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Western Midstream Partners (WES)
NYSE:WES
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Western Midstream Partners
(NYSE:WES)
78Outperform
Positive Factors
Financial Strength
WES is set to engage in targeted mergers and acquisitions, supported by a strong balance sheet, which could drive further growth.
Growth Initiatives
Western Midstream Partners has announced the construction of the 'Pathfinder' pipeline, which aims to enhance its water handling and disposal capabilities, aligning with investor interest in growth.
Leverage Improvement
WES has achieved its leverage target of 3x ahead of schedule, strengthening its leverage profile.
Negative Factors
Earnings Performance
Western Midstream Partners reported a miss on adjusted EBITDA, influenced by lower recoveries from fixed recovery contracts, lower commodity prices, and higher operational and maintenance costs.
Leadership Changes
An unexpected CEO change was seen as a distraction given the former CEO's credibility with the market.
Volume Guidance
The company lowered its full-year volume guidance for crude, NGLs, and water volumes, contrasting with other operators signaling stronger than expected growth.
Western Midstream Partners (WES) vs. S&P 500 (SPY)
Market Cap
$14.54B
Dividend Yield9.18%
Average Volume (3M)1.17M
Price to Earnings (P/E)9.5
Beta (1Y)0.58
Revenue Growth16.06%
EPS Growth54.94%
CountryUS
Employees1,511
SectorEnergy
Sector Strength52
IndustryOil & Gas Midstream
Share Statistics
EPS (TTM)4.02
Shares Outstanding381,321,140
10 Day Avg. Volume1,533,713
30 Day Avg. Volume1,173,353
Financial Highlights & Ratios
PEG Ratio0.17
Price to Book (P/B)N/A
Price to Sales (P/S)4.37
Price to Cash Flow (P/CF)7.10
P/FCF Ratio6.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$41.14Price Target Upside11.49% Upside
Rating ConsensusHold
Number of Analyst Covering7
Western Midstream Partners Business Overview & Revenue Model
Company DescriptionWestern Midstream Partners, LP (WES) is a master limited partnership focused on gathering, processing, and transporting energy products in the United States. Operating primarily in the midstream sector of the oil and gas industry, WES provides essential infrastructure and services for the transportation and processing of natural gas, crude oil, and natural gas liquids (NGLs). The company's operations are concentrated in key resource plays, including the Delaware Basin, the DJ Basin, and the Marcellus Shale, where it supports upstream producers by ensuring efficient and reliable delivery of their products to end markets.
How the Company Makes MoneyWestern Midstream Partners generates revenue primarily through long-term, fee-based contracts with energy producers. These contracts typically involve gathering, processing, and transporting natural gas, crude oil, and NGLs from production sites to downstream markets or storage facilities. The company's revenue streams include fees for gathering and transportation services, processing and fractionation services, and storage services. WES benefits from strategic partnerships and joint ventures with major energy companies, allowing it to expand its infrastructure and enhance its service offerings. Additionally, the company's operations are supported by its parent company, Occidental Petroleum Corporation, which provides a stable source of volumes and growth opportunities, contributing significantly to WES's earnings.
