Magellan Hits 52-Week High - Analyst Blog

By
A A A

On Mar 22, 2013, units of Magellan Midstream Partners LP ( MMP ) reached a 52-week high of $51.90 based on a slew of positive developments.

Late last month, Magellan signed a deal with Plains All American Pipeline LP ( PAA ) to buy two refined petroleum products pipeline systems - spread over roughly 800 miles - for about $190 million. The acquisition is likely to be accretive to the partnership immediately with incremental cash flows generated in the coming years.  

Before that, on Feb 5, 2013, Magellan came out with strong fourth quarter earnings. The pipeline operator reported earnings per unit (EPU) of 69 cents (excluding mark-to-market commodity-related pricing adjustments), breezing past the Zacks Consensus Estimate of 65 cents and the prior-year quarter profit of 51 cents. The earnings beat was primarily due to its good contributions from the business segments.

In addition, Magellan raised its fourth-quarter 2012 cash distribution by 3% sequentially and 23% year over year to 50 cents per unit ($2.00 per unit annualized).

Magellan also sports impressive long-term expected earnings growth rate and sales growth rate of 11.20% and 11.92%, respectively.

The partnership owns an attractive portfolio of energy infrastructure assets that generate stable and recurring fee- and tariff-based revenues. This includes the longest U.S. refined petroleum products pipeline system, access to more than 40% of the refining capacity in the continental U.S. along with imports and 85 petroleum terminals with more than 80 million barrels of storage.

However, results for Magellan are directly exposed to refined product demand, which are inherently volatile and subject to complex market forces. Actual demand could differ significantly from our expectations, thereby affecting the partnership's revenues, cash flows and distributions.

As a result, Tulsa, Oklahoma-based Magellan 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.

Stocks to Consider

Two firms in the energy sector that are expected to significantly outperform the equity markets in the next one to three months are Helmerich & Payne Inc ( HP ) and Range Resources Corporation ( RRC ). Both of these stocks carry a Zacks Rank #1 (Strong Buy).




HELMERICH&PAYNE (HP): Free Stock Analysis Report

MAGELLAN MDSTRM (MMP): Free Stock Analysis Report

PLAINS ALL AMER (PAA): Free Stock Analysis Report

RANGE RESOURCES (RRC): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: EPU , HP , MMP , PAA , RRC

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

Most Active by Volume

33,110,376
  • $113.99 ▲ 1.77%
25,034,179
    $17.98 unch
24,486,872
  • $7.41 ▲ 2.07%
20,864,535
  • $7.39 ▼ 2.76%
18,600,501
  • $8.30 ▼ 0.36%
17,530,211
  • $8.14 ▲ 3.17%
17,299,208
  • $93.79 ▲ 2.74%
14,669,760
  • $25.78 ▼ 0.19%
As of 12/26/2014, 04:15 PM


Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com