Analyzing the fall
So far, Calumet Specialty Products Partners (CLMT) has fallen 75% in 2016. In comparison, Northern Tier Energy (NTI) and Alon USA Partners (ALDW) have fallen 19% and 57% during the same period. The Alerian MLP ETF (AMLP) is up 5.6% in 2016. So, Calumet Specialty Products Partners has underperformed its peers in 2016.
In this series, we’ll analyze why it has underperformed. We’ll also analyze the company’s key financial and operational metrics in depth. Finally, we’ll look at its valuation compared to peers and discuss how attractive the stock is.
The above graph shows Calumet Specialty Products Partners’ stock price movement over the last five-year period. Currently, Calumet is trading close to its 50-day moving average and 222% below its 200-day moving average. Calumet has been trading below its 50-day and 200-day moving averages since November 2015.
Weaker refining economics
The performance of Calumet Specialty Products Partners’ fuel products business was impacted due to a significant decline in the Gulf Coast 2-1-1 crack spread and narrow crude oil price differentials. At the same time, the decline in crude oil prices impacted Calumet’s oilfield services activity.
Calumet had negative distributable cash flows in the last two quarters. It suspended distributions for 1Q16. The poor operational performance combined with high leverage and suspended distributions made investors concerned. They exited the stock which caused it to fall.
“During the first quarter 2016, continued stability in our core specialty products segment was more than offset by a material year-over-year decline in our fuel products segment gross profit, due mainly to weaker refining economics in the regional markets we serve, resulting in a consolidated net loss in the period,” stated Tim Go, Calumet’s CEO.