Why Is Antero Midstream Corporation (AM) Up 8% Since Last Earnings Report?
A month has gone by since the last earnings report for Antero Midstream Corporation (AM). Shares have added about 8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Antero Midstream Corporation due for a pullback? 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 Q4 Earnings Beat Estimates
Antero Midstream reported fourth-quarter 2023 adjusted earnings per share of 24 cents, which beat the Zacks Consensus Estimate of 21 cents. The bottom line also improved from the year-ago quarter’s level of 20 cents.
Total quarterly revenues of $260 million surpassed the Zacks Consensus Estimate of $249 million. The top line also increased from $242 million recorded in the year-ago quarter.
Such strong quarterly results were primarily driven by higher compression and increased low pressure gathering volumes.
Operational Performance
In the fourth quarter, average daily compression volumes were 3,343 million cubic feet (MMcf/d) compared with 2,945 MMcf/d in the year-ago period. The reported figure was also higher than our estimate of 3,126 MMcf/d. On a per-Mcf basis, the compression fee was 21 cents, in line with the prior-year quarter’s number.
High-pressure gathering volumes totaled 3,047 MMcf/d, up from the year-ago period’s level of 2,762 MMcf/d. The figure was also higher than our estimate of 2,767 MMcf/d. On a per-Mcf basis, the average gathering high-pressure fee was 21 cents, in line with the year-ago quarter’s level.
Low-pressure gathering volumes averaged 3,377 MMcf/d compared with 3,070 MMcf/d in the fourth quarter of 2022. The figure was also higher than our estimate of 3,207 MMcf/d. On a per-Mcf basis, the average gathering low-pressure fee was 35 cents, higher than the prior-year quarter’s level of 34 cents. The reported figure was in line with our estimate.
Freshwater delivery volumes were registered at 94 MBbls/d, down approximately 15% from the prior-year quarter’s level of 111 MBbls/d. On a per-barrel basis, the average freshwater distribution fee was $4.22 compared with $4.09 in the year-ago period. The figure was also higher than our estimate of $4.10.
Operating Expenses
Direct operating expenses amounted to $50.8 million, up from $48.3 million recorded a year ago.
Antero Midstream’s total operating expenses came in at $104.5 million, up from $97.4 million recorded in the corresponding period of 2022.
Balance Sheet
As of Dec 31, the company had cash and cash equivalents of $66,000. As of the same date, the company had $3,213.2 million of long-term debt.
Outlook
For 2024, Antero Midstream expects adjusted EBITDA to be in the range of $1,020-$1,060 million, indicating a 5% increase from the 2023 level at the midpoint. The company projects Free Cash Flows after dividends in the range of $235-$275 million for 2024. The capital budget for 2024 is expected to be in the band of $150-$170 million, indicating a 14% decrease from the 2023 level at the midpoint.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Antero Midstream Corporation has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, 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 D. 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 Midstream Corporation has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Antero Midstream Corporation is part of the Zacks Oil and Gas - Integrated - United States industry. Over the past month, ConocoPhillips (COP), a stock from the same industry, has gained 7.9%. The company reported its results for the quarter ended December 2023 more than a month ago.
ConocoPhillips reported revenues of $15.31 billion in the last reported quarter, representing a year-over-year change of -20.5%. EPS of $2.40 for the same period compares with $2.71 a year ago.
ConocoPhillips is expected to post earnings of $2.05 per share for the current quarter, representing a year-over-year change of -13.9%. Over the last 30 days, the Zacks Consensus Estimate has changed -4.8%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for ConocoPhillips. Also, the stock has a VGM Score of C.
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