Diversified midstream energy operator
Genesis Energy L.P.
) raised its first quarter 2013 cash distribution to 49.75 cents
per unit ($1.99 per unit annualized), representing an increase of
approximately 2.6% sequentially and 10.6% year over year.
Importantly, the latest payout marks the 31st consecutive
quarterly distribution hike by the pipeline operator, of which 26
increases have been 10% or more year over year.
EPL OIL&GAS INC (EPL): Free Stock Analysis
GENESIS ENERGY (GEL): Free Stock Analysis
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RANGE RESOURCES (RRC): Free Stock Analysis
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Genesis Energy's announced distribution boost is in sync with its
goal of delivering disciplined growth to unitholders. The
partnership boasts of a consistent and improving financial policy
with high distribution coverage. Genesis Energy's new
distribution is payable on May 15 to unitholders of record as on
May 1, 2013.
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.
With a juicy distribution yield of 4.3%, a business model focused
on operational efficiencies and attractive acquisitions/growth
projects, Genesis Energy provides investors with a steady,
predictable income stream.
However, valuation looks expensive for Genesis Energy. In
particular, the partnership has a price-to-book (P/B) ratio of
4.1, which suggests that the stock is overvalued. (A P/B ratio
under 3.0 generally indicates value.)
As a result, Genesis Energy - which acquired interests in Gulf of
Mexico oil pipelines from
Marathon Oil Corp.
) in Jan last year - 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 look at
EPL Oil & Gas Inc.
Range Resources Corp.
) as good buying opportunities. These domestic oil and natural
gas explorers - sporting a Zacks Rank #1 (Strong Buy) - have
solid secular growth stories with potential to rise significantly
from current levels.