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MPLX

MPLX NYSE:MPLX Stock Report

Last Price

US$30.01

Market Cap

US$30.4b

7D

2.3%

1Y

3.7%

Updated

02 Oct, 2022

Data

Company Financials +
MPLX fundamental analysis
Snowflake Score
Valuation5/6
Future Growth1/6
Past Performance3/6
Financial Health2/6
Dividends6/6

MPLX Stock Overview

MPLX LP owns and operates midstream energy infrastructure and logistics assets primarily in the United States.

MPLX LP Competitors

Price History & Performance

Summary of all time highs, changes and price drops for MPLX
Historical stock prices
Current Share PriceUS$30.01
52 Week HighUS$35.49
52 Week LowUS$27.47
Beta1.51
1 Month Change-7.78%
3 Month Change1.18%
1 Year Change3.70%
3 Year Change8.18%
5 Year Change-15.37%
Change since IPO10.33%

Recent News & Updates

Sep 25

MPLX: An Energy Play For The Looming Recession Supported By A 10% Yield

Summary MPLX is a highly profitable midstream company that mainly supports Marathon Petroleum Corporation. Therefore, it has been instrumental in underpinning the stability of its dividend payouts. Notwithstanding, MPLX is not immune to a recession. Therefore, investors need to monitor for potential demand destruction leading to lower utilization. However, we assessed that MPLX's valuation remains well-balanced. Also, its dividend payouts are expected to remain robust through the cycle. We discuss why investors can consider adding MPLX through the coming recession. But, we also highlight some critical caveats to watch. Thesis MPLX LP (MPLX) is a highly profitable midstream company that mainly supports Marathon Petroleum Corporation (MPC). It derives most of its adjusted EBITDA from its Logistics and Storage (L&S) segment, which accounted for 67% of MPLX's Q2 adjusted EBITDA. L&S is also the more profitable segment, with an adjusted EBITDA margin of 41.8%. In addition, the company also has a Gathering and Processing (G&P) segment which has benefited from higher NGL prices and more robust volumes in Q2. It's important for investors not to understate the income visibility provided by its partnership with MPC. It has allowed MPLX to leverage a mutually beneficial relationship, providing strong visibility on contract rates. Therefore, it has afforded significant assurances to investors on the stability of its profitability. As a result, MPLX should be able to continue providing investors with a stable dividend payout that yielded more than 10% (on an NTM basis) after the recent pullback. Notwithstanding, we would like to remind investors to consider potential demand destruction challenges that could affect the profitability of its G&P segment moving forward. Despite that, MPLX's midstream assets are likely less vulnerable than its upstream and downstream players from underlying energy price volatility. Therefore, we believe that MPLX should be able to sustain its strong profitability profile moving ahead. Furthermore, while MPLX has outperformed the broad market YTD, it has underperformed the SPDR Energy ETF (XLE) significantly, given its operating model. Hence, we believe the market is unlikely to de-rate MPLX substantially unless energy prices collapse dramatically, leading to significant profitability issues. Also, we believe the structural constraints should keep prices relatively high. Accordingly, we view the probability of such a worst-case scenario as highly unlikely for now. With a dividend yield that has improved to 10% from its recent pullback and robust profitability, we rate MPLX as a Buy. MPLX Will Not Be Immune To A Recession Despite the visibility in MPLX's revenue and income model, MPLX is mindful of the impact of a recession that could impact its utilization. The company also accentuated in its Q2 earnings call that it would monitor the developments, even though management remains confident. CEO Mike Hennigan articulated: The demand question is obviously one that we continue to monitor. And I guess at the end of the day, we're still pretty bullish on what we're seeing across the commodities. We're still mostly at pre-pandemic levels across the system. So we think there's still room to run on the demand side. Inventories are still constructive. So low cost, strong reliability and we'll take what the market offers as far as margins. And right now, it's hard not to still be constructive. Demand is looking good. Inventories are low. It's still a pretty constructive environment for us. (MPLX FQ2'22 earnings call) MPLX Adjusted EBITDA change % and Distributable cash flow change % consensus estimates (S&P Cap IQ) The consensus estimates (bullish) suggest that MPLX's adjusted EBITDA growth metrics remain robust through FY23. Therefore, the Street is not modeling a marked impact on its profitability, even though growth is expected to slow from FY21's recovery. Accordingly, investors should expect the increase in MPLX's distributable cash flow ((DCF)) to remain stable, offering stability in their distribution. MPLX Adj. EBITDA margins % consensus estimates (S&P Cap IQ) Accordingly, MPLX's adjusted EBITDA margins are expected to remain stable through the cycle, lending credence to management's confidence. We are cautiously optimistic about management's confidence and believe that MPLX's long-term contracts should continue to provide stability in its profitability outlook. Notwithstanding, MPLX is not immune to a severe downturn that could impact energy prices drastically. However, structural constraints are expected to continue supporting the pricing dynamics in the underlying markets. Therefore, we believe the consensus estimates are credible. Is MPLX Stock A Buy, Sell, Or Hold? MPLX Forward Dividend yields % consensus estimates (S&P Cap IQ) MPLX last traded at an NTM dividend yield of about 10%. Its payouts are expected to remain stable through the cycle, given its robust profitability. Therefore, it should continue to offer MPLX strong valuation support at its current levels. MPLX NTM EBITDA multiples valuation trend (koyfin) MPLX's NTM EBITDA multiple of 8.8x remains well below its 10Y mean of 12.4x. However, we deduce that the market has likely de-rated MPLX after the overvalued pre-COVID days.

