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Magellan Midstream (MMP) Q4 Earnings Beat, Revenues Miss

Zacks Equity Research

An Earnings Beat:Pipeline operator Magellan Midstream Partners L.P. MMP reported adjusted earnings per unit of $1.31, ahead of the Zacks Consensus Estimate of $1.18. Strong contribution from the Crude Oil and Refined Products operating segments led to the beat.

Estimate Revision Trend & Surprise History: The stock had seen the Zacks Consensus Estimate for fourth-quarter earnings remain essentially unmoved over the last 7 days.

Coming to earnings surprise history, the partnership is on a solid footing, having gone past the Zacks Consensus Estimate in three of the last four reports, with the average positive surprise being %. This is shown in the chart 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

Revenue Underperformance: Magellan Midstream reported revenues of $740.7 million, below the Zacks Consensus Estimate of $852.5 million.

Key Stats: Operating margin from the Refined Products segment was $264.9 million compared with $349.3 million in the year-ago quarter.

Magellan Midstream’s Crude Oil unit generated $151.3 million of operating margin in the quarter compared to $129.8 million for the same period in 2018.

For the Marine Storage division, operating margin was $32.9 million, 7.4% higher than the $30.7 million earned in the year-ago period.

Magellan Midstream reported that its distributable cash flow (DCF) for fourth-quarter 2019 came in at $357.8 million, up 18.3% from the year-ago quarter.

2020 Guidance: Management expects to generate distributable cash flows of approximately $1.2 billion for the full year and is targeting annual distribution growth of 3%. Magellan Midstream guided towards first-quarter and full-year earnings per unit of $1.08 and $4.30, respectively.

The partnership plans to spend $400 million to complete certain expansion projects in 2020. Additionally, Magellan Midstream continues to look out for more than $500 million of potential organic growth projects in the earlier stages of development

Zacks Rank: Currently, Magellan Midstream carries a Zacks Rank #3 (Hold).

(You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.)

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