X
<

Should you buy pipeline player Phillips 66 Partners?

PART:
1 2 3 4 5 6 7 8 9 10 11 12
Part 11
Should you buy pipeline player Phillips 66 Partners? PART 11 OF 12

Comparing Phillips 66 Partners to its rivals

How Phillips 66 Partners ranks

Phillips 66 Partners’ (PSXP) peers include DCP Midstream Partners (DPM), NuStar Energy (NS), and EQT Midstream Partners (EQM).

All of these companies are components of the Alerian MLP ETF (AMLP).

Comparing Phillips 66 Partners to its rivals

Interested in PSXP? Don't miss the next report.

Receive e-mail alerts for new research on PSXP

Success! You are now receiving e-mail alerts for new research. A temporary password for your new Market Realist account has been sent to your e-mail address.

Success! has been added to your Ticker Alerts.

Success! has been added to your Ticker Alerts. Subscriptions can be managed in your user profile.

As the above chart shows, EQT Midstream is the largest company in terms of market capitalization, while NuStar has the largest enterprise value, or EV.

Enterprise value ratio

EV is the approximate summation of a company’s equity value and net debt.

Of its peers, NuStar has the lowest EV/EBITDA (earnings before interest, taxes, depreciation, and amortization) multiple, 13.4x. PSXP has the highest EV/EBITDA multiple in the group, 37.8x.

Forward EV/EBITDA is a useful metric for gauging relative valuation. A lower forward multiple usually indicates expectations of EBITDA growth for the period.

Analysts’ consensus forward EV/EBITDA doesn’t change as significantly for NuStar as it does for PSXP or the others. This means analysts expect little increase in NuStar’s EBITDA.

PSXP shows the steepest fall in its EV/EBITDA, indicating strong expectations that its EBITDA will grow more than that of its rivals.

Distribution yield

Distribution yield is equal to the cash distribution per unit divided by the unit price. The ratio is annualized and expressed as a percentage. All else being equal, as distributions grow, the value of the underlying unit also increases.

PSXP has a 1.32% distribution yield, the lowest in the group. DCP Midstream’s distribution yield is 7.86%, the highest. NuStar closely follows with a yield of 7.8%.

PSXP’s yield strong growth prospects are reflected in its current premium valuation.

X

Please select a profession that best describes you: