EnLink Midstream Partners’ Strong Earnings Growth in 1Q18


May. 14 2018, Published 2:34 p.m. ET

ENLK posted a 15.4% YoY increase

EnLink Midstream Partners’ (ENLK) adjusted EBITDA[1. Earnings before interest, tax, depreciation, and amortization] rose to $243.7 million in 1Q18 from $211.2 million in 1Q17, a YoY (year-over-year) increase of 15.4%. Moreover, the partnership beat its 1Q18 EBITDA estimate by 4.0%. The YoY growth in the partnership’s 1Q18 EBITDA was mainly driven by strong throughput volume growth at its Texas, Oklahoma, and Crude & Condensate segments.

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1Q18 distribution

The partnership declared flat distribution of $0.318 per unit for the quarter. On the other hand, ENLK’s GP (general partner), EnLink Midstream LLC (ENLC), announced a distribution increase for the second consecutive quarter after several quarters of flat distribution. It declared a distribution of $0.263 per unit for 1Q18, which represents a 1.5% increase from the previous quarter and a 3.1% increase from 1Q17. Based on recent distribution, ENLK and ENLC are trading at distribution yields of 9.6% and 6.4%, respectively.

Reaffirms 2018 guidance

EnLink Midstream Partners reaffirmed its 2018 guidance during its 1Q18 earnings release. It expects 2018 adjusted EBITDA to lie between $950 million and $1.02 billion. At the mid-point, this range represents a 12.9% YoY increase.

Analysts’ recommendations

J.P. Morgan recently upgraded EnLink Midstream Partners to “overweight,” which is equivalent to “buy,” from “neutral,” which is equivalent to “hold.” Now, 58.8% of analysts rate ENLK a “hold,” 35.3% rate it a “buy,” and the remaining 5.38 rate it a “sell.” 68.8% of analysts rate EnLink Midstream LLC a “hold.” ENLK’s and ENLC’s average target prices of $16.9 and $17.4 imply 3.4% and 6.7% upside potential from the current price levels, respectively.


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