A Look at Western Midstream Partners’s Valuation Following Record EBITDA and Aris Deal Integration Success

Western Midstream Partners (NYSE:WES) just posted its second straight quarter of record adjusted EBITDA, supported by operational improvements, higher natural gas volumes, and tight cost controls. The recent Aris Water Solutions acquisition is already fueling future growth expectations.

See our latest analysis for Western Midstream Partners.

Momentum appears to be building for Western Midstream Partners, as evidenced by its exceptional third-quarter results and a busy stretch of strategic activity. While the share price has only edged slightly higher recently, the 18.6% total shareholder return over the past year and a remarkable 420% five-year run underline growing confidence in the company’s strategy and its ability to generate value, even with some earnings volatility along the way.

If you’re looking for more strong performers and want to broaden your view beyond energy infrastructure, now’s a great time to check out fast growing stocks with high insider ownership

Given the upbeat results, raised guidance, and recent expansion moves, the key question remains: is Western Midstream’s solid growth potential still underappreciated by the market, or is the current price already factoring in what comes next?

Most Popular Narrative: 4.5% Undervalued

With shares closing at $38.99 and the most popular narrative pricing Western Midstream Partners at $40.83, market optimism appears justified for now. The narrative’s fair value sits slightly above the current price, reflecting healthy operating momentum and strong forward assumptions.

Investment in major long-term capacity expansions, such as the Pathfinder pipeline and North Loving II plant, is set to come online in 2027. These additions will significantly increase processing and transport capability and are expected to materially increase revenues and cash flows in subsequent years. Continued focus on cost optimization and operational efficiencies is helping contain OpEx even as volumes grow. This provides the potential for margin expansion and higher net earnings as new projects ramp up.

Read the complete narrative.

Want to know what powers this bullish outlook? The narrative hinges on a bold set of growth projections and some surprising margin assumptions. Curious how these future profit leaps are justified by today’s numbers? The math behind that fair value might just challenge your expectations.

Result: Fair Value of $40.83 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, there are still significant risks, such as delayed infrastructure projects or sudden drops in production volumes, that could undermine this upbeat outlook.

Find out about the key risks to this Western Midstream Partners narrative.

Build Your Own Western Midstream Partners Narrative

If you see things differently or want to dig deeper into the numbers yourself, you can put together your own take in just minutes. Do it your way

A great starting point for your Western Midstream Partners research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.

Looking for More Investment Ideas?

Opportunities don’t wait. Get ahead of market moves by tracking powerful trends, smart fundamentals, and bold innovations. There is always another advantage to uncover if you know where to look.

• Capture steady returns and prioritize income by checking out these 16 dividend stocks with yields > 3% with yields surpassing 3% and proven payout consistency.
• Tap into unmatched growth potential by evaluating these 870 undervalued stocks based on cash flows for stocks priced below their intrinsic value, ready for your strategy.
• Spot tomorrow’s leaders in medicine and technology by searching these 32 healthcare AI stocks at the intersection of artificial intelligence and healthcare breakthroughs.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com