uploads/2017/01/Midstream-return-2-1.png

Midstream Stocks’ Implied Volatility: The Role of Returns

By

Updated

Midstream stocks with high implied volatilities

EnLink Midstream (ENLC) rose 63.8% in the past year ending on January 23, 2017. It has the highest implied volatility of all the midstream companies that make up the Alerian MLP ETF (AMLP). In the past five days, EnLink Midstream fell 4.2%.

The above table shows the one-year and last-five-day returns of the stocks we identified in the previous part of this series as having high and low implied volatilities. It shows how high volatility stocks have generally moved more sharply than low volatility stocks.

While NGL Energy Partners rose the most among the midstream stocks with high implied volatility in the past five days, EnLink Midstream (ENLC) lost the most.

Article continues below advertisement

Rice Midstream Partners LP (RMP) rose the most in the past year among the list of high implied volatility midstream stocks. In the last four quarters, Rice Midstream Partners’ revenue rose 36.5%, while its operating income rose 59.5%. Rice Midstream Partners’ operating profit margin is 58.2%, as compared to the industry median of 3.9%.

Western Refining Logistics (WNRL) rose the least in the past year among the high implied volatility midstream stocks. In the past four quarters, Western Refining Logistics’ revenue fell 16.4%, and its operating profit fell 27.7%. Western Refining Logistics’ operating profit margin is 3.7%, as compared to the industry median of 3.9%.

Returns of midstream stocks with low implied volatilities

Among the low volatility midstream stocks, Spectra Energy Partners (SEP) rose the least in the past year among our low implied volatility midstream stocks. In the past four quarters, Spectra Energy Partners’ revenue fell 0.9%, while its operating profit fell 12.7%. Its operating profit margin is 49.1%, as compared to the industry median of 3.9%.

In the next part of this series, we’ll look at the midstream stocks with the highest short-interest-to-equity-float ratios.

Advertisement

More From Market Realist