MPLX LP (MPLX) is a diversified, large-cap master limited partnership (MLP) that owns and operates midstream energy infrastructure and logistics assets and provides fuel distribution services. It is a fast-growing midstream energy company with strong distributable cash flow and consistent excess dividend coverage, offering a 7% dividend yield.

In the third quarter of 2024, the company reported $1.45 billion in distributable cash flow, marking a 5.3% year-over-year increase. Over the last three years, MPLX has grown its cash flow at an annualized rate of 7.7%, fueling dividend hikes of over 10% annually. These steady raises, including a 12.5% bump last October, have further solidified its appeal to income investors.

The company’s expansion projects, such as the Blackcomb and Rio Bravo pipelines and upgrades to the BANGL natural gas liquids system, are poised to deliver incremental cash flow as they come online. Moreover, with a low leverage ratio of 3.4 and robust cash flow, the MLP has the flexibility to fund its expansion projects while maintaining its hefty dividend.

Given its strong financial health and ongoing expansion projects, MPLX appears primed to continue rewarding its investors. Shares of MPLX have surged 10.9% over the past three months and 31.3% over the past year, closing the last trading session at $48.76.

Now, let us delve deeper into the factors that could shape MPLX’s performance in the near future.

Strong Financials

For the fiscal 2024 third quarter that ended September 30, MPLX’s total revenues and other income increased 2.1% year-over-year to $2.97 billion. Its income from operations grew 10.5% from the prior year’s quarter to $1.27 billion.

The company’s attributable net income rose 13% year-over-year to $1.04 billion and $1.01 per unit, while its adjusted EBITDA came in at $1.71 billion, up 7.4% year-over-year. As of September 30, 2024, MPLX’s cash and cash equivalents amounted to $2.43 billion compared to $1.05 billion on December 31, 2023.

Attractive Dividend

On November 15, 2024, the company paid a quarterly dividend of $0.96 per common unit, representing an increase of 12.5% from the previous quarter. MPLX pays a $3.83 per unit dividend annually, which translates to a 7.91% yield on the current share price. Its four-year dividend yield is 9.31%.

The company’s dividend payouts have grown at CAGRs of 8.2% and 5.8% over the past three and five years, respectively. Moreover, MPLX has a record of 11 years of consecutive dividend growth.

Favorable Analyst Expectations

Analysts expect MPLX’s revenue to increase 3.3% year-over-year to $3.06 billion for the fourth quarter ended December 31, 2024. The consensus earnings per share estimate of $1.03 for the same period indicates a 6.4% improvement from the previous year’s quarter.

In addition, for the fiscal first quarter ending March 2025, MPLX’s revenue and EPS are expected to increase 6.6% and 5.3% year-over-year to $3.03 billion and $1.03, respectively.

Looking ahead, analysts anticipate a 5.2% increase in revenue for the fiscal year 2025, reaching $12.52 billion. Similarly, EPS for the current year is expected to experience a growth of 6.1% from the prior year, settling at $4.37.

High Profitability

MPLX’s trailing-12-month gross profit margin of 57.43% is 25.9% higher than the industry average of 45.63%. Its trailing-12-month EBITDA margin stands at 52.45%, 51.6% higher than the industry average of 34.59%.

In addition, the company boasts a trailing-12-month net income margin of 39.41%, which is 248.5% higher than the sector average of 11.31%. Also, the stock’s trailing-12-month ROCE of 33.47% outperforms the industry average of 12.34% by 171.2%.

POWR Ratings Reflects Optimism

MPLX’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. MPLX’s A grade for Momentum is justified by its share price trading above its 50-day moving average of $47.68 and 200-day moving average of $43.60.

It also has a B grade for Quality, supported by profitability measures that exceed industry benchmarks. Within the B-rated MLPs – Oil & Gas industry, MPLX is ranked #3 out of 22 stocks.

Beyond what is stated above, we have also given MPLX grades for Growth, Value, Stability, and Sentiment. Get all MPLX ratings here.

Bottom Line

After a challenging year for the energy sector in 2024, MPLX seems to be a bright spot in the midstream space. With consistent growth in both EBITDA and distributable cash flow, along with a strong track record of 10% annual dividend increases, MPLX has positioned itself as an attractive option for income-focused investors. The company’s strong financial health and ongoing expansion projects provide ample opportunity for future growth.

Given its reliable profitability, solid cash flow, and commitment to returning value to unitholders, MPLX is poised to continue its upward trajectory in 2025 and beyond. Thus, now could be an opportune moment to consider adding this stock to one’s holdings.

How Does MPLX LP (MPLX) Stack Up Against Its Peers?

Although MPLX’s near-term outlook appears sound, exploring its industry peers, who also exhibit strong POWR Ratings, may be worthwhile. So, consider these A (Strong Buy) or B (Buy)-rated stocks from the MLPs – Oil & Gas industry: CrossAmerica Partners LP (CAPL), Star Group, L.P. (SGU), and Martin Midstream Partners L.P. (MMLP).

To explore more A or B-rated MLPs – Oil & Gas stocks, click here.

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MPLX shares . Year-to-date, MPLX has gained 1.88%, versus a -0.80% rise in the benchmark S&P 500 index during the same period.

About the Author: Shweta Kumari

Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions. More...

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