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Hess Midstream Partners (HESM)
NYSE:HESM
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Hess Midstream Partners
(NYSE:HESM)
80Outperform
Positive Factors
Free Cash Flow
The target price has been increased to $44 to reflect an improving free cash flow profile beyond 2027.
Stock Buybacks
There is an expectation of nearly $2.5 billion in stock buybacks over the next five years, representing more than 25% of the company's market cap.
Negative Factors
EBITDA Guidance
Q4 EBITDA guidance was a tad below Consensus.
Hess Midstream Partners (HESM) vs. S&P 500 (SPY)
Market Cap
$9.20B
Dividend Yield6.71%
Average Volume (3M)1.42M
Price to Earnings (P/E)16.1
Beta (1Y)0.73
Revenue Growth10.89%
EPS Growth19.50%
CountryUS
Employees211
SectorEnergy
Sector Strength73
IndustryFossil Fuels
Share Statistics
EPS (TTM)2.49
Shares Outstanding116,736,900
10 Day Avg. Volume1,356,059
30 Day Avg. Volume1,418,432
Financial Highlights & Ratios
PEG Ratio0.83
Price to Book (P/B)N/A
Price to Sales (P/S)3.15
Price to Cash Flow (P/CF)4.60
P/FCF Ratio4.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$44.67Price Target Upside9.94% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
Hess Midstream Partners Business Overview & Revenue Model
Company DescriptionHess Midstream LP engages in the ownership, development and acquisition of midstream assets to provide services to third-party crude oil and natural gas producers. It operates through the following segments: Gathering, Processing and Storage, and Terminaling and Export. The Gathering segment consists of natural gas and crude oil gathering and compression. The Processing and Storage segment includes Tioga gas plant, equity investment in Little Missouri (LM4) joint venture, and mentor storage terminal. The Terminaling and Export segment comprises of ramberg terminal facility, Tioga rail terminal, crude oil rail cars, and Johnson's corner header system. The company was founded on January 17, 2014 and is headquartered in Houston, TX.
How the Company Makes MoneyHess Midstream Partners generates revenue through long-term, fee-based commercial agreements with its primary customer, Hess Corporation, and other third-party producers. The company derives income from fees charged for gathering, processing, storage, and terminaling services. By operating under long-term contracts with minimum volume commitments, HESM ensures a stable and predictable cash flow. Additionally, the company's strategic infrastructure investments and expansion projects enhance its capacity to handle increasing production volumes, thereby contributing to revenue growth. Key partnerships, primarily with Hess Corporation, and favorable market conditions in the Bakken region further support HESM's financial performance.
Hess Midstream Partners Financial Statement Overview
Summary
Hess Midstream Partners shows strong profitability with high margins and revenue growth. However, the high debt-to-equity ratio poses a risk, partially offset by strong cash flow management and effective use of shareholder funds.Income Statement
Hess Midstream Partners demonstrates strong profitability with consistently high gross and net profit margins over the years. The company has shown a positive revenue growth trend, with a notable increase from the previous year. EBIT and EBITDA margins are robust, reflecting efficient operational performance.88
Very Positive
Balance Sheet
The balance sheet indicates a high level of debt relative to equity, with a rising debt-to-equity ratio, which could pose a financial risk. However, the company maintains a reasonable equity ratio, showing a stable asset base. Return on equity remains strong, indicating effective use of shareholder funds.72
Positive
Cash Flow
Hess Midstream Partners has shown strong cash flow management with consistent free cash flow generation. The operating cash flow to net income ratio suggests healthy cash conversion. However, the free cash flow growth has seen some fluctuations, which could be an area of concern if it persists.83
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.50B | 1.35B | 1.28B | 1.20B | 1.09B | Gross Profit |
| 1.29B | 1.04B | 1.09B | 1.04B | 935.00M | EBIT |
| 919.00M | 816.90M | 615.20M | 727.20M | 429.90M | EBITDA |
| 1.14B | 1.02B | 972.50M | 903.40M | 733.40M | Net Income Common Stockholders |
| 223.10M | 118.60M | 620.60M | 617.80M | 484.80M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 4.30M | 5.40M | 3.10M | 2.20M | 2.60M | Total Assets |
| 4.15B | 3.79B | 3.59B | 3.49B | 3.37B | Total Debt |
| 3.47B | 3.21B | 2.89B | 2.56B | 1.91B | Net Debt |
| 3.47B | 3.21B | 2.88B | 2.56B | 1.91B | Total Liabilities |
| 3.69B | 3.43B | 3.06B | 2.73B | 2.05B | Stockholders Equity |
| 465.30M | 340.20M | 529.00M | 753.10M | 1.33B |
| Cash Flow | Free Cash Flow | |||
| 634.20M | 642.90M | 622.90M | 632.30M | 340.60M | Operating Cash Flow |
| 940.30M | 866.40M | 861.10M | 795.50M | 641.70M | Investing Cash Flow |
| -306.10M | -223.50M | -238.20M | -163.20M | -301.00M | Financing Cash Flow |
| -635.30M | -640.60M | -622.00M | -632.70M | -341.40M |
Hess Midstream Partners Technical Analysis
Positive
40.63
Price Trends
39.61
Positive
37.35
Positive
36.00
Positive
Market Momentum
0.21
Positive
52.96
Neutral
42.27
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HESM, the sentiment is Positive. The current price of 40.63 is above the 20-day moving average (MA) of 40.44, above the 50-day MA of 39.61, and above the 200-day MA of 36.00, indicating a bullish trend. The MACD of 0.21 indicates Positive momentum. The RSI at 52.96 is Neutral, neither overbought nor oversold. The STOCH value of 42.27 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HESM.
