Diversified midstream energy operator
Genesis Energy L.P.
) gave its investors a reason to cheer as it increased its fourth
quarter 2013 cash distribution to 53.5 cents per unit ($2.14 per
unit annualized). This represents an increase of approximately
2.4% sequentially and 10.3% year over year.
Genesis Energy has been consistently increasing its distribution,
which indicates financial stability that may attract investors
looking for a steady income. The latest payout marks the 34th
consecutive quarterly distribution hike by the pipeline operator,
of which 29 increases have been 10% or more year over year. The
quarterly distribution is payable on Feb 14, 2014 to unitholders
of record as of Jan 31, 2014.
Houston, Texas-based Genesis Energy is a master limited
partnership that operates crude oil pipelines and is an
independent gatherer and marketer of crude oil in North America,
with operations concentrated in Texas, Louisiana, Alabama,
Florida, Mississippi and New Mexico. Genesis Energy engages in
three business segments: Pipeline Transportation, Refinery
Services, and Supply and Logistics.
Genesis Energy has a business model focused on operational
efficiencies and attractive acquisitions/growth projects. With a
juicy yield of 4.0%, the partnership offers investors a steady,
predictable income stream.
However, valuation looks expensive for the stock. It has a
forward PE of 30.2, much higher than its peer group average of
16.54. Moreover, the partnership has a price-to-book (P/B) ratio
of 4.2, which suggests that the stock is overvalued (a P/B ratio
under 3.0 generally indicates value).
Genesis Energy currently carries a Zacks Rank #3 (Hold), implying
that it is expected to perform in line with the broader U.S.
equity market over the next one to three months.
Meanwhile, one can consider better-ranked energy sector stocks of
Helmerich & Payne, Inc.
Harvest Natural Resources Inc.
Athlon Energy Inc.
). All these stocks currently sport a Zacks Rank #1 (Strong
ATHLON ENERGY (ATHL): Free Stock Analysis
GENESIS ENERGY (GEL): Free Stock Analysis
HARVEST NATURAL (HNR): Free Stock Analysis
HELMERICH&PAYNE (HP): Free Stock Analysis
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