Oil pipeline and storage partnership
Magellan Midstream Partners L.P.
) is set to release its fourth-quarter 2012 results before the
opening bell tomorrow, Tuesday, Feb 5.
In the preceding quarter, Magellan delivered a negative 20.45%
earnings surprise, pulled down by poor contribution from all its
business units. Let's see how things are shaping up prior to this
Factors to Consider This Quarter
The operating scenario for pipeline operators will remain
critical in the near to medium term. Magellan is also susceptible
to lower-than-expected demand for refined products, commodity
price fluctuations and cost overruns on expansion projects.
Moreover, depressed commodity margins and high maintenance
capital expenditure may adversely affect the partnership's
earnings and cash flows.
In fact, the Zacks Consensus Estimate for the fourth quarter
has moved down by 4 cents to 65 cents per unit over the last 30
days as the tendency for a downward estimate revision was more
Our proven model does not conclusively show that Magellan
Midstream is likely to beat the Zacks Consensus Estimate in the
fourth quarter. That is because a stock needs to have both a
positive Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank #1 (Strong Buy) or at least Zacks Rank #2
(Buy) or Zacks Rank #3 (Hold) for this to happen. Unfortunately
this is not the case here as elaborated below.
Negative Zacks ESP:
This is because the Most Accurate estimate stands at 60 cents,
while the Zacks Consensus is higher at 65 cents. This results in
a difference of -7.69%.
Zacks Rank #3 (Hold):
Magellan Midstream's Zacks Rank #3 (Hold), however, increases the
predictive power of ESP. That said, we also need to have a
positive ESP to be confident of an earnings surprise call.
Other Stocks to Consider
Here are some other firms you may want to consider on the
basis of our model, which shows that they have the right
combination of elements to post an earnings beat this
Northern Tier Energy L.P.
), Earnings ESP of +7.97% and Zacks Rank #1 (Strong Buy).
Hercules Offshore Inc.
), Earnings ESP of +14.29% and Zacks Rank #2 (Buy).
Sunoco Logistics L.P
), Earnings ESP of +7.69% and Zacks Rank #2 (Strong).
HERCULES OFFSHR (HERO): Free Stock Analysis
MAGELLAN MDSTRM (MMP): Free Stock Analysis
NORTHERN TIER (NTI): Free Stock Analysis
SUNOCO LOGISTIC (SXL): Free Stock Analysis
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