Magellan Midstream Partners LP MMP boasts a stable business model. Though the stock has lost 25.8% in the past year, it has a strong potential to grow in the near term. The firm should be included in investors’ watchlist.
Let’s dig deeper.
Steady Fee-Based Revenues
In the United States, this leading midstream energy player has the longest pipeline system for refined petroleum products, running over 9,700 miles.
Moreover, this partnership’s pipeline network for crude oil spreads across 2,200 miles and is supported by long-term volume commitments. The firm also has operating interests in six marine terminals with a capacity to store 27 million barrels.
It is to be noted that from all these midstream assets, the partnership generates stable fee-based revenues.
Expansion in Projects & Distribution
Albeit several projects have come online and are even completed, the partnership’s potential expansion projects are still worth more than $500 million, securing additional fee-based revenues in turn. Investors should know that for financing its extension projects, the partnership has been increasingly relying on cash savings, further reflecting its strong operational efficiency.
Moreover, solid returns on invested capital have been driving Magellan Midstream’s distribution growth over the years. Importantly, the partnership expects its 2020 cash distribution to grow 3%.
Solid Rank & Attractive VGM Score
This master limited partnership (MLP) that owns and operates a diversified portfolio of energy infrastructure assets currently has a Zacks Rank #2 (Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best investment opportunities. Thus, the company appears to be a compelling investment proposition at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stellar Q1 Performance
Magellan Midstream Partners reported first-quarter 2020 adjusted earnings per unit of $1.28, surpassing the Zacks Consensus Estimate of $1.03 as well as the year-ago profit of $1.06. Strong contribution from Refined Products unit aided results.
Quarterly revenues of $783 million not only rose from the year-ago level of $629 million but also outpaced the Zacks Consensus Estimate of $679 million.
Strong Surprise History
The Tulsa, OK-based firm’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average being 14.15%.
Other Key Picks
Some other stocks in the energy space carrying the same rank as Magellan Midstream are Gulfport Energy Corporation GPOR, National Oilwell Varco, Inc. NOV and Cheniere Energy, Inc. LNG.
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National Oilwell Varco, Inc. (NOV) : Free Stock Analysis Report
Magellan Midstream Partners, L.P. (MMP) : Free Stock Analysis Report
Cheniere Energy, Inc. (LNG) : Free Stock Analysis Report
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