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Hess Midstream Partners (HESM)
NYSE:HESM
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Hess Midstream Partners (HESM) AI Stock Analysis

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HESM

Hess Midstream Partners

(NYSE:HESM)

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Outperform 72 (OpenAI - 4o)
Rating:72Outperform
Price Target:
$39.00
▲(11.88% Upside)
Hess Midstream's strong financial performance and positive earnings call outlook are the primary drivers of its score. The stock's current technical weakness and high leverage are notable risks, but the attractive valuation and dividend yield provide a solid investment case.
Positive Factors
Revenue Growth
Consistent revenue growth and high margins indicate a robust business model and effective market positioning, supporting long-term financial health.
Cash Flow Management
Effective cash flow management ensures financial stability and supports strategic investments and shareholder returns over time.
Credit Rating Upgrade
An improved credit rating enhances financial flexibility and reduces borrowing costs, supporting long-term growth and stability.
Negative Factors
High Debt Levels
High debt levels can limit financial flexibility and increase risk, potentially impacting future investment and growth opportunities.
Decreased Rig Activity
Reduced drilling activity could lead to lower throughput volumes, affecting revenue and EBITDA growth in the medium term.
Higher Maintenance Costs
Increased maintenance costs can pressure margins and reduce profitability, affecting financial performance and cash flow.

Hess Midstream Partners (HESM) vs. SPDR S&P 500 ETF (SPY)

Hess Midstream Partners Business Overview & Revenue Model

Company DescriptionHess Midstream LP owns, develops, operates, and acquires midstream assets. The company operates through three segments: Gathering; Processing and Storage; and Terminaling and Export. The Gathering segment owns natural gas gathering and compression; crude oil gathering systems; and produced water gathering and disposal facilities. Its gathering systems consists of approximately 1,350 miles of high and low pressure natural gas and natural gas liquids gathering pipelines with capacity of approximately 450 million cubic feet per day; and crude oil gathering system comprises approximately 550 miles of crude oil gathering pipelines. The Processing and Storage segment comprises Tioga Gas Plant, a natural gas processing and fractionation plant located in Tioga, North Dakota; a 50% interest in the Little Missouri 4 gas processing plant located in south of the Missouri River in McKenzie County, North Dakota; and Mentor Storage Terminal, a propane storage cavern and rail, and truck loading and unloading facility located in Mentor, Minnesota. The Terminaling and Export segment owns Ramberg terminal facility; Tioga rail terminal; and crude oil rail cars, as well as Johnson's Corner Header System, a crude oil pipeline header system. Hess Midstream LP was founded in 2014 and is based in Houston, Texas.
How the Company Makes MoneyHess Midstream generates revenue through a fee-based model, which is primarily structured around long-term contracts with customers. The company earns money by charging fees for its gathering and processing services, as well as transportation and terminaling services. Key revenue streams include fixed fees for throughput volumes, which provide predictable cash flow regardless of commodity price fluctuations, and variable fees that can depend on the volume of oil and gas processed or transported. Significant partnerships with Hess Corporation, which is a major oil producer in the Bakken region, contribute to stable earnings, as they ensure a consistent demand for Hess Midstream's services. Additionally, the company benefits from investments in infrastructure that enhance operational efficiency and capacity, further supporting its revenue generation capabilities.

Hess Midstream Partners Earnings Call Summary

Earnings Call Date:Jul 30, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Oct 22, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong operational and financial performance with record operating metrics and an improved credit rating. However, these positives were balanced by anticipated higher maintenance costs and increased interest and tax expenses.
Q2-2025 Updates
Positive Updates
Record Operating Performance
In the second quarter, Hess Midstream delivered record operating performance. Throughput volumes increased across all segments, including a 6% increase in gas processing and a 10% increase in oil terminaling from the first quarter.
Financial Performance and Guidance
Adjusted EBITDA for Q2 2025 increased to $316 million from $292 million in Q1. The company expects approximately 11% adjusted EBITDA growth in 2025 and adjusted free cash flow of $725 million to $775 million, more than covering the targeted 5% annual distribution growth.
Credit Rating Upgrade
Hess Midstream's senior unsecured debt was upgraded by S&P to an investment-grade rating of BBB- following the Chevron Hess merger.
Negative Updates
Higher Seasonal Maintenance Costs
The company expects higher seasonal maintenance costs in the second half of the year, which could offset some revenue gains from higher volumes.
Increased Interest and Tax Expenses
The updated net income guidance includes an incremental $15 million in expected interest expense and $15 million in expected income tax expense resulting from ownership changes.
Company Guidance
During the Hess Midstream second quarter 2025 earnings call, the company provided optimistic guidance for the fiscal year, forecasting a 10% growth in volume across all oil and gas systems compared to 2024. They anticipate an 11% increase in adjusted EBITDA for 2025, with a 7% growth at the midpoint in the second half of the year. The company expects capital expenditures to reach approximately $300 million, leading to an adjusted free cash flow between $725 million and $775 million, which will support a targeted 5% annual distribution growth and generate excess free cash flow. Additionally, their strategy involves returning capital to shareholders, highlighted by their low leverage ratio and recent upgrade to an investment-grade rating of BBB-. Hess Midstream plans to leverage its strong balance sheet, with more than $1.25 billion of financial flexibility through 2027, to potentially engage in further unit and share repurchases.

