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Midstream Stocks: Analyzing the Latest Updates for Investors

PART:
1 2 3
Part 3
Midstream Stocks: Analyzing the Latest Updates for Investors PART 3 OF 3

Could These Midstream Stocks Be a Concern for You?

Midstream stocks with high short interest

On February 6, 2017, Phillips 66 Partners’ (PSXP) short interest-to-equity float is 9%—the highest among all of the midstream companies in the Alerian MLP ETF (AMLP). Its net debt-to-EBITDA ratio is 3x. In the past three months, Phillips 66 Partners stock rose 23.0%, while its short interest-to-equity float ratio rose 254.8%. In the past four quarters, Phillips 66 Partners’ revenue rose 121.7%, while its operating profit rose 67.8%. Its operating profit margin is 63.3%—compared to the industry median of 4%.

Could These Midstream Stocks Be a Concern for You?

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On January 13, 2017, Phillips 66 Partners’ short interest rose ~24% compared to the previous day. On January 12, 2017, Jefferies reduced its target price on the stock (PSXP) to $50.

EnLink Midstream

EnLink Midstream (ENLC) had a short interest-to-equity float ratio of 8.5%. In the past three months, EnLink Midstream units rose 27.9%, while its short interest-to-equity float ratio rose 10.1%. The company’s net debt-to-EBITDA (earnings before interest, tax, depreciation, and amortization) ratio was 4.5x. In the past four quarters, EnLink Midstream’s revenue fell 5.6%, while its adjusted operating profit was $62.9 million in 3Q16—compared to an adjusted operating profit of $71 million in 3Q15. Its operating profit margin is 5.7%—compared to the industry median of 4%.

Remember, high short interest in a stock can show the market’s expectation of a large fall. Expectations of large movements in a stock can cause its implied volatility to rise. EnLink Midstream was among the high implied volatility stocks that we discussed in Part 1 of this series.

Boardwalk Pipeline Partners

Boardwalk Pipeline Partners’ (BWP) short interest-to-equity float ratio is 8.1%. Its net debt-to-EBITDA ratio is 4.6x. In the past three months, the stock rose 15.4%. Its short interest-to-equity float ratio rose 126.9% during that time. In the past four quarters, Boardwalk Pipeline Partners’ revenue rose 2.5%, while its operating profit rose 16.1%. Its operating profit margin is 35.2%—compared to the industry median of 4%.

Dominion Midstream Partners

Dominion Midstream Partners’ (DM) short interest-to-equity float is 6.3%. Its stock rose 31.9% in the past three months, while its short interest-to-equity float ratio rose 50.4% during that time. Its net debt-to-EBITDA ratio is 1.1x. In the past four quarters, Dominion Midstream Partners’ revenue rose 114.6%, while its operating profit rose 51.5%. Its operating profit margin is 57.1%—compared to the industry median of 4%.

Energy Transfer Equity

Energy Transfer Equity’s (ETE) short interest-to-equity float is 6.3%. Its net debt-to-EBITDA ratio is 7.9x. In the past three months, the stock rose 34.3%, while its short interest-to-equity float rose 20.8%. In the past four quarters, Energy Transfer Equity’s revenue fell 8.8%, while its operating profit rose 8.9%. Its operating profit margin is 7.9%—compared to the industry median of 4%.

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