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Why Is Antero (AM) Down 0.1% Since Last Earnings Report?

Zacks Equity Research

A month has gone by since the last earnings report for Antero Midstream Corporation (AM). Shares have lost about 0.1% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Antero due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Antero Midstream Q1 Earnings & Sales Lag Estimates, Improve Y/Y

Antero Midstream Corporation reported first-quarter 2019 adjusted earnings per share of 19 cents, up 64% from the year-ago level. However, the figure missed the Zacks Consensus Estimate of 30 cents.

Revenues in the quarter rose 20% year over year to $266 million. The top line, however, missed the Zacks Consensus Estimate of $279 million.

The weaker-than-expected results can be attributed to lower fresh water delivery volumes, partially offset by growth in gathering, compression and Clearwater treatment volumes.

Notably, the structural simplification deal between Antero Midstream GP LP and Antero Midstream Partners LP was concluded during the quarter, leading to the creation of Antero Midstream Corporation.

Dividend

Adjusted distributable cash flow of $166.1 million, up 27.6% from the prior-year quarter, provided coverage of 1.1x.

The first-quarter 2019 dividend of 30.25 cents per share has been approved by the board of directors, which is likely to be paid on May 8, to stockholders of record as of Apr 26.

Operational Performance

During first-quarter 2019, compression volumes were recorded at 202,938 million cubic feet (MMcf), up 60% from the year-ago level. On a per-Mcf basis, compression fee was 19 cents, in line with the prior-year level.

In the first quarter, high pressure gathering volumes were 224,786 MMcf, up 41% from the year-ago period. On a per-Mcf basis, average gathering high pressure fee was 20 cents, 5% higher than the prior-year level.

Low pressure gathering volumes averaged 230,540 MMcf, up 40% from the first-quarter 2018 figure. On a per-Mcf basis, average gathering low pressure fee was 33 cents, 3% higher than the year-ago level.

Fresh water delivery volumes came in at 13,732 thousand barrels, down 31% from the prior-year level. On a per-barrel basis, average fresh water distribution fee was $3.89 in the first quarter, improving from the prior-year level of $3.78.

Operating Expenses

Total pro-forma operating expenses in the quarter were recorded at $167 million.

Balance Sheet

As of Mar 31, Antero Midstream had $2 million in cash and cash equivalents, and a long-term debt of $2,390 million. As of the same date, it had a long-term debt-to-capitalization ratio of 37.2%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -11.29% due to these changes.

VGM Scores

Currently, Antero has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Antero has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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