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DCP Midstream’s 1Q16 Earnings Estimates: Key Investor Takeaways

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DCP Midstream’s 1Q16 earnings estimates

DCP Midstream Partners (DPM) is expected to release its 1Q16 earnings on May 4, 2016. In this series, we’ll talk about DPM’s first-quarter estimates, each of its segments’ contribution to earnings, market performance, and analyst recommendations. Let’s start with analysts’ earnings estimates.

Wall Street analysts’ 1Q16 consensus EBITDA (earnings before interest, tax, depreciation, and amortization) estimate for DPM is $163.6 million. DPM’s 1Q16 estimate is 0.1% greater than the 1Q15 adjusted EBITDA.

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DCP Midstream’s 1Q16 EBITDA drivers

DCP Midstream’s flat 1Q16 earnings could be driven by the following factors:

  • DPM’s Natural Gas Services segment is exposed to natural gas prices (UNG) through the natural gas processing business
  • the decline in Eagle Ford natural gas production might impact DPM’s gathering and processing throughput volumes
  • lower propane sales volume due to a warmer winter in 1Q16

These negatives might be offset by expansion projects placed into service and cost cutting measures underway. Western Gas Partners (WES), Southcross Energy Partners (SXE), and Kinder Morgan (KMI) are other midstream companies that are negatively impacted by the decline in Eagle Ford production.

DCP Midstream’s adjusted EBITDA versus consensus estimates

While the 4Q15 EBITDA estimate for DPM was $166.4 million, the adjusted EBITDA was $176 million, a beat of 5.6%. We’ll have to wait for the 1Q16 earnings release to see whether DPM beats or misses its 1Q16 EBITDA estimates. We’ll cover this in our post-earnings release series for DPM. DPM forms 1.8% of the Multi-Asset Diversified Income ETF (MDIV).

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