We expect pipeline operator,
Magellan Midstream Partners LP
), to beat expectations when the company reports its
first-quarter 2013 results before the opening bell on May 2,
Why a Likely Positive Surprise?
Our proven model shows that Magellan is likely to beat
earnings because it has the right combination of two key factors.
Positive Zacks ESP:
Expected Surprise Prediction or ESP (Read:
Zacks Earnings ESP: A Better Method
), which represents the difference between the Most Accurate
estimate of 52 cents and the Zacks Consensus Estimate of 50
cents, stands at +4.00%. This is a meaningful and leading
indicator of a likely positive earnings surprise for shares.
Zacks Rank #2 (Buy):
The stocks with a Zacks Rank #1 (Strong buy), #2 (Buy) and #3
(Hold) have a significantly higher chance of beating earnings.
The Sell-rated stocks (#4 and #5) should never be considered
while going into an earnings announcement.
The combination of Magellan's Zacks Rank #2 (Buy) and +4.00%
ESP makes us very confident of a positive earnings beat on May 2,
What is Driving the Better-Than-Expected
Magellan owns an attractive portfolio of energy infrastructure
assets that generate stable and recurring fee and tariff-based
revenues. This includes the longest refined petroleum products
pipeline system and access to more than 40% of the refining
capacity in the U.S. along with imports, and 85 petroleum
terminals with more than 80 million barrels of storage
Moreover, Magellan's investment grade credit ratings provide a
competitive advantage in accessing capital at reasonable
Finally, we remain upbeat regarding Magellan's acquisition of
petroleum storage and pipelines from a subsidiary of
). Following the acquisition, Magellan owns one of the largest
crude oil storages in the Cushing crude oil region and will
continue to exploit opportunities to improve utilization of these
Other Stocks to Consider
Here are some other energy firms that are worth considering as
these have the right combination to report an earnings beat this
) has an earnings ESP of +28.95% and a Zacks Rank #1 (Strong
Exterran Partners LP
) has an earnings ESP of +4.35% and a Zacks Rank #2 (Buy).
BP PLC (BP): Free Stock Analysis Report
EXTERRAN PTNRS (EXLP): Free Stock Analysis
MAGELLAN MDSTRM (MMP): Free Stock Analysis
SEMGROUP CORP-A (SEMG): Free Stock Analysis
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