Boardwalk Pipeline Partners’ Earnings Recover in 3Q17
Earnings in 3Q17
Boardwalk Pipeline Partners (BWP), mainly involved in natural gas and NGL (natural gas liquid) transportation, storage, and marketing, saw a recovery in its 3Q17 earnings after a dismal 2Q17. BWP’s EBITDA (earnings before interest, tax, depreciation, and amortization) rose 8.8% to $191.7 million in 3Q17 from $176.2 million in 3Q16. Moreover, the partnership met its 3Q17 EBITDA estimate.
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BWP’s 3Q17 EBITDA growth was mainly driven by expansion projects placed into service. This growth was partially offset by lower parking and lending revenue and a fall resulting from the sale of its interest in the Flag City processing plant. The partnership’s distributable cash flow grew to $112 million in 3Q17 from $90 million in 3Q16, a YoY (year-over-year) rise of 24.4%, driving the partnership’s distribution coverage higher to 4.4x. However, the partnership will likely keep its distribution flat at $0.10 per unit, considering its high leverage and significant capital expansion plans.
RBC Capital Markets last downgraded BWP from “outperform” to “sector perform,” which is equivalent to “hold,” in August 2017—the only rating update for BWP in 2017. Of the analysts covering BWP, 50.0% had recommended “buy,” 40.0% had recommended “hold,” and the remaining 10.0% had recommended “sell” as of November 8. BWP’s average target price of $19.40 implies a 33.0% potential upside based on its current price.