Tesoro Logistics L.P.
) raised its fourth quarter 2012 cash distribution to 47.25 cents
per unit ($1.89 per unit annualized), representing an increase of
approximately 4% sequentially and 30% year over year.
Tesoro Logistics' announced distribution boost is in sync with
its goal of delivering disciplined growth to unitholders. The
partnership boasts a consistent and improving financial policy
with high distribution coverage. Tesoro Logistics' new
distribution is payable on Feb 14 to unitholders of record as on
Feb 4, 2013.
San Antonio, Texas-based Tesoro Logistics is engaged in the
ownership, operation, development and acquisition of crude oil
and refined products logistics assets.
The partnership is set to benefit from its ties with asset-rich
), which retains a 56% stake in the partnership. A sound
fee-based relationship with Tesoro - the nation's second-largest
independent refiner - shields the pipeline operator from
competitive pressures in the midstream energy space, providing it
with stable cash flows and consistent top-line growth
Additionally, Tesoro Logistics continues to leverage its
relationship with Tesoro to make 'drop-down' transactions (or
asset buys from the partnership's sponsor company).
BOARDWALK PIPLN (BWP): Free Stock Analysis
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However, we believe that these positive aspects are well
reflected in the current unit price, leaving little room for
upward movement in the near term. We are also concerned about the
partnership's valuation. Units of Tesoro Logistics are going for
about 20.3 times forward estimates, a slight premium to the peer
group average of 20.0x.
Tesoro Logistics currently retains 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, there are certain other energy pipeline operators like
Broadwalk Pipeline 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).