Partners announced first-quarter distribution of about $0.535 per unit ($2.14 per unit annualized). This cash distribution is equivalent to $0.8025 cents per unit on a pre-merger basis. The partnership expects to use the cash flow savings to deliver its balance sheet and fund growth projects.
EBITDA, Operating Income and Net Income
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter were $1,414 million compared with $1,412 million a year ago. This 0.14% improvement was mainly driven by strong performance from its Midstream and Liquids Transportation and Services segments. This rise was offset by a decline in Sunoco Logistics’ crude oil acquisition and marketing business.
The company’s Midstream segment benefited from higher Permian volumes, higher non-fee-based processing margins due to a slight recovery in crude oil and natural gas liquid prices, and the PennTex Midstream Partners, LP (PTXP - Research Report) acquisition. Higher NGL and crude oil transportation volumes drove the results of Liquids Transportation and Services segment.
The partnership reported operating income of $654 million compared to $614 million in first-quarter 2016.
The partnership reported a net income of $364 million in the reported quarter, compared with a net profit of $376 million in the year-ago quarter. The decline in the partnership’s net income is due to an income-tax benefit in first-quarter 2016.
Total Expense
Energy Transfer Partners reported total expense of $6,241 million in first-quarter 2017. It had recorded total expense of $3,867 million in the year-ago period.
Distributable Cash Flow
Distributable cash flow of $907 million was lower than the prior-year quarter level of $950 million. The 4.5% decrease in the distributable cash flow drove the partnership’s distribution coverage lower to $1.13x compared with 1.27x in the year ago quarter.
Capital Expenditure
Total capital expenditure for the quarter totaled to $1,256 million with growth capex of $1,196 million accounting for 95% of the total capex. The remaining capex balance was attributed toward maintenance activities totaling $60 million.
Balance Sheet
As of Mar 31, 2017, Energy Transfer Partners had long-term debt (less current maturities) of $31,648 million. Debt-to-capitalization ratio was about 51.5%.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter. While looking back an additional 30 days, we can see even more downward movement. There have been two moves down in the last two months.
VGM Scores
At this time, Energy Transfer Partners' stock has a poor score of 'F' on both growth and momentum front. However, 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 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value investors based on our style scores.
Outlook
While estimates have been broadly trending downward for the stock, the magnitude of these revisions indicates an upward shift. The stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.
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Why Is Energy Transfer Partners (ETP) Down 2.1% Since the Last Earnings Report?
A month has gone by since the last earnings report for Energy Transfer Partners, L.P. . Shares have lost about 2.1% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted 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.
First-Quarter 2017 Earnings
Energy Transfer Partners reported first-quarter 2017 earnings of $0.09 per limited partner unit. The Zacks Consensus Estimate was of earnings of $0.32 per limited partner unit. However, the bottom line compared favorably with the year-ago quarter profit of $0.08 per limited partner unit.
The weaker-than-expected results were led by a 61% increase in total expenses in the reported quarter from the prior-year quarter. Post the earnings release, the units of the company fell 3%.
Quarterly revenues increased to $6,895 million from $4,481 million a year ago. However, the top line missed the Zacks Consensus Estimate of $6,968 million.
This is Energy Transfer Partner’s first earnings release as a combined entity after its merger with Sunoco Logistics Partners. The combined entity is called Energy Transfer Partners and all the financial results are based on the post merger effect.
Quarterly Cash Distribution
Last month, Energy Transfer Partners announced first-quarter distribution of about $0.535 per unit ($2.14 per unit annualized). This cash distribution is equivalent to $0.8025 cents per unit on a pre-merger basis. The partnership expects to use the cash flow savings to deliver its balance sheet and fund growth projects.
EBITDA, Operating Income and Net Income
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter were $1,414 million compared with $1,412 million a year ago. This 0.14% improvement was mainly driven by strong performance from its Midstream and Liquids Transportation and Services segments. This rise was offset by a decline in Sunoco Logistics’ crude oil acquisition and marketing business.
The company’s Midstream segment benefited from higher Permian volumes, higher non-fee-based processing margins due to a slight recovery in crude oil and natural gas liquid prices, and the PennTex Midstream Partners, LP (PTXP - Research Report) acquisition. Higher NGL and crude oil transportation volumes drove the results of Liquids Transportation and Services segment.
The partnership reported operating income of $654 million compared to $614 million in first-quarter 2016.
The partnership reported a net income of $364 million in the reported quarter, compared with a net profit of $376 million in the year-ago quarter. The decline in the partnership’s net income is due to an income-tax benefit in first-quarter 2016.
Total Expense
Energy Transfer Partners reported total expense of $6,241 million in first-quarter 2017. It had recorded total expense of $3,867 million in the year-ago period.
Distributable Cash Flow
Distributable cash flow of $907 million was lower than the prior-year quarter level of $950 million. The 4.5% decrease in the distributable cash flow drove the partnership’s distribution coverage lower to $1.13x compared with 1.27x in the year ago quarter.
Capital Expenditure
Total capital expenditure for the quarter totaled to $1,256 million with growth capex of $1,196 million accounting for 95% of the total capex. The remaining capex balance was attributed toward maintenance activities totaling $60 million.
Balance Sheet
As of Mar 31, 2017, Energy Transfer Partners had long-term debt (less current maturities) of $31,648 million. Debt-to-capitalization ratio was about 51.5%.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter. While looking back an additional 30 days, we can see even more downward movement. There have been two moves down in the last two months.
Energy Transfer Partners, L.P. Price and Consensus
Energy Transfer Partners, L.P. Price and Consensus | Energy Transfer Partners, L.P. Quote
VGM Scores
At this time, Energy Transfer Partners' stock has a poor score of 'F' on both growth and momentum front. However, 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 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value investors based on our style scores.
Outlook
While estimates have been broadly trending downward for the stock, the magnitude of these revisions indicates an upward shift. The stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.