Hess Midstream Partners Financial Statement Overview

Summary
Hess Midstream Partners demonstrates strong profitability and efficient cash flow management, with robust EBIT and EBITDA margins. However, the high debt-to-equity ratio poses a financial risk, which is partially offset by strong return on equity and stable asset base.
Income Statement
88
Very Positive
Hess Midstream Partners demonstrates strong profitability with consistently high gross and net profit margins over the years. The company has shown a positive revenue growth trend, with a notable increase from the previous year. EBIT and EBITDA margins are robust, reflecting efficient operational performance.
Balance Sheet
72
Positive
The balance sheet indicates a high level of debt relative to equity, with a rising debt-to-equity ratio, which could pose a financial risk. However, the company maintains a reasonable equity ratio, showing a stable asset base. Return on equity remains strong, indicating effective use of shareholder funds.
Cash Flow
83
Very Positive
Hess Midstream Partners has shown strong cash flow management with consistent free cash flow generation. The operating cash flow to net income ratio suggests healthy cash conversion. However, the free cash flow growth has seen some fluctuations, which could be an area of concern if it persists.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue1.52B1.49B1.35B1.27B1.20B1.09B
Gross Profit1.31B1.29B1.15B1.09B1.04B934.70M
EBITDA1.15B1.14B1.02B977.80M903.40M743.60M
Net Income250.10M223.10M118.60M83.90M46.40M24.00M
Balance Sheet
Total Assets4.26B4.15B3.79B3.59B3.49B3.37B
Cash, Cash Equivalents and Short-Term Investments6.10M4.30M5.40M3.10M2.20M2.60M
Total Debt3.57B3.47B3.21B2.89B2.56B1.91B
Total Liabilities3.75B3.69B3.43B3.06B2.73B2.05B
Stockholders Equity601.30M530.70M340.20M529.00M753.10M1.33B
Cash Flow
Free Cash Flow660.60M634.20M642.90M622.90M632.30M340.60M
Operating Cash Flow957.40M940.30M866.40M861.10M795.50M641.70M
Investing Cash Flow-296.80M-306.10M-223.50M-238.20M-163.20M-301.00M
Financing Cash Flow-658.70M-635.30M-640.60M-622.00M-632.70M-341.40M

Hess Midstream Partners Technical Analysis

Technical Analysis Sentiment
Negative
Last Price34.86
Price Trends
50DMA
40.06
Negative
100DMA
38.81
Negative
200DMA
38.24
Negative
Market Momentum
MACD
-1.45
Positive
RSI
22.71
Positive
STOCH
5.47
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HESM, the sentiment is Negative. The current price of 34.86 is below the 20-day moving average (MA) of 38.97, below the 50-day MA of 40.06, and below the 200-day MA of 38.24, indicating a bearish trend. The MACD of -1.45 indicates Positive momentum. The RSI at 22.71 is Positive, neither overbought nor oversold. The STOCH value of 5.47 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HESM.

Hess Midstream Partners Peers Comparison

Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
80
Outperform
15.03B12.1139.91%9.06%7.11%-16.14%
78
Outperform
9.37B20.784.60%7.09%17.53%
72
Outperform
$7.40B13.0852.91%8.13%9.02%17.28%
69
Neutral
11.51B29.888.05%2.82%15.28%-9.99%
68
Neutral
12.46B19.569.44%8.23%-4.31%-17.80%
60
Neutral
7.38B62.56-1.48%6.84%16.09%-71.69%
65
Neutral
$15.17B7.614.09%5.20%3.87%-62.32%
* Energy Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
HESM
Hess Midstream Partners
35.00
2.29
7.00%
PAA
Plains All American
17.72
1.57
9.72%
WES
Western Midstream Partners
39.36
4.51
12.94%
AM
Antero Midstream
19.58
5.39
37.98%
KNTK
Kinetik
45.60
3.49
8.29%
DTM
DT Midstream
113.27
37.91
50.31%

Hess Midstream Partners Corporate Events

Business Operations and StrategyExecutive/Board Changes
Hess Midstream Partners Announces Leadership Change
Neutral
Sep 5, 2025

On September 4, 2025, John A. Gatling resigned as President and COO of Hess Midstream GP LLC, effective September 26, 2025. Michael S. Bast was appointed as his successor. Mr. Bast, who has been with Hess since 2007 and has held various roles, will also become an employee of Chevron U.S.A. Inc. on October 1, 2025. His appointment is expected to continue the company’s focus on efficient operations in the Bakken region, with no additional compensation from Hess Midstream for his role.

The most recent analyst rating on (HESM) stock is a Hold with a $46.00 price target. To see the full list of analyst forecasts on Hess Midstream Partners stock, see the HESM Stock Forecast page.

Business Operations and StrategyStock Buyback
Hess Midstream Announces $100 Million Repurchase Agreement
Positive
Aug 6, 2025

On August 4, 2025, Hess Midstream LP announced a $100 million repurchase agreement, including the repurchase of $30 million in Class B units from Chevron’s subsidiary and $70 million in Class A shares from the public. This strategic move, approved by the board and its conflicts committee, is part of Hess Midstream’s financial strategy to return capital to shareholders, potentially increasing distributable cash flow per share and providing capacity for distribution growth above the annual target through 2027.

The most recent analyst rating on (HESM) stock is a Buy with a $47.00 price target. To see the full list of analyst forecasts on Hess Midstream Partners stock, see the HESM Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Sep 20, 2025