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Why Is DCP Midstream Partners, LP (DCP) Up 9.1% Since Last Earnings Report?

·4 min read

It has been about a month since the last earnings report for DCP Midstream Partners, LP (DCP). Shares have added about 9.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is DCP Midstream Partners, LP 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 catalysts.

DCP Midstream Q1 Earnings Miss Estimates

DCP Midstream reported first-quarter adjusted earnings of 96 cents per unit, missing the Zacks Consensus Estimate by a penny. The bottom line increased from the year-ago quarter’s profit of 19 cents per unit.

Total quarterly revenues of $3,375 million missed the Zacks Consensus Estimate of $4,284 million. However, the top line increased from $2,318 million in the year-ago quarter.

Increased operating costs and expenses hurt DCP Midstream’s earnings. This was offset partially by higher NGL pipeline throughput volumes.

Operations

Logistics and Marketing

The segment recorded adjusted EBITDA of $212 million in the first quarter, up from the year-ago period’s $155 million. Higher NGL pipeline throughput volumes aided the segment.

The average NGL pipeline throughput in the quarter was 682 thousand barrels per day (Mbpd), higher than the year-ago quarter’s 578 Mbpd. Fractionator throughputs were recorded at 53 Mbpd, up from 43 Mbpd.

Gathering and Processing

The segment reported adjusted EBITDA of $278 million in the first quarter, up from $156 million in the year-ago quarter. Increased wellhead volumes aided the segment.

Average natural gas wellhead volumes in the quarter increased to 4,110 million cubic feet per day (MMcf/d) from the year-ago period’s 4,077 MMcf/d. NGL gross production totaled 402 Mbpd, up from 361 Mbpd.

Total Expenses

Purchases and related costs significantly increased year over year in the quarter under review. Operating and maintenance expenses rose to $152 million from $149 million in the first quarter of 2021.

Total operating costs and expenses in the first quarter were $3,365 million, up from the year-ago quarter’s figure of $2,315 million.

Financials

In first-quarter 2022, total expansion capital expenditures and equity investments were $9 million. Sustaining capital in the quarter was $13 million. DCP generated an excess free cash flow of $247 million in the reported quarter.

At the end of the first quarter, the partnership reported long-term debt of $4,838 million. Cash and cash equivalents were $1 million. It had current debt of $505 million, reflecting a debt to capitalization of 47.8%.

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 -7.99% due to these changes.

VGM Scores

At this time, DCP Midstream Partners, LP has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. 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, DCP Midstream Partners, LP 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

DCP Midstream Partners, LP belongs to the Zacks Oil and Gas - Production and Pipelines industry. Another stock from the same industry, Williams Companies, Inc. The (WMB), has gained 5.1% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.

Williams Companies, Inc. The reported revenues of $2.52 billion in the last reported quarter, representing a year-over-year change of -3.4%. EPS of $0.41 for the same period compares with $0.35 a year ago.

Williams Companies, Inc. The is expected to post earnings of $0.37 per share for the current quarter, representing a year-over-year change of +37%. Over the last 30 days, the Zacks Consensus Estimate has changed +7.4%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #1 (Strong Buy) for Williams Companies, Inc. The. Also, the stock has a VGM Score of D.


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