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Magellan Midstream Has Fallen 11% Year-to-Date—What’s Ahead?

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MMP’s year-to-date performance

Magellan Midstream Partners (MMP) stock has fallen nearly 11% so far in 2018. It’s underperformed its peers Enterprise Products Partners (EPD) and Plains All American Pipeline (PAA) during this period.

While Enterprise Products has fallen nearly 4%, Plains All American has risen nearly 15% YTD (year-to-date). The Alerian MLP ETF (AMLP), a benchmark ETF for energy MLPs, has fallen nearly 12% YTD.

Crude oil prices have risen nearly 11% in 2018. Learn more about the factors driving crude oil prices in Trade Wars and Iran Are Impacting Crude Oil Prices.

Over the last 12 months, Magellan Midstream Partners has fallen nearly 18%. In comparison, Enterprise Products Partners, Plains All American Pipeline, and the Alerian MLP ETF have fallen nearly 8%, 21%, and 23%, respectively.

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MMP’s moving averages

Magellan Midstream Partners is trading close to its 50-day moving average. MMP’s 50-day moving average fell below its 200-day average on March 15, 2018—a bearish indicator. The stock is trading 7% below its 200-day moving average. MMP’s 50-day moving average may act as a resistance for its stock in the near term.

MLP structure

MLPs have largely been in the red in 2018. The FERC’s (Federal Energy Regulatory Commission) policy revision to disallow income taxes to be included in cost-of-service rates for interstate pipelines has likely impacted MLPs, which have already been beaten down. Magellan Midstream Partners has announced that it doesn’t expect to see a material impact from the policy change.

Moreover, Magellan Midstream believes that, at the moment, an MLP is the best corporate structure for it. The company, however, continually evaluates the benefits and disadvantages of both MLP and C corporation structures.

In this series

In this series, we’ll take a look at Magellan Midstream’s recent and expected performances in 2018 and beyond. We’ll also analyze MMP’s key metrics, including distributable cash flow, capital spending, and segment-by-segment operating income.

Let’s begin with an analysis of MMP’s largest segment’s key metrics as well as its recent and expected performances.

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