El Paso Pipeline Partners
(
EPB
) announced fourth-quarter 2012 operating earnings of 63 cents
per unit, surpassing the Zacks Consensus Estimate by 8 cents. The
results of the partnership were also higher than the year-ago
earnings of 51 cents per unit.
El Paso Pipeline Partners 2012 operating earnings were $2.19 per
unit compared with $1.96 per unit reported in 2011. With this the
partnership surpassed the Zacks Consensus Estimate of $2.09 per
unit.
The upside was driven by strong performance from its pipeline and
storage assets, positive impact from cost savings and increasing
use of natural gas by power plants.
Total Revenue
Total revenues at the end of the fourth quarter were $390 million
versus $388 million in the year-ago period, which reflects growth
of 0.5%.
Quarterly revenue was lower than the Zacks Consensus Estimate of
$406 million.
The partnership generated total revenue of $1,515 million in
2012, marginally down from $1,531 million reported in 2011.
Highlights of the Release
The partnership was able to lower its operating and maintenance
costs both for the quarter and the full year. This benefited the
partnership's operating income.
Operating income in the fourth quarter increased 17.5% year over
year to $248 million. 2012 operating income inched up 1.6% to
$863 million.
The partnership also hiked its quarterly cash distribution rate
to 61 cents per unit up 5% sequentially from 58 cents and higher
22% year over year from 50 cents.
2013 Forecast
El Paso Pipeline Partners expects to increase its annual cash
distribution per unit by 13% year over year to $2.55. The
partnership also expects to generate earnings before DD&A of
$1.22 billion, up an estimated $40 million from the 2012
level.
Other Stocks to Consider
Besides El Paso Pipeline Partners a few other pipeline operators
are also performing well and have a favorable Zacks Rank.
Increasing production and use of natural gas in power plants
benefited the pipeline operators. The operators worth considering
are Zacks Ranked #1
Boardwalk Pipeline Partners LP
(
BWP
) and Zacks Ranked #2
Sunoco Logistics Partners L.P.
(
SXL
) among others.
Our view
The partnership has registered back-to-back earnings surprises
with an average beat of 12.3%. The long-term expected earnings
growth rate for this stock is 5.1%.
Despite a handful of positives, El Paso Pipeline Partners will
have to deal with rate case proceedings and the timely completion
of Elba Express Pipeline. The partnership currently retains a
short-term Zacks Rank #3 (Hold).
Based in Houston, Texas, El Paso Pipeline Partners was founded in
2007. The partnership is involved in storage and transportation
of natural gas across the United States.
BOARDWALK PIPLN (BWP): Free Stock Analysis
Report
EL PASO PIPELIN (EPB): Free Stock Analysis
Report
SUNOCO LOGISTIC (SXL): Free Stock Analysis
Report
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