Aug 25

MPLX: Higher Distributions Should Only Be Months Away

Summary MPLX offered strong results for the first half of 2022, whilst continuing to pay their high 8.50% distribution yield. Their strong cash flow performance continued, with their operating cash flow edging higher year-on-year versus the first half of 2021. This provides ample scope to fund higher distributions, which appear almost certain as their review approaches following the third quarter. Their leverage continued falling even further below their target, although management seemingly ruled out utilizing debt-funded unitholder returns to realign with their target. Given the prospects to collect a high distribution yield that appears poised to grow quite soon, I believe that maintaining my strong buy rating is appropriate. Introduction Upon entering the new year, unitholders of MPLX (MPLX) saw very desirable prospects to see their capital returned during 2022, as my previous article highlighted. Whilst the first half still only saw their usual high 8.51% distribution yield, if looking ahead towards the second half, it seems that higher distributions should only be months away, likely accompanied by unit buybacks and possibly another special distribution, as discussed within this follow-up analysis that also reviews their recently released results for the second quarter of 2022. Executive Summary & Ratings Since many readers are likely short on time, the table below provides a very brief executive summary and ratings for the primary criteria that were assessed. This Google Document provides a list of all my equivalent ratings as well as more information regarding my rating system. The following section provides a detailed analysis for those readers who are wishing to dig deeper into their situation. Author *Instead of simply assessing distribution coverage through distributable cash flow, I prefer to utilize free cash flow since it provides the toughest criteria and also best captures the true impact upon their financial position. Detailed Analysis Author It was positive to see their strong cash flow performance from recent years continued into the first half of 2022 with their operating cash flow at $2.612b and thus a handy 4.94% higher year-on-year versus their previous result of $2.489b during the first half of 2021, which does not materially change if removing their temporary working capital movements. Even though this increase is less than what unitholders have been accustomed to seeing during 2020 and 2021, it should not be a surprise given their capital expenditure has been far lower across the last two years with their level of $680m during 2021 being a massive reduction from their previous level of $3.121b back in 2019, as they leave their high growth days in the past. Despite lowering their growth, thankfully their lower capital expenditure also boosts their free cash flow with the first half of 2022 seeing a result of $2.081b and thus providing strong distribution coverage of 145.52% to their $1.43b of distribution payments, thereby leaving excess free cash flow of $651m. Since their capital expenditure of $450m during the first half was exactly half their guidance of $900m for 2022, as per my previously linked article, it means this was not materially influenced by temporary high or low capital expenditure. It was also positive to see that their capital expenditure guidance is still unchanged, despite the inflationary pressure hitting the economy. If their operating cash flow during the first half of 2022 persists into the second half, which I see no reason to doubt, the full year should see twice as much excess free cash flow after distribution payments as the first half, which equates to circa $1.3b. Since their unit buybacks were only a minimal $135m during the first half, this leaves at least $1b of potential for the second half, which as an important reminder, sits atop their existing distribution payments. Following the payment of their recent quarterly distribution, unitholders have now enjoyed four quarters at their record $0.705 per unit rate and thus as we approach their next distribution review after the third quarter, it seems that higher distributions are on the cards, as per the commentary from management included below. “…so in addition to unit repurchases, right, we'll reassess our base distribution as we did last year and certainly any change there would be subject to board approval.” -MPLX Q2 2022 Conference Call. In my view, when management says they will “reassess” their distributions, it seems almost certain that higher distributions are coming, as their continued strong cash flow performance current strong operating conditions make a reduction unthinkable. When they last reviewed their distributions after the third quarter of 2021, not only did they boost their quarterly distributions but they also declared a special distribution of $0.575 per unit. Since they sport strong distribution coverage, it makes increasing their quarterly distributions by another 2% to 5% very easy and thus almost certain, similar to their 3% increase in 2021. The bigger question is the extent these will be accompanied by additional unitholder returns and the mixture between unit buybacks and special distributions. Whilst I am hopeful they will be weighted towards the latter, it seems that only time will tell with no clues being released, as per the commentary from management included below. “I would say people are very convicted that, some tell us very, very strongly that unit buybacks is the way to go and others tell us very, very strongly, please send me a check, that's the way I'd like to see return of capital. So our approach has been to look at market conditions, look at where we stand as far as our projections, evaluate our ability to invest capital, because we keep saying it's a return of and return on.” -MPLX Q2 2022 Conference Call (previously linked). Author Thanks to their continued strong distribution coverage during the first half of 2022 and minimal unit buybacks, their cash balance increased significantly to $298m versus its previous level of only a mere $13m at the end of 2021. Meanwhile, their total debt decreased in tandem and thereby resulted in their net debt falling $531m to $19.477b versus its previous level of $20.008b across these same two points in time. Interestingly, this is the first time in recent history that they have increased their cash balance, which was intentional as they evaluate growth opportunities or particularly opportunistic unitholder returns, as per the commentary from management included below.

