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Buckeye Partners (BPL) Down 8.3% Since Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Buckeye Partners L.P. (BPL - Free Report) . Shares have lost about 8.3% 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 as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Buckeye Earnings & Revenues Miss Estimates in Q2

Buckeye Partners reported second-quarter 2017 earnings of 80 cents per unit, lagging the Zacks Consensus Estimate of $1.00 by 20%. Moreover, it was lower than the year-ago figure of $1.07 by 25.2%.

Total Revenue

In the quarter under review, Buckeye Partners’ total revenue came in at $810.2 million, missing the Zacks Consensus Estimate of $874 million by 7.3%.

Total revenues were up 4.3% year over year owing to better performance of the Domestic Pipelines & Terminals and Merchant Services segments in second-quarter 2017.

Operational Highlights

In the second quarter, the partnership’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations increased 4.9% year over year to $269.2 million.

Total costs and expenses were $639.6 million, up 8.9%. The partnership’s operating income was down 10.2% to nearly $170.6 million from $189.9 million a year ago.

Interest and debt expenses increased 18% to $56.4 million.

Financial Screening

As of Jun 30, 2017, Buckeye Partners had cash and cash equivalents of $2.4 million compared with $640.3 million as of Dec 31, 2016.

Long-term debt as of Jun 30, 2017 was $4,579.9 million, higher than $4,217.7 million as of Dec 31, 2016.

Total capital expenditure in second-quarter 2017 was $104.8 million, down 12.5% from $111.8 million a year ago.

Cash Distribution Update

The partnership announced third-quarter 2017 cash distribution of $1.2625 per limited partner unit, up 4.1% from the prior-year payout of $1.2125 per limited partner unit. The revised distribution will be paid on Aug 21, 2017, to unit holders of record as of Aug 14.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend in fresh estimates. There have been five revisions lower for the current quarter. In the past month, the consensus estimate has shifted down by 10.8% due to these changes.

Buckeye Partners L.P. Price and Consensus

 

Buckeye Partners L.P. Price and Consensus | Buckeye Partners L.P. Quote

VGM Scores

At this time,  the stock has a subpar Growth Score of D, while its Momentum is doing a bit better with a B. However, the stock was allocated also a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

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

Our style scores indicate that the stock is solely suitable for momentum investors.

Outlook

Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #5 (Strong Sell). We are expecting a below average return from the stock in the next few months.




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