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EnLink Midstream, LLC (ENLC)
NYSE - NYSE Delayed Price. Currency in USD
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743 reactions on $ENLC conversation
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People will be traveling again higher than pre”pandemic” levels. This stock has a big balance sheet with lots of runway for earnings this summer. It will be worth $10-12. Which correlates to the dividend.
Alright, I’m out at $4.95. Come on baby, $4.95 and I won’t bother you anymore.
Based upon KMI earnings ENLC is going to post a huge quarter due to the winter storm
I get some are disappointed in management's decision to focus on debt reduction rather than increasing dividends but in the end it really doesn't matter. As debt is paid down the even if the market does not appreciate it if EV (debt plus equity) stays the same then equity is going to move north as debt heads south.
The plan this year is to pay off that 350M left on their term note with profits from 2021 (free cash flow midpoint is 300M but they are probably being conservative) meaning odds are the equity portion of the equation moves north by 300M if everything stays equal (which it never does but the move will still play out)......which is around 60 cents a share or about 15% at the current trading price.
So odds are between the debt reduction and the distribution (around 8.5% currently) this will return over 20% this year.
That's not such a bad return for a boring investment.
In the end the large move north will probably play out as debt is dropped below 4X (probably 18 months from now) and dividends are pushed north by 100% (free cash flow of 300M staying steady after all capex.....you only need about half of that to go to dividends to double the current payout).
As that plays out this should move north to the 8 to 10 range.
If this hits $5 , I’m out
So ENLC is an LLC company, not an MLP. However, it pays distributions to unit holders as RETURN OF CAPITAL. Strange, I thought only MLP companies pays RETURN OF CAPITAL. But I like it, nice! I can't find on its website where they say distributions are paid as ordinary dividends or as return of capital.
Yahoo Finance Insights
EnLink Midstream is up 7.87% to 4.66
Could this possibly hit $5.00 again???
Odds of ENLC and/or AM Antero Midstream returning to half of their 2017-18 glory (half being $15 level)?
Does ENLC have a buy back in place? With all the FCF generated last qtr I’d hope they bought in the $4 range.
This is likely going to be a long boring hold from here on out. If you like the dividend then stay. If you don't and chasing growth maybe look elsewhere.I am holding this through the summer, just to ride the positive momentum with the Energy industry. #$%$6 maybe a good exit point.
I looked at ENLC. With ET, WES, PAA breaking out .. this thing should have moved as well. The fact it has not was a turnoff for me .
What does anyone have as their price target for enlc? I am like this move. How much more is in the tank?
How come this company doesn't earn positive GAAB profit according to Yahoo analysis?
Dropped on huge volume. Any ideas what happened? Any news? Whose dumping?
ENLC continues to hold the title of ''laggard'' when it comes to energy stocks.
All energy stocks, and just about ever other stock on the planet, bottomed around the 2nd week of March. From there they took off, with almost all energy stocks doubling from their bottom by the 2nd week of April.
Except for ENLC, which continued to hover near it's low (around one dollar). It's what brought me to this stock in the first place back then.
All energy stocks have been crushed the last three weeks by 30% or more including ENLC.....the ''laggard'' title comes from the fact while all I follow are recovering somewhat today while ENLC is headed in the opposite direction.
Never mind the fact the share price rallied after a solid earnings report last quarter and the distributive numbers on the dividend are rock solid (3.7X and 1.7X after all CAPEX including growth) and the debt to EBITA number is dropping as cash flow increases (4.2X last quarter). Never mind the fact that their number one customer (15% of revenue) just agreed to merge with another player creating an even stronger partner.
We'll just have to see if the current scenario plays out like the last one (where it rallied 400% over a 10 week period to catch up to all the other players in the sector....going from 1 to 4) or just continues to pay a high dividend while remaining in the Wall Street Doghouse for an extended period of time.
No one here? Someone is dumping major shares today.
For those that sold today based on this headline from SA:
''Devon says it is suspending activity in the Anadarko, Eagle Ford, and Powder River plays....''
That is not what was stated during the C.C.
This is from the call:
''As outlined on slide seven, we have elected to continue to invest and preserve operational continuity in the Delaware Basin to generate the necessary cash flow to effectively operate our business while suspending all capital activity in the Anadarko, Eagle Ford and Powder River plays until market conditions improve.''
They further stated this:
''Furthermore, in key plays like the Eagle Ford and Powder River Basin, we correctly anticipated that there would be weak regional pricing, and our marketing team took early and decisive action to lock in our revenue at pricing above variable costs in May and June. Taking all these factors together, our production operations are well positioned to be resilient in the face of these challenging conditions.''
So they are not ''suspending'' their drilling (which they just locked in additional hedging on and is expected to be ''resilient'')....they are just not drilling new wells (CAPEX).
This is also the reason ENLC cut back on CAPEX on March 17th when they stated this:
''EnLink Midstream (NYSE:ENLC) says it is reducing its 2020 capital spending plan by ~30% to $225M-$285M from its previous plan for $315M-$425M, driven by key customers that have decreased drilling and completions activity in response to the current oil price environment.''
Not hard to connect those dots.
So again.....DVN earnings were positive for ENLC (even if share price doesn't reflect it).
Don't forget we went from $1 straight to $4 in less than 3 months. So this is just a healthy correction. Overall technical trend is still positive. Fundamentals are also positive considering Oil will be recovering the rest of the year as the economy opens up along with posted production cuts, we may have a better than expected Oil recovery Also Natural Gas around $3 next year.
So I am definitely holding for at least 6 months into the recovery.
The general consensus of why the share price has tanked from around 16 dollars to 5 dollar since GIP bought in (July 2018) is their debt level is too high (4.7X EBITDA....or about 4.7B dollars).
The tank job from 5 down to 1 logic is their earnings are about to take a major hit which is why the dividend was slashed 66%.....and their high debt level (4.7X) brings a BK scenario into play (hence a one dollar dollar share price).
So are the markets correct? I don't think so.
First off, their only major payment coming due in the next 5 years is a term loan for 850M due Dec 2021.
Now they have a revolver for 1.7B (currently owe about 300M on it) that is good through 2024.....but the markets are probably thinking that could be pulled (although that's not what the company says).
My thinking is earnings are not going to take a major hit (maybe 10% vs the markets thinking near 30%)....because most of their contracts are long term and 80% of them are with investment grade companies (you don't go from investment grade to BK in one quarter or even one year...maybe 3 to 5 bad years).
So why cut the dividend so dramatically?
I think the reason is when they were raising the dividend (from .26 cents per quarter to 28 cents) from mid 2018 to mid 2019 the share price only went lower.....down from about 16 to 8.
Meaning the markets really didn't care.....they weren't focused on the payout.
What the markets wanted, and what the company is now going to focus on, is debt reduction (not a crisis plan...just a plan).
This is the last update from the company from March 24th when oil was trading for about 20 dollars (had already tanked).
''"We continue to take deliberate actions to position EnLink to weather this evolving environment," said Barry E. Davis, Chairman and Chief Executive Officer. "The comprehensive measures we have taken during 2020 will create over $500 million of cash flow available for full-year 2020 to effectively manage our balance sheet, including our liquidity and leverage. ''
Odds are 100% of that 500M will go to pay down the 850M term loan due in Dec of 2021.
Now the Note can be called earlier, if the EBITDA debt ratio breaks the 5X barrier, but remember that is based off four rolling quarters.....meaning one or two bad quarters will not trigger it.
So even if they drop below the number at the end of this year the Note will not come due until they report Q4 2020 numbers.....sometime in Feb or March 2021. Meaning....they'll have a full 2020 and 500M to pay down a large portion of that debt.
It should also be mentioned that ENLC is a bit different from other midstreams in how they make money. While they have fixed price contracts....that is just a base that provides a minimum number. A large part of their core earnings come from their actually buying the NG on the front end and then selling it on the back end (when it's delivered). Now they buy and sell this NG immediately.....they don't bet on it going up in price while they transport it. But they do earn more as NG prices rise because they take a cut out of every sale....and while the percentage is fixed the larger the price the greater the dollar value.
That is also why they hedge NG and why if NG prices rise they end up making more money.
Which is why it's a big deal, even if the markets don't recognize it, that NG futures took a major jump up the last month or so (moved to over 3 dollars some months next winter).
So to me the debt is not a big problem and I don't see earnings taking a big hit....although they will take a hit.
The other thing they have going for them is they've been through hard times before and survived just fine.....the share price also bottomed around .88 cents back in the 2008/09 recession and it didn't stop the share price from breaking 40 a few years later.
Not saying that is how it will play out this time.....just saying they are not going BK and that's basically how this is priced.
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