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What Will NGL Energy Partners' (NGL) Q1 Earnings Unveil?

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NGL Energy Partners LP (NGL - Free Report) is scheduled to release fiscal first-quarter 2020 results before the opening bell on Thursday, Aug 8. The current Zacks Consensus Estimate for the quarter under review is a loss of 7 cents per unit on revenues of $5.5 billion.

In the last reported quarter, the diversified energy master limited partnership fell short of the consensus mark due to weakness in the Refined Products & Renewables segment performance.

As far as earnings surprises are concerned, the Tulsa, OK-based midstream operator has a bad record, having missed the Zacks Consensus Estimate thrice in the last four reports. This is depicted in the graph below:

NGL Energy Partners LP Price and EPS Surprise


NGL Energy Partners LP Price and EPS Surprise

NGL Energy Partners LP price-eps-surprise | NGL Energy Partners LP Quote

Investors are keeping their fingers crossed and hoping that the partnership can surpass earnings estimate this time around. However, our model indicates that NGL Energy Partners might not beat on earnings in the to-be-reported quarter.

Let’s delve deeper and find out the factors impacting the results.

Factors to Consider This Quarter

Two major segments of the partnership – ‘Crude Oil Logistics’ and ‘Water Solutions’ – are sending mixed signals with regard to NGL Energy Partners’ results in the upcoming quarter.

Our model estimates fiscal first-quarter adjusted EBITDA for the Crude Oil Logistics unit to be $46.9 million, falling 8% from $51.2 million in the fiscal fourth-quarter but 54% above the year-ago EBITDA of $30.4 million. The significant year-over-year growth reflects solid volumes on the partnership’s 100%-owned Grand Mesa Pipeline that carries oil from the DJ Basin to NGL Energy Partners’ storage facility in Cushing. The conduit transported approximately 129,000 barrels per day on an average in the last quarter, rising 15% from the fiscal first-quarter 2019.

Meanwhile, analysts polled by Zacks envision ‘Water Solutions’ adjusted EBITDA to increase 14% from the previous quarter, while improving 19% from the year-ago level. The partnership processed approximately 860,000 barrels of wastewater per day, a 13% increase from the corresponding period of fiscal 2018. While the segment is expected to witness volume growth in the to-be-reported quarter as well, results will be affected by the recent sale of the Bakken and the South Pecos water assets.  

What Does Our Model Say?

Our proven model too does not conclusively predict that NGL Energy Partners will beat the Zacks Consensus Estimate this quarter. This is because it doesn’t have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -11.11%.

Zacks Rank: NGL Energy Partners currently has a Zacks Rank #3 (Hold), which increases the predictive power of ESP. But we need to have a positive Earnings ESP to be sure of the positive surprise.

Note that we caution against stocks with a Zacks Ranks #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing a negative estimate revision.

Stocks to Consider

While earnings beat looks uncertain for NGL Energy Partners, here are some companies from the energy space you may want to consider on the basis of our model, which shows that they have the right combination of elements to post earnings beat this quarter:

ProPetro Holding Corp. (PUMP - Free Report) has an Earnings ESP of +2.39% and a Zacks Rank of 3. The company is anticipated to release earnings on Aug 8. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Global Partners LP (GLP - Free Report) has an Earnings ESP of +64.47% and a Zacks Rank #3. The partnership is anticipated to release earnings on Aug 8.

NuStar Energy L.P. (NS - Free Report) has an Earnings ESP of +14.58% and a Zacks Rank #3. The partnership is expected to release earnings on Aug 8.

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