Antero Midstream Corporation (AM) Up 1.5% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Antero Midstream Corporation (AM). Shares have added about 1.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Antero Midstream Corporation due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Antero Midstream Tops on Q2 Earnings
Antero Midstream Corporation reported second-quarter 2023 adjusted earnings per share of 22 cents, which beat the Zacks Consensus Estimate of 20 cents. The bottom line also improved from the year-ago quarter’s level of 20 cents.
Total quarterly revenues of $258.3 million surpassed the Zacks Consensus Estimate of $252 million. The top line also increased from $229 million in the year-ago quarter.
Strong quarterly results were primarily driven by higher compression and gathering volumes and increased average freshwater distribution fees.
Operational Performance
In the second quarter, average daily compression volumes were 3,251 million cubic feet (MMcf/d) compared with 2,776 MMcf/d in the year-ago period. The reported figure was also higher than our estimate of 2,865 MMcf/d. On a per-Mcf basis, the compression fee was 21 cents, in line with the prior-year quarter’s number.
High-pressure gathering volumes totaled 2,922 MMcf/d in the reported quarter, up from the year-ago period’s level of 2,819 MMcf/d. The figure was also higher than our estimate of 2,880 MMcf/d. On a per-Mcf basis, the average gathering high-pressure fee was 21 cents, in line with the year-ago quarter’s level.
Low-pressure gathering volumes averaged 3,304 MMcf/d compared with 2,970 MMcf/d in the second quarter of 2022. The figure was also higher than our estimate of 3,033 MMcf/d. On a per-Mcf basis, the average gathering low-pressure fee was 35 cents, higher than the prior-year quarter’s level of 34 cents.
Freshwater delivery volumes were registered at 105 MBbls/d, down 5% from the prior-year quarter’s level of 110 MBbls/d. On a per-barrel basis, the average freshwater distribution fee was $4.21 in the reported quarter compared with $4.09 in the year-ago period. The figure was also higher than our estimate of $4.10.
Operating Expenses
Direct operating expenses amounted to $52.6 million, up from $43.3 million a year ago.
Antero Midstream’s total operating expenses were $112.8 million, up from $100.5 million recorded in the corresponding period of 2022.
Balance Sheet
As of Jun 30, the company had no cash and cash equivalents. As of the same date, the company had $3,306.7 million of long-term debt.
Outlook
For 2023, Antero Midstream reiterated its net income projection in the range of $355-$395 million, indicating an increase from $326.2 million reported in 2022. The company expects an adjusted EBITDA of $950-$990 million for the year. The midstream operator looks forward to leverage target of 3.0x or less in 2024.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, Antero Midstream Corporation has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Antero Midstream Corporation has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Antero Midstream Corporation (AM) : Free Stock Analysis Report
