A month has gone by since the last earnings report for SemGroup . Shares have lost about 7.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is SemGroup 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 catalysts. <p style="text-align: justify;"><u><strong>Second-Quarter 2018 Results</strong></u></p><p style="text-align: justify;">SemGroup reported second-quarter 2018 adjusted profit of 12 cents per share, well ahead of the Zacks Consensus Estimate of 1 cent. The outperformance stemmed from strength in the company’s Crude Transportation, Crude Facilities and SemCAMS segments. <br /><br />However, the company’s bottom line deteriorated from the year-ago quarter adjusted income of 15 cents per share due to weak results from the SemGas division though overall adjusted EBITDA improved 51.4% from the prior period to $99 million.<br /><br />Total revenues recorded in the quarter came in at $595.8 million, surpassing the Zacks Consensus Estimate of $575 million. Further, the top line was also around 26% higher than the prior-year sales of $473.1 million.<br /><br /><strong>Segmental Information</strong><br /><br /><em><strong>Crude Transportation:</strong></em> This segment recorded a profit of $37.9 million, reflecting an increase of 30.4% from the year-ago quarter. Consolidated pipeline volumes increased 3.3% to 188 thousand barrels per day (Mbbl/d). In particular, White Cliffs pipeline volumes of 135 Mbbl/d were notably higher than the year-ago figure of 107 Mbbl/d.<br /><br /><em><strong>Crude Facilities:</strong></em> Profit generated from this segment amounted to $9.7 million, essentially unchanged from a year ago on flat storage and throughput volumes.<br /><br /><em><strong>Crude Supply and Logistics:</strong></em> The segment’s loss in the quarter under review narrowed to $2 million, from $2.2 million incurred in the corresponding quarter of the last year. The improvement came on the back of positive basis differentials.<br /><br /><em><strong>HFOTCO:</strong></em> This unit (acquired last year) generated a profit of around $34.8 million in the second quarter.<br /><br /><em><strong>SemGas:</strong></em> During the second quarter, the SemGas segment earned $15.4 million, down 20.8%. The decrease could be attributed to lower processing volumes, which fell 32.5% to 367 million cubic feet per day.<br /><br /><em><strong>SemCAMS:</strong></em> Profit generated from this unit increased 12.7% year over year to stand at $21.4 million in the quarter under review. The uptick reflects improvement in cost recoveries and favourable timing issues.<br /><br /><strong>Capital Expenditure & Balance Sheet</strong><br /><br />During the three months ended Jun 30, 2018, SemGroup’s capital investments and expenditures totaled $94 million.<br /><br />As of Jun 30, 2018, the company had cash and cash equivalents of $55.3 million and long-term debt of around $2.5 billion. The debt-to-capitalization ratio of the company was 61.5%, down from 63.2% six months ago. SemGroup was able to improve the leverage primarily on the back of asset sales.<br /><br /><strong>2018 Guidance</strong><br /><br />SemGroup reaffirmed its full-year 2018 capital expenditure guidance of $350 million. The better-than-expected second-quarter earnings also allowed the company to reiterate its adjusted EBITDA band of $385-$415 million.</p>
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -21.51% due to these changes.
VGM Scores
Currently, SemGroup has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, SemGroup has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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SemGroup (SEMG) Down 7.4% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for SemGroup . Shares have lost about 7.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is SemGroup 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 catalysts. <p style="text-align: justify;"><u><strong>Second-Quarter 2018 Results</strong></u></p><p style="text-align: justify;">SemGroup reported second-quarter 2018 adjusted profit of 12 cents per share, well ahead of the Zacks Consensus Estimate of 1 cent. The outperformance stemmed from strength in the company’s Crude Transportation, Crude Facilities and SemCAMS segments. <br /><br />However, the company’s bottom line deteriorated from the year-ago quarter adjusted income of 15 cents per share due to weak results from the SemGas division though overall adjusted EBITDA improved 51.4% from the prior period to $99 million.<br /><br />Total revenues recorded in the quarter came in at $595.8 million, surpassing the Zacks Consensus Estimate of $575 million. Further, the top line was also around 26% higher than the prior-year sales of $473.1 million.<br /><br /><strong>Segmental Information</strong><br /><br /><em><strong>Crude Transportation:</strong></em> This segment recorded a profit of $37.9 million, reflecting an increase of 30.4% from the year-ago quarter. Consolidated pipeline volumes increased 3.3% to 188 thousand barrels per day (Mbbl/d). In particular, White Cliffs pipeline volumes of 135 Mbbl/d were notably higher than the year-ago figure of 107 Mbbl/d.<br /><br /><em><strong>Crude Facilities:</strong></em> Profit generated from this segment amounted to $9.7 million, essentially unchanged from a year ago on flat storage and throughput volumes.<br /><br /><em><strong>Crude Supply and Logistics:</strong></em> The segment’s loss in the quarter under review narrowed to $2 million, from $2.2 million incurred in the corresponding quarter of the last year. The improvement came on the back of positive basis differentials.<br /><br /><em><strong>HFOTCO:</strong></em> This unit (acquired last year) generated a profit of around $34.8 million in the second quarter.<br /><br /><em><strong>SemGas:</strong></em> During the second quarter, the SemGas segment earned $15.4 million, down 20.8%. The decrease could be attributed to lower processing volumes, which fell 32.5% to 367 million cubic feet per day.<br /><br /><em><strong>SemCAMS:</strong></em> Profit generated from this unit increased 12.7% year over year to stand at $21.4 million in the quarter under review. The uptick reflects improvement in cost recoveries and favourable timing issues.<br /><br /><strong>Capital Expenditure & Balance Sheet</strong><br /><br />During the three months ended Jun 30, 2018, SemGroup’s capital investments and expenditures totaled $94 million.<br /><br />As of Jun 30, 2018, the company had cash and cash equivalents of $55.3 million and long-term debt of around $2.5 billion. The debt-to-capitalization ratio of the company was 61.5%, down from 63.2% six months ago. SemGroup was able to improve the leverage primarily on the back of asset sales.<br /><br /><strong>2018 Guidance</strong><br /><br />SemGroup reaffirmed its full-year 2018 capital expenditure guidance of $350 million. The better-than-expected second-quarter earnings also allowed the company to reiterate its adjusted EBITDA band of $385-$415 million.</p>
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -21.51% due to these changes.
VGM Scores
Currently, SemGroup has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, SemGroup has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.