Magellan Midstream Partners, L.P. MMP stock has shown insignificant movement since the third-quarter 2021 earnings announcement on Nov 2. Despite this partnership’s impressive earnings results and a solid Distributable Cash Flow (DCF) guidance for 2021, its units failed to display substantial growth due to uncertainty associated with the sale of the independent terminals network, which is pending regulatory approvals.
Behind the Earnings Headlines
Magellan Midstream reported third-quarter 2021 adjusted earnings per unit of $1.09, beating the Zacks Consensus Estimate of 96 cents and improving 12.4% from the year-ago bottom line of 97 cents. The outperformance is attributable to a solid revenue contribution from its refined products unit.
However, quarterly revenues of $639 million lagged the Zacks Consensus Estimate of $648 million due to weak revenue contribution from the crude oil unit. The top line rose 6.9% from the year-ago sales of $598 million.
Segmental Performance
Refined Products: Revenues of $504.4 million were up from the year-ago period’s $414.8 million.Total volumes shipped in the quarter under review were 119.2 million barrels, comparing unfavorably with 141.8 million barrels a year ago. The operating margin from the segment increased to $272.5 million in the third quarter from $228.2 million in the corresponding period of 2020.
Crude Oil: Quarterly revenues grossed $136.1 million, down 16.8% year over year on lower storage revenues and softness in average tariff rates. Total volumes shipped in the quarter were 49.2 million barrels, up from 45.1 million barrels a year ago. Operating margin contracted to $111.6 million from $135.8 million in the prior year.
Magellan Midstream Partners, L.P. Price, Consensus and EPS Surprise
Magellan Midstream Partners, L.P. price-consensus-eps-surprise-chart | Magellan Midstream Partners, L.P. Quote
DCF & Balance Sheet
Magellan Midstream’s distributable cash flow (DCF) for the third quarter summed $277 million, rising 6.9% from the year-ago level.
On Oct 20, MMP announced the third-quarter cash distribution of $1.0375 per unit ($4.15 on an annualized basis), up 1% from its prior quarter’s dividend of $1.0275. The amount was paid out on Nov 12 to its unitholders of record as of Nov 5.
As of Sep 30, 2021, Magellan Midstream had cash and cash equivalents worth $12.6 million, and long-term debt of $5.1 billion.
2021 Outlook
Management raised its annual DCF outlook for 2021 to $1.1 billion from the prior guidance of $1.07 billion.
For the full year, free cash flow (FCF) is expected to be $1.29 billion or $384 million after distributions.
Based on the success of projects currently underway, Magellan Midstream plans to invest $80 million in 2021 and $20 million in 2022 to complete its current array of expansion capital projects.
Zacks Rank & Key Picks
Magellan Midstream currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are EOG Resources EOG, Diamondback Energy FANG and ConocoPhillips COP, each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
EOG Resources reported third-quarter 2021 adjusted earnings per share of $2.16, beating the Zacks Consensus Estimate of $2.01. Strong earnings were driven by increased production volumes and a higher realization of commodity prices.
EOG announced a quarterly dividend of 75 cents per share, indicating an 82% increase from the previous level. The dividend will be paid out on Jan 28, 2022, to its shareholders of record as of Jan 14, 2022. EOG Resources also declared a special dividend of $2 per share. Moreover, the board of directors updated its share repurchase authorization to $5 billion.
Diamondback Energy reported third-quarter 2021 adjusted earnings of $2.94 per share, which surpassed the Zacks Consensus Estimate of $2.81 and the year-ago quarter’s earnings of 62 cents. FANG’s bottom line was aided by better-than-expected production.
The board of directors declared a dividend of 50 cents per share for the third quarter, raising the level by 11.1% from the previous payout of 45 cents. The amount will be paid out on Nov 18, 2021, to its shareholders of record as of Nov 11. FANG also generated a free cash flow of $740 million in the third quarter.
ConocoPhillips reported third-quarter 2021 adjusted earnings per share of $1.77, comfortably beating the Zacks Consensus Estimate of $1.53. This outperformance is led by increased production volumes owing to the Concho acquisition and rising realized commodity prices.
Based in Houston, TX, this one of the world’s largest independent oil and gas producers’ capital expenditures and investments totaled $1.3 billion, and dividend payments grossed $579 million. ConocoPhillips’ net cash provided by operating activities was recorded at $4.8 billion, up from the year-ago figure of $868 million. COP generated a free cash flow of $2.8 billion in the third quarter.
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