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Antero Midstream Updates Guidance: Major Points for Investors

Antero Midstream Corporation AM recently provided a company presentation, highlighting updates regarding its 2020 guidance. The estimation for capital expenditure has been lowered from the prior view. The same for profits have also been downwardly revised.

Let’s delve deeper.

Capex

As the coronavirus pandemic has shaken the energy industry, demand has taken a massive hit. Hence, several companies opted for capital budget reduction in order to save cash and navigate through the current market volatility. Antero Midstream, one of these companies, decided to reduce capital expenditure for the current year to the range of $200-$215 million, reflecting a 34% drop from the initial projection of $300-$325 million. Moreover, this indicates a decline from the 2019 figure of $646 million.

Cash Flow

The company now expects 2020 free cash flow in the band of $445-$475 million, reflecting a 15% rise from the initial guidance of $375-$425 million. Higher cash can enable it to reduce debt burden and strengthen the balance sheet. However, the company expects distributable cash flow for 2020 in the range of $590-$620 million, down 7% from the original guidance of $625-$675 million.

Profits

Antero Midstream expects 2020 adjusted EBITDA in the band of $800-$830 million, down 7% from the initial expectation of $850-$900 million. The company reported adjusted EBITDA of $829.6 million in 2019.

The Zacks Consensus Estimate for loss per share for the current year is pegged at 31 cents. The year-ago earnings were recorded at 56 cents per share. It has witnessed one upward and downward estimate revision each in the past 30 days.

Notably, the Zacks Consensus Estimate for 2020 revenues of $883.4 million suggests more than 12% decrease from the prior year.

Project Updates

The company has already brought several projects online this year, including the Morris HP gathering pipeline and Morris compressor station in the Marcellus with 240 million cubic feet of natural gas per day (MMcf/d) capacity. Moreover, it anticipates the Smithburg gathering pipeline and Morris Ph. 2 compressor station in the Marcellus with 120MMcf/d capacity to come online in the third quarter.

Price Performance

The company’s shares have popped 57.2% in the past three months against 9% fall of the industry it belongs to.

Zacks Rank & Stocks to Consider

Antero Midstream currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space include Altus Midstream Company ALTM, Concho Resources Inc. CXO and Royal Dutch Shell plc RDS.A, each holding a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Altus Midstream’s bottom line for current quarter is expected to surge 138.6% year over year.

Concho Resources’ bottom line for 2020 is expected to rise 34.4% year over year.

Shell’s bottom line for 2021 is expected to rise 112.5% year over year.

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Antero Midstream Corporation (AM): Free Stock Analysis Report
 
Concho Resources Inc. (CXO): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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