Why Is MPLX LP (MPLX) Up 15.1% Since Last Earnings Report?
It has been about a month since the last earnings report for MPLX LP (MPLX). Shares have added about 15.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is MPLX LP due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
MPLX Beats Q1 Earnings Estimates On Pipeline Throughput
MPLX LP reported first-quarter adjusted earnings of 61 cents per unit, beating the Zacks Consensus Estimate of 56 cents. The bottom line was on par with the year-ago quarter figure.
Revenues of $992 million declined from first-quarter 2019 sales of $2,235 million. Also, the top line missed the Zacks Consensus Estimate of $2,249 million.
The better-than-expected earnings was backed by higher pipeline and gathering throughput. This was, however, partially offset by lower natural gas processed volumes from Rockies operations.
Segmental Highlights
MPLX’s operating income from the Logistics and Storage segment increased from $687 million a year ago to $723 million. The year-over-year upside is attributable to higher average tariff rates from product pipelines and increased pipeline throughput.
Operating loss from the Gathering and Processing segment was recorded at $3,209 million against $225 million profit in the prior-year quarter. The underperformance can be attributed to a decline in processed volumes of natural gas from Rockies operations. The negative was partially offset by the surge in natural gas gathering throughput from Marcellus and Bakken operations.
Costs and Expenses
Total costs and expenses in the quarter were recorded at $3,478 million, significantly up from the year-ago level of $1,323 million. Although total costs rose, expenses related to operations declined to $538 million from $570 million.
Cash Flow
Distributable cash flow available to limited partners in first-quarter 2020 was $1,078 million, providing 1.44X distribution coverage, up from $757 million in the year-ago quarter. Distribution per unit was 68.75 cents in the reported quarter, representing an increase of 4.6% from the year-ago quarter.
Net cash flow from operating activities in the quarter under review increased to $1,009 million from $853 million recorded in the corresponding period of 2019.
Balance Sheet
As of Mar 31, 2020, the partnership’s cash and cash equivalents were $57 million. Its total long-term debt amounted to $20.5 billion, while debt-to-capitalization ratio was 0.61.
Outlook
The partnership lowered its 2020 capital budget by more than $700 million to $1 billion. Notably, the capital budget for growth projects in 2020 was slashed by more than $600 million to roughly $900 million. The partnership has decided to reduce operating expenses in the year by roughly $200 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month. The consensus estimate has shifted -34.28% due to these changes.
VGM Scores
Currently, MPLX LP has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
MPLX LP has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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