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Hess Midstream Partners (HESM)
NYSE:HESM
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Hess Midstream Partners
(NYSE:HESM)
Rating:76Outperform
Price Target:
$42.00
▲( 8.16% Upside)
Positive Factors
Free Cash Flow Growth
Management has a clear view of free cash flow growth through the end of the decade, driven by EBITDA growth and declining capital expenditure.
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.
Operational Expenses
Slightly lowering the 2024 EBITDA estimate to reflect the impact of wildfires and higher operational expenses.
Hess Midstream Partners (HESM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$8.19B
Dividend Yield6.97%
Average Volume (3M)888.58K
Price to Earnings (P/E)14.9
Beta (1Y)0.64
Revenue Growth8.77%
EPS Growth15.22%
CountryUS
Employees176
SectorEnergy
Sector Strength40
IndustryOil & Gas Midstream
Share Statistics
EPS (TTM)0.65
Shares Outstanding116,778,610
10 Day Avg. Volume800,266
30 Day Avg. Volume888,575
Financial Highlights & Ratios
PEG Ratio1.67
Price to Book (P/B)0.00
Price to Sales (P/S)0.00
P/FCF Ratio15.29
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$42.50Price Target Upside9.45% Upside
Rating ConsensusHold
Number of Analyst Covering2
Hess Midstream Partners Business Overview & Revenue Model
Company DescriptionHess Midstream LP owns, develops, operates, and acquires midstream assets. The company operates through three segments: Gathering; Processing and Storage; and Terminaling and Export. The Gathering segment owns natural gas gathering and compression; crude oil gathering systems; and produced water gathering and disposal facilities. Its gathering systems consists of approximately 1,350 miles of high and low pressure natural gas and natural gas liquids gathering pipelines with capacity of approximately 450 million cubic feet per day; and crude oil gathering system comprises approximately 550 miles of crude oil gathering pipelines. The Processing and Storage segment comprises Tioga Gas Plant, a natural gas processing and fractionation plant located in Tioga, North Dakota; a 50% interest in the Little Missouri 4 gas processing plant located in south of the Missouri River in McKenzie County, North Dakota; and Mentor Storage Terminal, a propane storage cavern and rail, and truck loading and unloading facility located in Mentor, Minnesota. The Terminaling and Export segment owns Ramberg terminal facility; Tioga rail terminal; and crude oil rail cars, as well as Johnson's Corner Header System, a crude oil pipeline header system. Hess Midstream LP was founded in 2014 and is based in Houston, Texas.
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
Neutral
38.83
Price Trends
38.58
Negative
38.72
Negative
36.49
Positive
Market Momentum
0.20
Negative
51.28
Neutral
58.81
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HESM, the sentiment is Neutral. The current price of 38.83 is above the 20-day moving average (MA) of 37.67, above the 50-day MA of 38.58, and above the 200-day MA of 36.49, indicating a neutral trend. The MACD of 0.20 indicates Negative momentum. The RSI at 51.28 is Neutral, neither overbought nor oversold. The STOCH value of 58.81 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 |
|---|---|---|---|---|---|---|---|
79 Outperform | $10.62B | 28.59 | 8.29% | 2.89% | 10.83% | -10.47% | |
78 Outperform | $9.02B | 21.90 | 19.71% | 4.78% | 5.03% | 7.15% | |
77 Outperform | $14.93B | 11.70 | 39.79% | 11.18% | 11.48% | -5.67% | |
76 Outperform | $8.19B | 14.95 | 49.74% | 6.97% | 8.77% | 15.22% | |
57 Neutral | $7.10B | 47.88 | -8.21% | 6.69% | 23.42% | -61.22% | |
57 Neutral | $7.14B | 3.33 | -3.45% | 5.75% | 0.66% | -50.76% | |
48 Neutral | $512.11M | 5.86 | -28.13% | ― | -4.69% | -418.50% |
* Energy Sector Average
Performance Comparison
HESM
Hess Midstream Partners
38.09
5.12
15.53%
WES
Western Midstream Partners
38.49
3.15
8.91%
SMC
Summit Midstream
26.69
-5.33
-16.65%
AM
Antero Midstream
18.57
4.73
34.18%
KNTK
Kinetik
44.36
6.46
17.04%
DTM
DT Midstream
102.47
38.97
61.37%
Hess Midstream Partners Earnings Call Summary
Earnings Call Date:Apr 30, 2025
(Q1-2025)
| % Change Since: 2.78%|
Next Earnings Date:Jul 23, 2025
Earnings Call Sentiment Positive
The earnings call presented a generally positive outlook with Hess Midstream demonstrating resilience and strong performance despite weather challenges. While there were some negative impacts from weather on throughput and financial metrics, the reaffirmation of guidance, strong shareholder returns, and a robust financial position provided a largely optimistic view.Q1-2025 Updates
Positive Updates
Strong Operating and Financial Performance
Hess Midstream delivered strong operating and financial performance despite challenging weather. Throughput volumes were 424 million cubic feet per day for gas processing, 125,000 barrels of oil per day for crude terminaling, and 126,000 barrels of water per day for water gathering.
