Energy company MPLX LP (MPLX - Get Rating) owns and operates midstream energy infrastructure and logistics assets. The company operates in two broad segments: Logistics and Storage; and Gathering and Processing. 

The company offers reliable dividends. In November, MPLX declared a quarterly distribution of $0.775 per common unit for the third quarter of 2022, representing a 10% increase over the second-quarter distribution. It has a record of nine years of consecutive dividend growth.

The quarterly dividend cumulates to $3.10 per common unit annually and yields 9.63% on the current share price. The company has a four-year average yield of 11.25%. MPLX’s dividend payouts have increased at a 2.9% CAGR over the past three years and a 5.5% CAGR over the past five years.

The stock has gained 11.5% over the past year and 8% year-to-date. It has gained 13.1% over the past six months to close its last trading session at $31.96.

Here are the factors that could influence MPLX’s performance in the near term:

Solid Financials

For the fiscal third quarter ended September 30, MPLX’s total revenues and other income increased 32.9% year-over-year to $3.40 billion. Net income attributable to MPLX and per limited partner unit came in at $1.43 billion and $1.36, up 78.1% and 83.8% from the prior-year period, respectively.

Impressive Profitability

MPLX’s trailing-12-month EBIT margin and net income margin of 39.79% and 35.16% are 106.3% and 208.9% higher than the industry averages of 19.29% and 11.38%, respectively. Its ROCE, ROTC, and ROTA of 32.15%, 8.40%, and 11.05% are 55.4%, 1.4%, and 60.5% higher than their respective industry averages of 20.68%, 8.28%, and 6.88%.

Favorable Bottom-line Estimates

The consensus EPS estimates of $0.85 and $0.84 for the current (ending December 2022) and next (ending March 2023) quarters indicate 9% and 7.7% year-over-year improvements, respectively. Street EPS estimate for the fiscal year 2022 of $3.61 reflects a rise of 26.2% from the prior year. Its EPS is estimated to grow 3.7% per annum over the next five years.

POWR Ratings Reflect Promising Prospects

MPLX’s strong 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 considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. The stock has a Quality grade of A, in sync with its robust profitability.

MPLX has a C grade for Stability, consistent with its five-year beta of 1.45.

In the 31-stock MLPs – Oil & Gas industry, it is ranked #4. The industry is rated A.

Click here to see the additional POWR Ratings for MPLX (Growth, Value, Momentum, and Sentiment).

View all the top stocks in the MLPs – Oil & Gas industry here.

Bottom Line

A long-term tight supply and underinvestment in new oil supply might lead to structurally higher energy prices, which could benefit MPLX. Moreover, the company’s bottom-line growth expectations are promising. With Wall Street analysts expecting the stock to grow almost 20% in the near term, MPLX might be a solid buy now.

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

While MPLX has an overall POWR Rating of B, one might consider looking at its industry peers, Global Partners LP (GLP - Get Rating) and CrossAmerica Partners LP (CAPL - Get Rating), which have an overall A (Strong Buy) rating.

MPLX shares were unchanged in premarket trading Tuesday. Year-to-date, MPLX has gained 17.85%, versus a -19.21% rise in the benchmark S&P 500 index during the same period.

About the Author: Anushka Dutta

Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...

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