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NuStar Energy Units Up on Chairman's $15M Stock Purchase

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NuStar Energy L.P. (NS - Free Report) chairman Bill Greehey acquired $15 million worth of stock in a transaction earlier this week.

Details of the Purchase

With this acquisition, Bill Greehey will now be holding 8.9% stake in the partnership. Per a Nov 25, SEC filing, Greehey bought 527,426 NuStar Energy units worth $14.99 million. He paid $28.44 for each unit. Following this news, units of the firm rose and closed yesterday’s trading session at $28.32, up 2.34%. With corporate insiders — chairman or others associated with running the company — expected to possess a deeper understanding of the business fundamentals than anybody else, this move surely is indicative of which investors to rely on. Greehey believes, the firm’s units will be good investment options, which would enable it to weather any volatility in business.

Recent Payouts

NuStar Energy recently paid out quarterly distributions to its unitholders of record on Nov 8. The amount was distributed on Nov 14 represents an annualized payout of $2.40 with 8.67% yield. Currently, NuStar Energy’s payout ratio stands at 428.57%.

Q3 Performance

NuStar Energy’s third-quarter 2019 earnings and sales lagged the Zacks Consensus Estimate. The partnership posted adjusted earnings per unit of 15 cents, lower than the Zacks Consensus Estimate of 29 cents. Weaker storage terminal revenues and higher operating expenses of the storage unit can be attributed to the earnings miss.

Nonetheless, the bottom line reversed the year-ago loss of $3.49 a unit on the back of solid operations from the Pipeline segment amid expanded throughput volumes from crude oil pipelines.

Quarterly revenues of $378.1 million missed the Zacks Consensus Estimate of $381 million. The top line was also below the year-ago level of $380.1 million.

For 2020, NuStar Energy projects a 35% year-over-year reduction in its 2020 capital spending, which is expected in the band of $300-$350 million. This is likely to improve the partnership’s performance in the quarters to come.

Zacks Rank & Key Picks

NuStar Energy currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the energy space are HollyFrontier Corp., Parker Drilling Company and FuelCell Energy, Inc. (FCEL - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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