Bakken Production Growth
Hess Corporation reported first-quarter net production in the Bakken averaged 195,000 barrels of oil equivalent per day. They plan to run a four-rig drilling program in 2025 and expect Bakken net production to rise to 210,000-215,000 barrels of oil equivalent per day in the second quarter, up approximately 9% at the midpoint compared to the first quarter.
Reaffirmed Guidance
Hess Midstream reaffirmed its full-year 2025 financial and throughput guidance, projecting increased volumes and revenues in the second quarter despite higher seasonal maintenance activity.
Shareholder Returns
Since 2021, $1.95 billion has been returned to shareholders through accretive repurchases. Distribution per Class A share has increased by approximately 57% since 2021.
Strong Financial Position
Hess Midstream's leverage is approximately 3.1 times adjusted EBITDA, one of the lowest among peers, highlighting strong balance sheet strength.
Negative Updates
Weather Impact on Throughput Volumes
Throughput volumes were down compared to the fourth quarter due to severe winter weather in January and February, though partially offset by higher third-party oil volumes and a strong recovery in March.
Decrease in Net Income and Adjusted EBITDA
Net income for the first quarter of 2025 was $161 million, down from $172 million in the fourth quarter of 2024. Adjusted EBITDA decreased to $292 million from $298 million in the fourth quarter of 2024, mainly due to lower volumes and revenues from severe winter weather.
Company Guidance
During the first quarter of 2025, Hess Midstream demonstrated robust operational and financial performance despite challenging weather conditions, with throughput volumes averaging 424 million cubic feet per day for gas processing, 125,000 barrels of oil per day for crude terminaling, and 126,000 barrels of water per day for water gathering. The company reaffirmed its full-year financial and throughput guidance, expecting net income of $715-765 million and adjusted EBITDA of $1,235-1,285 million. Capital expenditures are projected to be approximately $300 million, with adjusted free cash flow anticipated between $735-785 million for the year. The company aims for sustainable cash flow growth and plans to increase distribution per Class A share by at least 5% annually through 2027. Additionally, Hess Midstream plans to generate over $1.25 billion in financial flexibility by 2027, facilitating multiple unit repurchases yearly. The first quarter adjusted EBITDA was $292 million, with a gross margin of approximately 80%, and net income was $161 million.Hess Midstream Partners Corporate Events
Stock Buyback
Hess Midstream Partners Announces $200 Million Repurchase Plan
Positive
May 7, 2025
On May 5, 2025, Hess Midstream LP announced a $200 million repurchase agreement, including $190 million of Class B units from its sponsors and $10 million of Class A shares from the public. The repurchase, approved by the board and conflicts committee, aims to enhance shareholder returns and maintain financial flexibility. The transaction is expected to close on May 9, 2025, with funding from the company’s existing revolving credit facility.
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.