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DTM

DT Midstream NYSE:DTM Stock Report

Last Price

US$51.89

Market Cap

US$5.0b

7D

1.2%

1Y

10.1%

Updated

30 Sep, 2022

Data

Company Financials +
DTM fundamental analysis
Snowflake Score
Valuation4/6
Future Growth1/6
Past Performance2/6
Financial Health3/6
Dividends4/6

DTM Stock Overview

DT Midstream, Inc. provides integrated natural gas services in the United States.

DT Midstream, Inc. Competitors

Price History & Performance

Summary of all time highs, changes and price drops for DT Midstream
Historical stock prices
Current Share PriceUS$51.89
52 Week HighUS$59.36
52 Week LowUS$44.70
Beta0
1 Month Change-6.01%
3 Month Change4.34%
1 Year Change10.08%
3 Year Changen/a
5 Year Changen/a
Change since IPO24.02%

Recent News & Updates

Sep 29

DT Midstream to raise ownership stake in Millennium Pipeline

DT Midstream (NYSE:DTM) has agreed to acquire an additional 26.25% stake in Millennium Pipeline for ~$552M in cash. Under the terms of the agreement, DTM will acquire National Grid’s full ownership interests in Millennium Pipeline. The purchase will bring DT Midstream's total ownership in the natural gas pipeline to 52.50%. DTM is a founding developer and existing owner in the 263-mile interstate pipeline that runs from Steuben County, New York to Rockland County, New York. The transaction, funded with cash on hand and available capacity under the company’s revolving credit facility, will be immediately accretive. The company expects an incremental adj. EBITDA contribution of $12M to $14M in 2022 from the deal. It has been approved by DT Midstream's Board of Directors and is expected to close in the fourth quarter of 2022.

