Antero Midstream’s enterprise value
The enterprise value—approximately equal to market equity value plus the net debt (debt less cash)—is an important metric for the valuation of the entire business. Equity value alone just gives the value to equity holders.
Antero Midstream’s EV-to-EBITDA multiple
AM’s forward EV-to-EBITDA[1. earnings before interest, taxes, depreciation, and amortization] multiple of 17.4x is the highest among the selected peers. This could reflect AM’s strong distribution growth guidance, low leverage, impressive distribution coverage, and strong throughput guidance. Crestwood Equity Partners (CEQP) has the lowest forward EV-to-EBITDA of 8.8x.
Antero Midstream’s profitability margins
Excluding Crestwood Equity Partners (CEQP), which has exposure to the Eagle Ford Shale and commodity prices, Antero Midstream has the lowest profitability margins among the selected peer group. This might be due to AM’s involvement in the low-margin water handling and treatment business.
However, AM’s margins are higher compared to most other MLPs. EQT Midstream has the highest gross margin of 72.0% in the peer group
Antero Midstream’s distribution yield
Antero Midstream Partners’s distribution yield of 4.4% is the lowest among the selected peers. This could reflect Antero Midstream’s higher distribution guidance compared to its peers. A low distribution yield likely indicates low riskiness and the low cost of equity capital.
In the next part, we’ll analyze Antero Midstream’s exposure to commodity prices.