Oiltanking Partners, L.P.
) hit a 52-week high of $38.55 on August 27, following strong
second quarter results that included an 11% earnings surprise. With
an impressive year-to-date return of 36.1%, distribution coverage
of 1.42x and a triple-digit earnings growth expectation for 2012,
this Zacks #1 Rank (Strong Buy) provider of oil and refined
products storage services is poised for further upside.
Solid Second Quarter, Healthy DCF
On August 8, Oiltanking Partners posted second quarter earnings of
41 cents per limited partner unit, surpassing the Zacks Consensus
Estimate of 37 cents by 10.8%. The outperformance was driven by
higher storage and throughput volumes - which drove higher
ancillary service fees - accompanied by lower operating expenses.
The partnership's total revenue came in at $33.8 million, up 14.1%
from the year-ago level and better than the Zacks Consensus
Estimate of $33.0 million by 2.4%. All three segments posted higher
results, aided by additional revenues from a new storage capacity
that was placed into service in April, along with increased
throughput during the quarter.
Distributable cash flow (DCF) - an indicator of cash paid for
distribution to unitholders - escalated approximately 5.7%
sequentially to $20.2 million, providing a healthy 1.42x
Improving Growth Visibility
The partnership remains positive on its crude storage expansion and
pipeline projects. Notably, with its storage capacity fully
contracted, Oiltanking Partners' $200 million crude oil storage and
pipeline projects in the Gulf Coast should be solid growth drivers.
The partnership is poised to benefit from its list of projects.
Additionally, Oiltanking Partners' strategically located assets on
the Houston Ship Channel and the Port of Beaumont will continue to
bring organic growth opportunities.
Earnings Momentum on the Rise
Over the last 30 days, the Zacks Consensus Estimate for 2012
increased 4.7% to $1.55 per unit, aided by upward revisions from
four of six total estimates. This implies a substantial
year-over-year growth of 158.6%. Moreover, the Zacks Consensus
Estimate for 2013 increased 7.9% to $1.64, with four of six
estimates again heading north.
Valuation Appears Reasonable
Oiltanking Partners currently trades at a forward P/E of 24.5x, a
35.8% discount to the peer group average of 38.1x. The
partnership's strong growth prospect remains well supported by its
long-term estimated EPU growth rate of 48.6% (versus peer group
average of only 7.3%).
Importantly, Oiltanking Partners has a PEG ratio of 0.50, a 50%
discount to the benchmark of 1 for a fairly priced stock.
The stock also looks attractive with regard to its trailing
12-month Return on Assets (ROA) of 15.5%, which is above the peer
group average of 4.0%. Again, its Return on Investment (ROI) of
16.6% is significantly above the peer group average of 4.2%.
Chart Confirms the Upward Trend
Units of Oiltanking Partners have been trading above the simple
moving average for 50 days or SMA (50) as well as for 200 days or
SMA (200) since late June. The continuous uptrend in stock prices,
as well as the ever-increasing gap between the unit price and that
of the moving average lines, indicates a greater bullish trend. The
year-to-date return for the stock is also solid at 36.1% compared
to an S&P 500 tally of 12.1%.
Formed in March 2011, Oiltanking Partners L.P. is engaged in the
terminaling, storage, and transportation of crude oil, refined
petroleum products and liquefied petroleum gas. Notably, its
terminal assets are located along the upper Gulf Coast of the U.S.
on the Houston Ship Channel and in Beaumont, Texas. This MLP's
facilities are directly linked to refineries and storage and
production facilities along the upper Gulf Coast area via pipelines
to end markets along the Gulf Coast and to the Cushing storage hub
OILTANKING PTNR (OILT): Free Stock Analysis
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