Earnings Roundup: The Week's 5 Best Midstream Stocks

This week featured a cascade of earnings from the energy sector's midstream companies. Today we're looking at the top five performers based on beating analyst estimates on earnings per share.

Company

Estimate

Actual

Beat

ONEOK (NYSE: OKE  )

$0.26

$0.34

30.8%

NuStar Energy (NYSE: NS  )

$0.22

$0.28

27.3%

Western Gas Equity Partners (NYSE: WGP  )

$0.13

$0.16

23.1%

Magellan Midstream Partners (NYSE: MMP  )

$0.54

$0.65

20.4%

ONEOK Partners (NYSE: OKS  )

$0.55

$0.62

12.7%

Sources: Yahoo! Finance, company filings.

ONEOK and ONEOK Partners both reported stronger-than-expected earnings. This general partner/master limited partnership tag team has been hurt in prior quarters because of its exposure to natural gas liquids prices. Despite the continued low-price environment, OKS was able to mitigate the losses as volumes ramped up across its system.

NuStar Energy beat earnings expectations, but revenue was half of what it was at this time last year, which clouded results. Volumes were up on all segments, but revenue was down on its terminals business, greatly affecting overall revenue. The stock dropped 4.5% on the week.

Magellan Midstream Partners found itself in the same boat as NuStar, beating earnings expectations and missing on revenue. In Magellan's case, however, revenue fell less than 2% year over year, and distributable cash flow was up 26%. The partnership also increased its quarterly distribution, which NuStar hasn't done in a year.

As a general partner, Western Gas Equity Partners has a great quarter when Western Gas Partners has a great quarter, which is exactly what happened. As a result, net income attributable to WGP was almost double what it was last year, coming in at $34.7 million. Western Gas Equity Partners increased its second-quarter distribution by 10%, year over year.

Bottom line
Naturally, outperforming analyst targets doesn't guarantee success, and in fact for some of the companies I've mentioned here, it merely masks a deeper issue. For others, however, it was indeed an indication of a job well done.

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