Hess Midstream Partners Peers Comparison
Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
85 Outperform | $53.53B | 12.52 | 31.78% | 6.90% | 4.30% | 10.45% | |
81 Outperform | $61.18B | 13.44 | 13.40% | 7.44% | 5.20% | 18.35% | |
80 Outperform | $9.20B | 16.09 | 51.23% | 6.71% | 10.89% | 19.50% | |
79 Outperform | $15.44B | 9.68 | 50.12% | 8.64% | 16.06% | 54.94% | |
78 Outperform | $13.67B | 26.43 | 7.56% | 6.86% | 3.28% | -47.59% | |
61 Neutral | $6.72B | 63.80 | 7.26% | 3.75% | -5.94% | -63.96% | |
57 Neutral | $8.36B | 5.49 | -6.03% | 7.47% | 0.03% | -68.64% |
* Energy Sector Average
Performance Comparison
HESM
Hess Midstream Partners
40.63
7.47
22.53%
ET
Energy Transfer
17.83
3.90
28.00%
PAA
Plains All American
19.32
3.74
24.01%
WES
Western Midstream Partners
40.54
9.54
30.77%
MPLX
MPLX
52.51
14.95
39.80%
ENLC
EnLink Midstream
14.12
1.54
12.24%
Hess Midstream Partners Earnings Call Summary
Earnings Call Date: Jan 29, 2025 | % Change Since: 1.09% | Next Earnings Date: Apr 23, 2025
Earnings Call Sentiment Positive
The earnings call presented a strong performance in 2024 with significant growth in gas processing and Bakken production. Financial results were solid, with a notable increase in EBITDA. However, challenges such as weather impacts and planned maintenance causing temporary volume reductions were acknowledged. The future outlook remains positive with strategic expansions and volume growth expected.Highlights
Strong Volume Growth in Gas Processing
Hess Midstream achieved a 14% year-over-year growth in gas processing throughputs for 2024. They also expect gas volumes to grow by more than 25% from 2024 through 2027.
Bakken Net Production Increase
Bakken net production averaged 204,000 barrels of oil equivalent per day for 2024, marking a 12% year-over-year increase.
Financial Performance and EBITDA Growth
Hess Midstream reported a full year adjusted EBITDA of $1.136 billion for 2024, representing a growth of approximately 12% from 2023.
Projected Volume Growth and New Projects
For full year 2025, Hess anticipates approximately 10% growth in volumes across oil and gas systems. They are beginning construction on the Capa Gas Plant with a capacity of 125 million cubic foot per day to support future growth.
Strategic Capital Allocation
Hess Midstream plans to maintain annual capital expenditures in the range of $250 million to $300 million through 2027, focusing on infrastructure expansions and maintenance.
Lowlights
Impact of Severe Winter Weather
In the first quarter of 2025, volumes are anticipated to be lower due to severe winter weather in January, affecting overall production.
Temporary Reduction in Gas Volumes Due to Maintenance
Planned regulatory inspections and maintenance at the Tioga Gas Plant in 2027 are expected to temporarily reduce gas volumes, with a full year impact of approximately 10 million cubic foot per day.
Company Guidance
During the Hess Midstream Fourth Quarter 2024 Conference Call, guidance was provided detailing strong operational and financial performance, as well as future projections. The company reported a full year adjusted EBITDA of $1.136 billion for 2024, with expectations to grow by 11% in 2025, ranging between $1.235 billion and $1.285 billion. Volume growth is anticipated to be approximately 10% across oil and gas systems in 2025, with gas processing volumes expected between 455 and 465 million cubic feet per day, crude terminaling volumes between 130,000 and 140,000 barrels per day, and water gathering volumes between 120,000 and 130,000 barrels per day. Hess Midstream plans to continue a four-rig drilling program in 2025 and expects net production to range from 195,000 to 200,000 barrels of oil equivalent per day in the first quarter, although volumes may be impacted by severe winter weather. Capital expenditures for 2025 are projected at $300 million, focusing on gathering system expansions and the construction of the Capa Gas Plant. The company also aims to extend its 5% annual distribution growth through 2027 and maintains a strong balance sheet with a leverage target below 3 times adjusted EBITDA.Hess Midstream Partners Corporate Events
Stock BuybackBusiness Operations and Strategy
Hess Midstream Partners Announces Strategic Unit Repurchase
Positive
Jan 15, 2025
On January 13, 2025, Hess Midstream LP announced a $100 million repurchase of Class B units from its sponsors, Hess Corporation and Global Infrastructure Partners, with the transaction being funded through existing credit facilities and completed on January 15, 2025. This move, considered accretive and unanimously approved by the company’s board, exemplifies Hess Midstream’s financial strategy of delivering shareholder returns while maintaining balance sheet strength, and is expected to increase distributable cash flow per Class A share, allowing for potential distribution growth above the annual target through 2026.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.