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Magellan Midstream (MMP) Q3 Earnings Beat, Revenues Miss

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An Earnings Beat: Pipeline operator Magellan Midstream Partners L.P. (MMP - Free Report) reported adjusted earnings per unit of $1.19, ahead of the Zacks Consensus Estimate of $1.09. Strong contribution from the Refined Products operating segment led to the beat.

Estimate Revision Trend & Surprise History: The stock had seen the Zacks Consensus Estimate for third-quarter earnings remain essentially unmoved over the last 30 days.

Coming to earnings surprise history, the partnership has a good record: its beaten estimates in three of the last four quarters, as shown in the chart below:

Revenue Underperformance: Magellan Midstream reported revenues of $656.6 million, below the Zacks Consensus Estimate of $675 million.

Key Stats: Operating margin from the Refined Products segment was $240.1 million compared with $214.7 million in the year-ago quarter.

Magellan Midstream’s Crude Oil unit generated $154.4 million of operating margin in the quarter compared to $153.9 million for the same period in 2018.

For the Marine Storage division, operating margin was $32.4 million, 11.6% higher than the $26.1 million earned in the year-ago period.

Magellan Midstream reported that its distributable cash flow (DCF) for third-quarter 2019 came in at $306.8 million, up 8.9% from the year-ago quarter.

2019 Guidance Up: For full-year 2019, management now expects to generate distributable cash flow of approximately $1.26 billion, up from the prior forecast of $1.22 billion. Also, it is targeting annual distribution growth of 5%. Magellan projects fourth-quarter earnings per unit to be $1.13. Projection for full-year earnings per unit has been revised upward to $4.34 from the previous guidance of $4.20. The partnership plans to spend approximately $1 billion on expansion projects in 2019, with expenditures of $400 million thereafter required to complete these projects. Additionally, the partnership continues to look out for more than $500 million of potential organic growth projects in the earlier stages of development.

Zacks Rank: Currently, Magellan Midstream carries a Zacks Rank #3 (Hold).

(You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.)

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