Aug 25

DT Midstream: Stability, Growth, And LNG Potential

Summary DT Midstream is a natural gas-focused midstream company operating in the Haynesville Shale and Appalachia. The company has a long history of cash flow growth and is very well positioned to continue to do so. The firm should be able to grow its adjusted EBITDA at a 5% to 7% rate over the 2021-2023 period. The company's assets are very close to planned LNG plants, positioning it well to take advantage of this enormous opportunity. The dividend yield is low but well-covered, and the company is likely to increase its dividend over the coming years. DT Midstream, Inc. (DTM) is a somewhat little-followed natural gas-focused midstream company that operates primarily in the Appalachian region, although the company also has some operations in the Haynesville Shale. This is something that sets the company apart from many of its peers, as it is one of the only midstream companies that is serving the Appalachian market. It is also something that could give the company an advantage over many of its peers since the Appalachian region is very well positioned to see enormous production growth in the coming years and DT Midstream could benefit by taking these incremental resources to the market where they can be sold. In addition to this, DT Midstream enjoys many of the same qualities that other midstream companies do, such as stable cash flows and a respectable dividend yield. With that said, though, the 3.25% yield currently possessed by the stock is substantially lower than what many of its peers possess. This alone does not mean that the company is not worth your investment dollar, though, since it may be able to make up for the low current yield through growth. Let us, therefore, investigate further and see if DT Midstream could be deserving of a place in your portfolio. About DT Midstream As stated in the introduction, DT Midstream is a little-known midstream company with operations in the Haynesville Shale and the Appalachian Basin: DT Midstream The Appalachian region is almost always considered to be a natural gas play, although it also produces natural gas liquids. The Haynesville Shale is not a play that we hear about very much in the investment media but it is also one of the most natural gas-rich basins in the United States. As such, we might expect DT Midstream to focus primarily on providing midstream infrastructure to natural gas producers. This is indeed the case as the company boasts over 1,200 miles of long-haul natural gas transportation pipelines, 1,000 miles of natural gas gathering pipelines, and 94 billion cubic feet of natural gas storage capacity. This focus on the natural gas space is a legacy of the company's formation last year when it was spun off from DTE Energy (DTE), which is a large natural gas and electric utility in Michigan. One thing we note, though, is that the company's operations are almost evenly split between transportation and gathering pipelines: DT Midstream The transportation pipelines are the large, long-distance pipelines that we typically associate with midstream companies. However, the gathering pipelines are completely different animals. These are a specialized form of small, short pipelines that grab resources at the wellhead where they are extracted from the ground and then transport them to the first destination on their journey to the end-user, which is typically either a much larger long-haul pipeline or a processing facility. The company's long-haul pipelines and its gathering pipelines use the same basic business model. DT Midstream enters into long-term, volume-based contracts with its customers that include minimum volume commitments. This provides DT Midstream with incredible stability regardless of resource prices or conditions in the broader economy. As we can see here, DT Midstream managed to increase its adjusted EBITDA (a proxy for pre-tax cash flow) every year since 2008: DT Midstream This is a period of time that included a global financial crisis, two energy price collapses, and two recessions (one of which was caused by a global pandemic). The fact that DT Midstream was able to grow its cash flows at a 20% compound annual growth rate and never had a year in which cash flows declined speaks wonders to the strength of its business model. This kind of strength and performance is exactly the sort of thing that income-focused investors like to see because stable cash flows through any environment provide a great deal of support for the dividend. Naturally, as investors, we are unlikely to be satisfied with mere stability. We also want to see growth. As might be suspected given DT Midstream's volume-based business model, the way that this growth is accomplished is by growing volumes. However, one of the defining characteristics of midstream infrastructure is that it only has a finite capacity of resources that it can handle. Thus, DT Midstream needs to construct new infrastructure in order to increase the volume of resources that it can store or transport. The company is doing exactly this. As we can see here, DT Midstream currently has seven growth projects under construction that are scheduled to come online between now and the first quarter of 2024: DT Midstream One of the nicest things about these projects is that DT Midstream has already secured contracts from its customers for their use. This provides several advantages for the company. Perhaps the most significant advantage is that we can be certain that DT Midstream is not spending a great deal of money to construct infrastructure that nobody wants to use. A second major advantage is that DT Midstream knows in advance how profitable a given project will be so it knows that each of them will deliver a large enough return to justify the investment. DT Midstream has not specified exactly what the rate of return will be on any of these projects but midstream projects typically pay for themselves in four to six years, which I mentioned in a recent article. We can, therefore, assume that this is probably a good estimate of DT Midstream's average payback period. As all of these projects are already contracted, they will begin generating cash flow as soon as they become active. Thus, we will start to see the impact of each project during the quarter in which it begins operations. This should prove valuable over the remainder of this year since, as we can see, there are three to four projects coming online during the third and fourth quarters of this year. This gives DT Midstream a nice pipeline to continue its historical growth trajectory. Although DT Midstream has not stated exactly how profitable each of its current growth projects will be, we have been provided with some cash flow growth projections. Based on the projects that are scheduled to come online between now and the end of 2023, DT Midstream should be able to grow its adjusted EBITDA at a 5% to 7% compound annual growth rate over the 2021 to 2023 period: DT Midstream This is admittedly nowhere close to the 20% historical growth rate that DT Midstream has delivered but it is certainly respectable. DT Midstream has committed to growing its dividend at roughly the same rate as its cash flows. Thus, we are looking at a pathway for dividend growth, which helps to offset the fact that DT Midstream's current yield is somewhat lower than the other companies in the sector. It is also something that we can appreciate in today's inflationary environment because it should help us maintain the purchasing power of the dividend. A Potential Opportunity In Liquefied Natural Gas In a few previous articles, such as this one, I discussed the emerging opportunity in liquefied natural gas. This has become something of a popular investment idea lately due to the recent war in Ukraine that has left Europe frantically searching for new sources of natural gas. However, the majority of the demand growth for liquefied natural gas will come from Asia, which is shifting from coal to natural gas in an effort to clear up its smog problems. Asia is expected to increase its imports of liquefied natural gas by 40% between now and 2030, so clearly, this is an opportunity that we should not ignore: Golar LNG DT Midstream could be in an excellent position to take advantage of this growing market, even though the company produces no natural gas itself. This is partly due to the areas in which it operates. There are two places in the United States where energy companies that are constructing liquefaction plants are focusing their efforts. One is along the Gulf Coast near the border between Texas and Louisiana. The other area is along the East Coast near Philadelphia, Pennsylvania. The two closest natural gas-producing basins to these areas are the Haynesville Shale and Appalachia: DT Midstream

Shareholder Returns

DTMUS Oil and GasUS Market
7D1.2%2.2%-2.5%
1Y10.1%32.0%-23.2%

Return vs Industry: DTM underperformed the US Oil and Gas industry which returned 36.6% over the past year.

Return vs Market: DTM exceeded the US Market which returned -21.5% over the past year.

Price Volatility

Is DTM's price volatile compared to industry and market?
DTM volatility
DTM Average Weekly Movement4.4%
Oil and Gas Industry Average Movement8.1%
Market Average Movement6.9%
10% most volatile stocks in US Market15.6%
10% least volatile stocks in US Market2.8%

Stable Share Price: DTM is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: DTM's weekly volatility (4%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
2021280David Slaterhttps://www.dtmidstream.com

DT Midstream, Inc. provides integrated natural gas services in the United States. The company operates through two segments, Pipeline and Gathering. It develops, owns, and operates an integrated portfolio of interstate pipelines, intrastate pipelines, storage systems, lateral pipelines, gathering systems, related treatment plants, and compression and surface facilities.

DT Midstream, Inc. Fundamentals Summary

How do DT Midstream's earnings and revenue compare to its market cap?
DTM fundamental statistics
Market CapUS$5.02b
Earnings (TTM)US$333.00m
Revenue (TTM)US$877.00m

15.1x

P/E Ratio

5.7x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
DTM income statement (TTM)
RevenueUS$877.00m
Cost of RevenueUS$209.00m
Gross ProfitUS$668.00m
Other ExpensesUS$335.00m
EarningsUS$333.00m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)3.44
Gross Margin76.17%
Net Profit Margin37.97%
Debt/Equity Ratio75.1%

How did DTM perform over the long term?

See historical performance and comparison

Dividends

4.9%

Current Dividend Yield

72%

Payout Ratio