Pipeline operator Magellan Midstream Partners LP MMP is set to release first-quarter 2015 financial results before the opening bell on Tuesday, May 5.
During the last four quarters, the partnership had delivered a 15.88% positive earnings surprise. Let’s see how things are shaping up for this announcement.
Factors Likely to Influence this Quarter
Magellan Midstream owns an attractive portfolio of energy infrastructure assets that generate stable and recurring fee and tariff-based revenues. Moreover, lucrative acquisitions and organic growth projects have made major contributions toward Magellan’s development.
However, the oil price tumble over the first quarter may have affected its financials due to lower crude transportation revenues. With a lower incentive for the explorers to produce oil, the midstream energy players lost business related to storage and transportation of the commodity. This was reflected in the partnership’s expected first-quarter 2015 earnings of 80 cents per unit, lower than both the sequential and the year-ago adjusted figures.
Earnings Whispers?
Our proven model does not conclusively show that Magellan Midstream is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. Unfortunately, this is not the case here as elaborated below.
Zacks ESP: Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. This leads to an ESP of +1.08% for Magellan Midstream as the Most Accurate estimate stands at 94 cents while the Zacks Consensus Estimate is pegged lower at 93 cents.
Zacks Rank: Magellan Midstream has a Zacks Rank #4 (Sell). Despite the positive ESP, our surprise prediction is inconclusive. This is because we caution investors against Sell-rated (Zacks Rank of 4 or 5) stocks going into an earnings announcement, especially when it is seeing negative estimate revisions.
Other Stocks to Consider
Here are some other companies to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Alon USA Energy, Inc. ALJ has an Earnings ESP of +10.71% and holds a Zacks Rank #1 (Strong Buy). The company is expected to release earnings on May 7.
Callon Petroleum Company CPE has an Earnings ESP of +50.00% and holds a Zacks Rank #2 (Buy). The company is expected to release earnings on May 6.
TC PipeLines, LP TCP) has an Earnings ESP of +10.67% and holds a Zacks Rank #2. The company is expected to release earnings on May 7.
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