A month has gone by since the last earnings report for NuStar Energy L.P. . Shares have lost about 6.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is NuStar Energy L.P. due for a breakout? 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.
NuStar Energy Q4 Earnings Beat Estimates
The oil pipeline operator, NuStar Energy reported fourth-quarter adjusted earnings per unit of 34 cents, which was above the Zacks Consensus Estimate of 27 cents and improved significantly from the year-ago figure of 14 cents. This was primarily on account of all-time high Permian volumes, which averaged 584000 daily during the quarter.
NuStar Energy reported revenues of $430 million that also beat the consensus mark of $350 million and edged up 3.1% year over year.
NuStar recorded an operating income of $129.4 million, up from $101.7 million in the last year’s corresponding quarter.
Segmental Performance
Pipeline: Total quarterly throughput volumes were 2,021,977 barrels per day (Bbl/d), down 0.2% from the year-ago period. Throughput from Refined products and ammonia pipelines decreased to 611,011 Bbl/d from 624,209 Bbl/d.
However, a record-breaking quarter from its Permian Crude System led to a 12.8% rise in the segment’s revenues to $229.9 million and surpassed the consensus mark of $151 million. Moreover, the operating profit of $131.6 million increased 24.9% year over year due to higher sales and lower operating expenses.
Storage: Throughput volumes fell to 512,504 Bbl/d from 557,448 Bbl/d in the prior-year quarter but outperformed the Zacks Consensus Estimate of 449,231 Bbl/d.
Moreover, the segment reported an operating income of $22.2 million, down 17.8% from $27 million in the fourth quarter of 2021.
Fuels Marketing: Product sales decreased to $120.6 million from $121.9 million, recorded in the year-ago quarter. Notwithstanding a 6.9% downtick in the cost of goods, the segment recorded earnings of $ 11,842 million, a surge from $5,203 million in the year-ago period, primarily due to higher fuel margins.
Cash Flow, & Debt
Fourth-quarter 2022 distributable cash flow available to limited partners was $89 million (providing 2.01x distribution coverage), higher than $63 million (41.3X) in the year-ago period. In addition to a year-over-year increase, the coverage ratio, far in excess of 1, implies that the partnership is generating more than enough cash to cover its distribution.
As of Dec 31, the partnership’s long-term debt was $3.3 billion. NuStar continues to improve its debt-to-EBITDA ratio to 3.98 in the fourth quarter (compared with 3.99 a year ago).
Guidance
NuStar expects to spend between $130 and $150 million on capital projects this year ($60 million on the Permian system), while maintenance expenditure is pegged in the range of $25 million-$35 million.
Net income and adjusted EBITA guidance are expected in the range of $202-$240 million and $700-$760 million, respectively. Finally, the partnership wants to focus on the identified areas of cost control to lessen the effect of inflation and strengthen the free cash flow position.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -11.32% due to these changes.
VGM Scores
At this time, NuStar Energy L.P. has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise NuStar Energy L.P. has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Why Is NuStar Energy L.P. (NS) Down 6.4% Since Last Earnings Report?
A month has gone by since the last earnings report for NuStar Energy L.P. . Shares have lost about 6.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is NuStar Energy L.P. due for a breakout? 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.
NuStar Energy Q4 Earnings Beat Estimates
The oil pipeline operator, NuStar Energy reported fourth-quarter adjusted earnings per unit of 34 cents, which was above the Zacks Consensus Estimate of 27 cents and improved significantly from the year-ago figure of 14 cents. This was primarily on account of all-time high Permian volumes, which averaged 584000 daily during the quarter.
NuStar Energy reported revenues of $430 million that also beat the consensus mark of $350 million and edged up 3.1% year over year.
NuStar recorded an operating income of $129.4 million, up from $101.7 million in the last year’s corresponding quarter.
Segmental Performance
Pipeline: Total quarterly throughput volumes were 2,021,977 barrels per day (Bbl/d), down 0.2% from the year-ago period. Throughput from Refined products and ammonia pipelines decreased to 611,011 Bbl/d from 624,209 Bbl/d.
However, a record-breaking quarter from its Permian Crude System led to a 12.8% rise in the segment’s revenues to $229.9 million and surpassed the consensus mark of $151 million. Moreover, the operating profit of $131.6 million increased 24.9% year over year due to higher sales and lower operating expenses.
Storage: Throughput volumes fell to 512,504 Bbl/d from 557,448 Bbl/d in the prior-year quarter but outperformed the Zacks Consensus Estimate of 449,231 Bbl/d.
Moreover, the segment reported an operating income of $22.2 million, down 17.8% from $27 million in the fourth quarter of 2021.
Fuels Marketing: Product sales decreased to $120.6 million from $121.9 million, recorded in the year-ago quarter. Notwithstanding a 6.9% downtick in the cost of goods, the segment recorded earnings of $ 11,842 million, a surge from $5,203 million in the year-ago period, primarily due to higher fuel margins.
Cash Flow, & Debt
Fourth-quarter 2022 distributable cash flow available to limited partners was $89 million (providing 2.01x distribution coverage), higher than $63 million (41.3X) in the year-ago period. In addition to a year-over-year increase, the coverage ratio, far in excess of 1, implies that the partnership is generating more than enough cash to cover its distribution.
As of Dec 31, the partnership’s long-term debt was $3.3 billion. NuStar continues to improve its debt-to-EBITDA ratio to 3.98 in the fourth quarter (compared with 3.99 a year ago).
Guidance
NuStar expects to spend between $130 and $150 million on capital projects this year ($60 million on the Permian system), while maintenance expenditure is pegged in the range of $25 million-$35 million.
Net income and adjusted EBITA guidance are expected in the range of $202-$240 million and $700-$760 million, respectively. Finally, the partnership wants to focus on the identified areas of cost control to lessen the effect of inflation and strengthen the free cash flow position.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -11.32% due to these changes.
VGM Scores
At this time, NuStar Energy L.P. has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise NuStar Energy L.P. has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.