AM’s enterprise value
Antero Midstream Partners (AM) is the third-largest company in its peer group by enterprise value (or EV), preceded by EQT Midstream Partners (EQM) and Western Gas Partners (WES). Currently, AM has an enterprise value of $4.4 billion.
Enterprise value—approximately equal to market equity value plus net debt—is an important metric for the valuation of a business. Equity value alone just gives a company’s value to equity holders. Together, EQM and WES account for 1.4% of the First Trust ISE-Revere Natural Gas ETF (FCG).
AM’s EV-to-EBITDA multiple
Antero Midstream’s forward EV-to-EBITDA (earnings before interest, tax, depreciation, and amortization) multiple of 13.7x is the highest among its selected peers. At the same time, Rice Midstream Partners has the lowest forward EV-to-EBITDA at 9.4x.
We discussed the possible reasons behind Antero Midstream’s strong valuation in the previous article. AM forms 0.26% of the Global X MLP & Energy Infrastructure ETF (MLPX).
AM’ leverage position
Antero Midstream’s leverage of 2.8x is higher than the peer average of 2.4x. However, a leverage multiple of 2.8x is considered very good in the current energy price environment. MLPs usually target a ratio below 4x.
AM’s distribution yield
Antero Midstream’s distribution yield of 4.8% is the lowest among its selected peers after EQT Midstream Partners. Cone Midstream Partners (CNNX) has the highest distribution yield of 8.4%.
A low distribution yield indicates low riskiness and a low cost of equity capital. Recently, Antero Resources (AR), AM’s sponsor, announced a secondary offering of Antero Midstream’s 8 million common units. According to the related press release, “Antero Midstream will not receive any proceeds from the sale of common units in the offering.”