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Is a Beat in Store for Magellan Midstream's (MMP) Q4 Earnings?

Zacks Equity Research

Magellan Midstream Partners, L.P. MMP is set to report fourth-quarter 2019 results on Jan 30, before the opening bell.

The midstream infrastructure provider managed to beat the Zacks Consensus Estimate for earnings in three of the past four quarters, the average positive surprise being 4%. This is depicted in the graph below:

Magellan Midstream Partners, L.P. Price and EPS Surprise

 

Magellan Midstream Partners, L.P. Price and EPS Surprise

Magellan Midstream Partners, L.P. price-eps-surprise | Magellan Midstream Partners, L.P. Quote

 

In the last reported quarter, the partnership reported earnings of $1.19 per unit, beating the Zacks Consensus Estimate of$1.09, thanks to solid contribution from the Refined Products unit. Let’s take a closer look at the factors that might have influenced the partnership’s performance in the December quarter.

Estimate Scenario

The Zacks Consensus Estimate for fourth-quarter earnings of $1.18 per unit has seen one upward revision and one downward movement in the past 60 days. The figure suggests a year-over-year improvement of 14.6%.

Further, the Zacks Consensus Estimate for revenues is pegged at $853 million, indicating a decline of almost 2% from the year-ago reported figure.

Why a Likely Positive Surprise?

Our proven model predicts an earnings beat for Magellan Midstream this time around. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. 

Earnings ESP: The partnership’s Earnings ESP is +3.81%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Magellan Midstream currently carries a Zacks Rank #3.

What is Driving the Better-Than-Expected Earnings?

Growing transported volumes of gasoline and diesel fuel through Magellan Midstream’s refined petroleum products pipeline network are likely to have driven the partnership’s bottom line in the fourth quarter.

The midstream energy player’s extensive network of crude oil pipelines, spreading across 2,200 miles, is also expected to have contributed to earnings.

The Zacks Consensus Estimate for revenues from transportation and terminals volumes of crude oil is pegged at $150 million, suggesting a rise from $140.5 million reported in the year-ago quarter.

Other Energy Stocks With a Favorable Combination

Here are a few other companies from the energy space which, according to our model, have the right combination of elements to post an earnings beat in the upcoming quarterly reports.

Chevron Corporation CVX has an Earnings ESP of +3.68% and a Zacks Rank of 2. The firm is expected to release earnings on Jan 31. You can see the complete list of today’s Zacks #1 Rank stocks here.

Antero Resources Corporation AR has an Earnings ESP of +6.02% and is Zacks #3 Ranked. The company is scheduled to release earnings on Feb 12.

NuStar Energy L.P. NS has an Earnings ESP of +1.32% and a Zacks Rank #2. The partnership is set to release earnings on Feb 5.

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Magellan Midstream Partners, L.P. (MMP) : Free Stock Analysis Report
 
NuStar Energy L.P. (NS) : Free Stock Analysis Report
 
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