Energy Transfer Partners: 2Q Earnings Dip but Beat Estimates
Revenue versus consensus estimates
In the previous article, we analyzed Energy Transfer Partners’ (ETP) 2Q15 operating results. In this article, we’ll see how ETP’s 2Q15 revenue and earnings fared against Wall Street estimates. Let’s start with revenue.
After a 29.1% miss in 1Q15, Energy Transfer Partners beat 2Q15 revenue estimates by a huge margin. The 2Q15 consensus estimate was ~$9.878 billion, while the reported revenue came in at $11.54 billion, a beat of 16.83%.
EBITDA versus consensus estimates
Energy Transfer Partners also beat EBITDA (earnings before interest, taxes, depreciation, and amortization) estimates for 2Q15. The consensus estimate was ~$1.419 billion, while EBITDA stood at $1.546 million, a beat of 8.92%.
ETP’s 2Q15 EBITDA beat can be attributed to strong operating performance by its Midstream and Investment in Sunoco Logistics segments. The Midstream segment benefited from the ETP–Regency Energy Partners merger completed in April 2015. We’ll discuss this further when we analyze ETP’s segmental operating performance in a later article.
Stock price reaction
ETP rose ~3% on the day after its earnings announcement. It has returned -27.11% since the beginning of the year. ETP peers DCP Midstream Partners (DPM), EnLink Midstream Partners (ENLK), and Midcoast Energy Partners (MEP) have returned -33.94%, -37.54%, and -12.28% YTD (year-to-date), respectively. This indicates a general weakness in the midstream energy sector. Together, ETP, ENLK, and DPM account for ~12.18% of the Alerian MLP ETF (AMLP).
In contrast, Energy Transfer Equity (ETE), ETP’s general partner, has returned 0.14% over this time frame. ETE’s earnings mainly depend on distributions from its limited partner interest, general partner interest, and IDRs (incentive distribution rights) in Energy Transfer Partners and its other subsidiaries.
Energy Transfer Equity reported its 2Q15 earnings on the same day as ETP. ETE’s 2Q15 distributable cash flows grew by a massive 55% compared to the second quarter of 2014.
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