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Why Is Dominion Midstream Underperforming the MLP Sector in 2016?

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Dec. 4 2020, Updated 10:53 a.m. ET

Year-to-date returns

Dominion Midstream Partners (DM) has generated total returns, including dividends, of -15% so far in 2016. In comparison, American Midstream Partners (AMID) and Cone Midstream Partners (CNNX) have generated total returns of 106% and 107%, respectively, during the same timeframe.

The Energy Select Sector SPDR ETF (XLE) and the Alerian MLP ETF (AMLP) have generated 17% and 12% returns, respectively, during the same timeframe.

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A recovery in natural gas prices in 2016, uncertainty in global LNG demand, and increased competition from global LNG players likely contributed to the underperformance of Dominion Midstream Partners and Cheniere Energy (LNG) in 2016. The above graph compares DM’s total returns with those of AMID, CNNX, and AMLP.

Moving averages

Dominion Midstream Partners (DM) currently trades 4% below its 50-day moving average and 14% below its 200-day moving average. DM fell below its 50-day and 200-day moving averages in May 2016 and has seen a declining trend since then.

Analyst recommendations

Analysts’ median target price for Dominion Midstream Partners for the next year is $35.63. The low and high target prices for the stock over the same period are $30 and $45, respectively. The median target price implies a 38% price return over the next year from DM’s current price of $25.80.

About 64% of the analysts surveyed have rated Dominion Midstream Partners (DM) a “buy,” 27% have rated it a “hold,” and 9% of the surveyed analysts have rated DM a “sell.” As for other energy MLPs, 55% of analysts rated CNNX a “hold”, 67% rated Southcross Energy (SXE) a “sell,” and 50% of analysts rated AMID a “buy.”

Next, let’s take a look at Dominion Midstream Partners’s operating revenue growth.

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