Suggest everyone read it. Quite clear that ETP has turned the corner. Distribution covered 1.14X and now covered for all of 2014. A bit better than I expected in a terrible NGL environment.
I would state that EPS is completely meaningless. There is only a minor correlation between DCF (where the company pays distributions) and EPS. Almost positive of two thnigs. The report was not unexpected and second it was a bit better that most predicted.
This is a really stupid thread with predictions of exact closing prices. Oil is correct in that EPD has historically move upward before going ex-div and tpp is correct that trading in MLPs creates some huge and very profitable situations, but usually only for your CPA.
You have just gotten the ignore button. Suggest other do the same. Do you ever have anything to say? Any reasons? Today is actually a VERY strong day with EPD trading above the secondary offering price.
This is all excellent news and does two things for the long term investor. It puts a drag on DCF until the growth slows down to about 10% of EValue a year, because of the interent costs of building the plants and all the costs that are dexpensed before the revenues flow. Second it means distribution increases will continue to increase at a slower rate in the near term but a much larger CAGR into 2015 and beyond.
Marv - The flaw in your analysis is this - KMP has a business model that has only beeen able to sustain growth through expensive acquisition via purchases. It is simply too large to keep up the growth through organic projects and pays out virtually all of its DCF.
EPD moved to an organic model with large cash retention. This was done to guarantee stability and provide for a cushion when interest rates rise significantly. This allows EPD to increase its distribution in that situation to offset and yield based reduction in its unit price. That stability and safelty are why EPD demands the price (it coud raise by .02 a quarter for about 5 years and still have coverage.)
MWE is completely different in that it is growing at a rate in excess of 30%. That puts a huge drag on DCF during the construction and ramp up phase of new projects but when the % of projects a a % of EValue goes to under 10% a year then DCF moves up almost geometrically. Since all of the new MWE projects are fixed fee and at something like a 6-8X EBITDA then the future growth in DCF can fairly accurately be predicted. MWE is also trying to retian cash to obtain investment grade and will do so under it gets that rating. Eventually interest rates will rise and being able to lock in debt costs for 20-30 years makes a company stronger and more stable. That is why distribution increases of .02 - .04 per quarter are expected going forward in 2015 and beyond.
Hope this gives you some meat to chew on. ARB
You really cannot mean what you post. Nobody who can use a computer could post about the daily movements of any stock and be serious. We do this over and over - it is the long term trend that matters. The daily movements matter not. Predicting daily movements according to the WSJ is a fool's game.
Interesting article. Especially when it is not true. We are exporting propane. There is no shortage that my family - Iowa and Nebraska - could find. The only problem for the farmers and consumers is that with exports up so is the price. retail and contract prices seem to be up about 20% compared to a year ago. Have no ida how much of this is the shutdown of Heritage and olding into APU.
The only shortages are related to the capacity to deliver to the farmers. When everyone wants propane in basically the same week then many need to wait. Pretty simple concept in that the distributors are not going to add 50% more trucks etc for demand that spikes only at harvest time and then only when farmers choose to dry and store because of weak pricing.
Henning - He appears to be a board troll looking for responses insted of contributing in oreder to assist others. What he truly does not understand is that witrh the distribution EPD is over $64. That said daily movements are worthless as wwe both know.
Good time to put bigk on ignore. If he (or she) had information to share they would be both welcome and appreciated. Bigk appears to have neither.
There were 4 new reports out as of 3pm local time. All DCF estimates in line w/MWE range or a tiny bit higher. The significant question about all was the suggestion of about a 9% CAGR for distributions in 2014 with coverage ratio staying at 1.0 to 1.1X. That would suggest investment grade no longer a goal for either 2014 or 2015. MWE also stated grwoth would drop significantly in 2016 and beyond and DCF thus rise quickly thereafter. Wonder if that means MWE is going to cease finding profitable growth projects. LOL.
bj - Credit Suisse is the one that predicted $900+M in DCF for next year. They currently have NO credibility. The problem is with reduced DCF numbers - remember MWE is saying 600-690 and with low NGL prices we will be closer to 600M - they do not have the $$ to do the payout increases as MWE has already said they need to retain earnings to get investment grade. My guess is we are looking at another year of .01 per quarter. I think you need to look at what the NEW estimates for distribution growth will be.
Note - I look at this as a blip in the road and [possibly a place to buy a bunch more MWE. It simply means as I have saaid for years - until their growth rate for organic projects drops under 10% of EV they cannot get nearly as much to the bottom line. MWE keeps adding projects to their book faster than they complete the old ones. I understand the opportunity and am happy to wait, but many will not.
It means ETE controlls the LNG export facility and can spin off an IPO for that company in 2016. As to a split - YAWN. A split creates no value today unlike the old days. Electronic trading today proves in make no difference on spreads for $20 stocks vs. $200 ones.
Chinook you do not get it. This is what happens when someone decides to basically dump about 400K units on the market. You get a sharp downturn followed by a quick recovery of about 50% of the decline.
B&W - The difference that does effect you is this means the distributions you wlll receive will be less in the future and the unit price lower. Understand the difference for reinvesting distributions is about zero, but it effect MWE for at least 4 or 5 years. This is a significant change potentially in the focus of thec company. It also suggests that MWE will trade lower (in the 60s) over the next year or two. Remember what happened with the distribution CAGR cut? It also suggests that there are some management issues along with the normal growing pains.
Does it make sense to you for MWE to delay reporting for a week when it had to know there were issues and the week before put out several notices extolling great things they had done? They historically reported one week earlier.
PS - I too am not interested in selling, but it makes the story gfoing forward a bit more suspect.
MWE is not growing to move the unit price over the short term. They are investing for 2014 and way beyond. If you are a trader then sell. If a long term investor then hold for the future and higher CAGR on distributions that is coming.
What jump? EPD is still close to where it has traded for a couple months. Daliy moves not meaningful unless you are a fortune teller.
Two things. The payout ratio to DCF is a tad under 1X and steadily improving. Your numbers are bobus. As to borrowing costs going up there is no real worry as many of its projects have a rate component tied to a cost inflator. Also ETP earns well over an average of 10% on its projects. Agree ETP not for you as you have no clue about MLPs. ARB