Aug 15

MPLX to redeem $1B senior notes

MPLX (NYSE:MPLX) plans to redeem all $500M outstanding aggregate principal amount of its 3.500% senior notes due Dec. 1, 2022 and $500M of its 3.375% senior notes due March 15, 2023. The 2022 senior notes are expected to be redeemed around Aug. 25, 2022 at a price equal to the greater of par or the make-whole payment calculated in accordance with the terms of the 2022 senior notes, plus accrued and unpaid interest to, but not including, the redemption date. The 2023 senior notes are expected to be redeemed around Sept. 15, 2022 at a price equal to the greater of par or the make-whole payment calculated in accordance with the terms of the 2023 senior notes. The regular semiannual interest payment due on the 2023 senior notes on Sept. 15, 2022, will be paid in the usual manner to holders of record at the close of business on Sept. 1, 2022.

Shareholder Returns

MPLXUS Oil and GasUS Market
7D2.3%2.2%-2.5%
1Y3.7%32.0%-23.2%

Return vs Industry: MPLX underperformed the US Oil and Gas industry which returned 32% over the past year.

Return vs Market: MPLX exceeded the US Market which returned -23.2% over the past year.

Price Volatility

Is MPLX's price volatile compared to industry and market?
MPLX volatility
MPLX Average Weekly Movement4.2%
Oil and Gas Industry Average Movement8.0%
Market Average Movement6.8%
10% most volatile stocks in US Market15.5%
10% least volatile stocks in US Market2.8%

Stable Share Price: MPLX is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 4% a week.

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

About the Company

FoundedEmployeesCEOWebsite
2012n/aMike Henniganhttps://www.mplx.com

MPLX LP owns and operates midstream energy infrastructure and logistics assets primarily in the United States. It operates in two segments, Logistics and Storage, and Gathering and Processing. The company is involved in the gathering, processing, and transportation of natural gas; gathering, transportation, fractionation, exchange, storage, and marketing of natural gas liquids; gathering, storage, transportation, and distribution of crude oil and refined products, as well as other hydrocarbon-based products; and sale of residue gas and condensate.

MPLX LP Fundamentals Summary

How do MPLX's earnings and revenue compare to its market cap?
MPLX fundamental statistics
Market CapUS$30.38b
Earnings (TTM)US$3.19b
Revenue (TTM)US$10.45b

9.5x

P/E Ratio

2.9x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
MPLX income statement (TTM)
RevenueUS$10.45b
Cost of RevenueUS$4.86b
Gross ProfitUS$5.59b
Other ExpensesUS$2.40b
EarningsUS$3.19b

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

Nov 01, 2022

Earnings per share (EPS)3.15
Gross Margin53.53%
Net Profit Margin30.53%
Debt/Equity Ratio153.3%

How did MPLX perform over the long term?

See historical performance and comparison

Dividends

9.4%

Current Dividend Yield

90%

Payout Ratio