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How Mid-Cap and Large-Cap MLPs Performed in 2Q17

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Part 4
How Mid-Cap and Large-Cap MLPs Performed in 2Q17 PART 4 OF 10

Enable Midstream Posted Strong 2Q17 Earnings Growth

ENBL beat EBITDA estimate by 8.3%

Enable Midstream Partners (ENBL) reported 2Q17 earnings on August 1. It posted strong earnings growth in the recent quarter. ENBL’s EBITDA rose to $215 million in 2Q17 compared to $196 million in 2Q16, a YoY (year-over-year) increase of 9.7%. Moreover, the partnership beat its 2Q17 EBITDA estimate by 8.3%. ENBL’s 2Q17 EBITDA growth was driven by higher natural gas gathering and processing volumes. The partnership benefitted from higher gross margins due to YoY increases in average natural gas and crude oil prices.

Enable Midstream Posted Strong 2Q17 Earnings Growth

ENBL’s distributable cash flow rose 8.3% YoY, driving its distribution coverage higher to 1.13x. Plus, the partnership announced a contract renewal with a key electric utility customer during the 2Q17 earnings report.

ENBL declared flat 2Q17 distribution

The partnership declared a flat distribution of $0.32 per unit for the recent quarter. Based on recent the distribution, ENBL is trading at a distribution yield of 8.5%. John Laws, ENBL’s CFO, said, “While we’ve not provided specific distribution guidance for 2017 or beyond, I would like to reiterate that our distribution policy is influenced by our commitment to investment credit grade metrics as well as our long-term financial metrics targeting a total debt to adjusted EBITDA ratio of approximately four times and a distribution covered ratio of 1.05 to 1.15 times in a stabilized environment.”

Analyst recommendations

46.2% of analysts rate Enable Midstream Partners a “buy,” 38.4% rate it a “hold,” and the remaining 18.2% rate it a “sell” as of August 8, 2017. ENBL’s average target price of $17.7 implies a 17.9% return from its current price of $15.0.

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