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NGL Energy Partners (NGL): What Will Q4 Earnings Unveil?

Nilanjan Choudhury

NGL Energy Partners LP NGL is scheduled to release fiscal fourth-quarter 2019 results before the opening bell on Thursday, May 30. The current Zacks Consensus Estimate for the quarter under review is a profit of 27 cents per share on revenues of $6.1 billion.

In the preceding three-month period, the diversified energy master limited partnership blew past the consensus mark, buoyed by its Crude Oil Logistics segment performance.

As far as earnings surprises are concerned, the Tulsa, OK-based midstream operator has a bearish record, having gone past the Zacks Consensus Estimate just once in the last four reports. This is depicted in the graph below:

NGL Energy Partners LP Price and EPS Surprise

NGL Energy Partners LP Price and EPS Surprise

NGL Energy Partners LP price-eps-surprise | NGL Energy Partners LP Quote


Investors are keeping their fingers crossed and hoping that the partnership can surpass earnings estimate this time around.

Let’s delve deeper and find out the factors impacting the results.

Factors to Consider This Quarter

Two major segments of the partnership – ‘Crude Oil Logistics’ and ‘Water Solutions’ – are sending mixed signals with regard to NGL Energy Partners’ results in the upcoming quarter.

Our model estimates fiscal fourth-quarter adjusted EBITDA for the Crude Oil Logistics unit to be $45.6 million, falling 10% from $50.7 million in the fiscal third-quarter but 43% above the year-ago EBITDA of $31.9 million. The significant year-over-year growth reflects solid volumes on the partnership’s 100%-owned Grand Mesa Pipeline that carries oil from the DJ Basin to NGL Energy Partners’ storage facility in Cushing. The conduit transported approximately 129,000 barrels per day on an average in the last quarter, rising 22% from the fiscal fourth-quarter 2018.

Meanwhile, analysts polled by Zacks envision ‘Water Solutions’ adjusted EBITDA to remain in line with the previous quarter, while improving 52% from the year-ago level. The partnership processed approximately 999,000 barrels of wastewater per day, a 26.5% increase from the corresponding period of fiscal 2018. While the segment is expected to witness volume growth in the to-be-reported quarter as well, results will be affected by the recent sale of the Bakken and the South Pecos water assets.  

What Does Our Model Say?

Our proven model too does not conclusively predict that NGL Energy Partners will beat the Zacks Consensus Estimate this quarter. This is because it doesn’t have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.0%.

Zacks Rank: NGL Energy Partners currently has a Zacks Rank #3, which increases the predictive power of ESP. But we need to have a positive Earnings ESP to be sure of the positive surprise.

Note that we caution against stocks with a Zacks Ranks #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing a negative estimate revision.

Stocks to Consider

While earnings beat looks uncertain for NGL Energy Partners, here are some firms you may want to consider on the basis of our model, which shows that they have the right combination of elements to post earnings beat this quarter:

Dollar General Corp. DG has an Earnings ESP of +2.16% and a Zacks Rank #2 (Buy). The company is anticipated to release earnings on May 30. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Dell Technologies DELL has an Earnings ESP of +13.91% and a Zacks Rank #3. The company is anticipated to release earnings on May 30.

Costco Wholesale Corp. COST has an Earnings ESP of +2.19% and a Zacks Rank #3. The company is expected to release earnings on May 30.

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