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NuStar Energy (NS) Stock Rises 4% Since Q1 Earnings Beat

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NuStar Energy L.P.’s NS stock has gone up 4.4% since the first-quarter 2022 earnings announcement on May 5.

This stock performance could be attributed to the earnings beat in the first quarter as a result of the strong business performance due to surging commodity prices and higher throughput volumes, backed by its refined products and crude oil pipelines.

Behind the Earnings Headlines

The oil pipeline operator, NuStar, reported first-quarter adjusted earnings per unit of 19 cents, beating the Zacks Consensus Estimate of 16 cents. This could be attributed to a rise in energy prices in the reported quarter along with greater total crude and product pipeline volumes.

Moreover, the bottom line was also higher than the year-ago income of 5 cents per share, attributable to higher year-over-year revenues from the pipeline segment.

NS’ revenues of $409.86 million lagged the Zacks Consensus Estimate of $417 million but increased by about 13.3% year over year.

It recorded an operating profit of $58.4 million compared with the profit of $98.3 million in the year-ago corresponding quarter. This downside was due to an increase in costs associated with product sales as well as general and administrative costs.

NuStar Energy L.P. Price, Consensus and EPS Surprise

NuStar Energy L.P. Price, Consensus and EPS Surprise
NuStar Energy L.P. Price, Consensus and EPS Surprise

NuStar Energy L.P. price-consensus-eps-surprise-chart | NuStar Energy L.P. Quote

Segmental Updates

Pipeline: Total quarterly throughput volumes were 1,872,333 barrels per day (Bbl/d), up 22.2% from the year-ago period’s level of 1,610,053 Bbl/d. Throughput volumes from crude oil pipelines rose about 18.9% to 1,309,085 Bbl/d, while the throughput from refined product pipelines witnessed an increase to 563,248 Bbl/d from 508,726 Bbl/d.

NuStar's Permian Crude System throughput volumes also improved to 510,000 Bbl/d, up 27% from the year-ago quarter’s level. As a result, the segment’s revenues increased by 11.5% year over year to $188.7 million. NS’ Pipeline unit reported an operating profit of $95.7million, up from the $79.4 million earned in the year-ago period.

Storage: Throughput volumes marginally declined to 395,803 Bbl/d from 400,302 Bbl/d in the prior-year quarter. The unit’s quarterly revenues fell 19% year over year to $87.9 million due to lower storage terminal revenues (from $83.8 million to $61.5 million) but throughput terminal revenues rose marginally from $24.8 million to 26.4 million. The segment’s operating loss for the reported quarter came in at $14.9 million against the $42.7 million profit in the corresponding quarter of 2021 due to reduced revenues.

Fuels Marketing: Product sales increased to $133.3 million from $83.9 million in the year-ago quarter. Moreover, the cost of goods rose about 53% from the prior-year period to $126.1 million. The segment recorded operating earnings of $6.5 million in the quarter under review compared with the earnings of $2.7 million in the first quarter of 2021.

Cash Flow, Debt and Guidance

The first-quarter 2022 distributable cash flow available to limited partners was $91 million (providing 2.06X distribution coverage). A coverage ratio of more than 1 implies that NuStar is generating more than enough cash in the quarter to cover its distribution.

As of Mar 31, NuStar’s total consolidated debt was $3.17 billion.

NuStar anticipates exiting 2022 with volumes in the range of 560,000-570,000 barrels per day.

For 2022, NS reduced its strategic capital spending guidance to the $115-$145 million range, which at the midpoint is $15 million less than what the company had previously announced.

Zacks Rank & Stocks to Consider

NuStar currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the energy space that warrant a look include ConocoPhillips COP, PDC Energy PDCE and Marathon Oil MRO. While PDC Energy and Marathon Oil each sport a Zacks Rank #1 (Strong Buy), ConocoPhillips carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ConocoPhillips is valued at around $135.8 billion. The consensus estimate for ConocoPhillips’ 2022 earnings has been revised 38.6% upward over the past 60 days.

COP beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 7.6%. ConocoPhillips has rallied around 92.7% in a year.

PDC Energy’s stock has gone up 71.8% in a year. The Zacks Consensus Estimate for PDC Energy’s 2022 earnings has been revised about 30.8% upward over the past 60 days from $13.41 per share to $17.54.

The Zacks Consensus Estimate for PDCE’s 2022 earnings is pegged at $17.54 per share, up 119.5% from the projected year-ago earnings of $7.99.

Marathon Oil’s stock has gone up 131% in a year. Marathon Oil beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average being around 23%.

The Zacks Consensus Estimate for MRO’s 2022 earnings is projected at $4.75 per share, up about 202.5% from the projected year-ago earnings of $1.57.


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