Diversified midstream energy operator
Genesis Energy L.P.
) raised its fourth quarter 2012 cash distribution to 48.50 cents
per unit ($1.94 per unit annualized), representing an increase of
approximately 2.6% sequentially and 10.2% year over year.
Importantly, the latest payout marks the 30th consecutive
quarterly distribution hike by the pipeline operator, of which 25
increases have been 10% or more year over year.
GENESIS ENERGY (GEL): Free Stock Analysis
GLOBAL PARTNERS (GLP): Free Stock Analysis
MARATHON OIL CP (MRO): Free Stock Analysis
SUNOCO LOGISTIC (SXL): 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 February 14 to unitholders of record
as on February 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.
Genesis Energy - which acquired interests in Gulf of Mexico oil
Marathon Oil Corp.
) in January last year - currently retains a Zacks Rank # 4
(Sell), implying that it is expected to underperform the broader
U.S. equity market over the next one to three months.
With a juicy distribution yield of 5.2%, 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
3.2, which suggests that the stock is overvalued. (A P/B ratio
under 3.0 generally indicates value.)
However, there are certain other energy stocks like
Global Partners L.P.
Sunoco Logistics Partners L.P.
) that offer tremendous value and are worth buying now. Both
these partnerships sport a Zacks Rank # 1 (Strong Buy).