What Does EQT Midstream Partners’ Current Valuation Indicate?



EQT Midstream’s price-to-distributable cash flows

EQT Midstream Partners (EQM) is trading at a significant discount to its historical levels, driven by the recent weakness. It was trading at a price-to-distributable cash flow of 10.7x on June 19, 2017. That’s below the historical ten-quarter average of 15.2x. EQM’s peers Antero Midstream Partners (AM) and Rice Midstream Partners (RMP) have experienced a similar fall in their valuations since the rout in energy prices.

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EQT Midstream’s EV-to-adjusted-EBITDA multiple

EQM’s forward EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple was 9.13x as of June 19, 2017. That’s below the peer median forward EV-to-EBITDA multiple of 9.56x.

EQM’s current valuation looks attractive, considering its significant expansion opportunities. These opportunities include the drop-down opportunities from the merger of EQT Corporation (EQT) and Rice Energy (RICE), strong fee-based cash flows, industry-leading distribution growth guidance, impressive distribution coverage, low leverage, and a strong presence in the prolific Marcellus and Utica shale plays. The partnership is targeting a 20.0% distribution growth in 2017.

In the next part, we’ll look at EQT Midstream’s technical indicators.


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