Western Midstream Partners Financial Statement Overview
Summary
Western Midstream Partners demonstrates strong financial health across all verticals. The income statement shows excellent profitability and growth, the balance sheet reflects improving leverage and strong equity returns, and cash flow generation is robust, supporting future growth and stability. The company is well-positioned in the fossil fuels industry, with potential for sustained performance.Income Statement
Western Midstream Partners shows strong profitability with a high Gross Profit Margin of 75.6% and a Net Profit Margin of 43.6% for 2024. Revenue growth is robust, increasing by 16.0% from 2023 to 2024. EBIT and EBITDA margins remain solid at 54.7% and 51.7% respectively, indicating effective cost management and strong operational performance.86
Very Positive
Balance Sheet
The company maintains a healthy balance sheet with an improving Debt-to-Equity Ratio of 0.30 in 2024, reflecting a decrease in leverage. Return on Equity is strong at 46.6%, suggesting effective use of equity financing. The Equity Ratio stands at 25.7%, indicating a stable capital structure, although it could be improved to reduce financial risk.72
Positive
Cash Flow
Cash flow generation is robust with a Free Cash Flow Growth Rate of 127.6% from 2023 to 2024. The Operating Cash Flow to Net Income Ratio is 1.34, reflecting strong cash conversion from earnings. Free Cash Flow to Net Income Ratio is also high at 1.34, indicating efficient cash management and the ability to support dividends or reinvestment.88
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 3.61B | 3.11B | 3.25B | 2.88B | 2.77B | Gross Profit |
| 2.78B | 2.18B | 2.25B | 2.00B | 2.09B | EBIT |
| 1.97B | 1.38B | 1.59B | 1.34B | 1.53B | EBITDA |
| 2.66B | 2.00B | 2.17B | 1.71B | 1.78B | Net Income Common Stockholders |
| 1.57B | 998.53M | 1.22B | 916.29M | 527.01M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 1.09B | 272.79M | 286.66M | 202.00M | 444.92M | Total Assets |
| 13.14B | 12.47B | 11.27B | 11.27B | 11.83B | Total Debt |
| 8.14B | 7.96B | 6.79B | 6.40B | 7.42B | Net Debt |
| 7.05B | 7.69B | 6.50B | 6.20B | 6.97B | Total Liabilities |
| 9.77B | 9.44B | 8.16B | 8.18B | 8.93B | Stockholders Equity |
| 3.24B | 2.90B | 3.11B | 3.10B | 2.90B |
| Cash Flow | Free Cash Flow | |||
| 1.27B | 926.25M | 1.21B | 1.45B | 1.21B | Operating Cash Flow |
| 2.11B | 1.66B | 1.70B | 1.77B | 1.64B | Investing Cash Flow |
| -39.17M | -1.61B | -218.24M | -257.54M | -448.25M | Financing Cash Flow |
| -1.25B | -67.91M | -1.40B | -1.75B | -844.20M |
Western Midstream Partners Technical Analysis
Negative
36.90
Price Trends
39.76
Negative
39.54
Negative
38.34
Negative
Market Momentum
-0.87
Positive
41.99
Neutral
74.84
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WES, the sentiment is Negative. The current price of 36.9 is below the 20-day moving average (MA) of 38.76, below the 50-day MA of 39.76, and below the 200-day MA of 38.34, indicating a bearish trend. The MACD of -0.87 indicates Positive momentum. The RSI at 41.99 is Neutral, neither overbought nor oversold. The STOCH value of 74.84 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for WES.
Western Midstream Partners Peers Comparison
Overall Rating
UnderperformOutperform
Sector (55)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $8.22B | 20.82 | 18.79% | 5.24% | 5.79% | 7.52% | |
78 Outperform | $14.54B | 9.49 | 50.12% | 9.18% | 16.06% | 54.94% | |
74 Outperform | $8.56B | 14.97 | 51.23% | 7.21% | 10.89% | 19.50% | |
74 Outperform | $9.85B | 26.95 | 8.08% | 3.12% | 6.40% | -8.42% | |
73 Outperform | $12.20B | 23.67 | 7.56% | 7.51% | 3.28% | -47.59% | |
61 Neutral | $14.63B | 36.21 | 7.11% | 7.04% | 3.28% | -48.50% | |
55 Neutral | $6.97B | 3.35 | -6.10% | 6.00% | -0.44% | -51.04% |
* Energy Sector Average
Performance Comparison
WES
Western Midstream Partners
36.90
4.30
13.19%
PAA
Plains All American
17.33
0.68
4.08%
PAGP
Plains GP Holdings
18.44
0.99
5.67%
AM
Antero Midstream
16.49
3.31
25.11%
HESM
Hess Midstream Partners
36.46
3.40
10.28%
DTM
DT Midstream
92.92
32.26
53.18%
Western Midstream Partners Earnings Call Summary
Earnings Call Date: Feb 26, 2025 | % Change Since: -8.75% | Next Earnings Date: May 7, 2025
Earnings Call Sentiment Positive
The earnings call for Western Midstream Partners presented a positive outlook with significant achievements in throughput and distribution growth. The announcement of the Pathfinder Pipeline project and successful integration of acquisitions and asset sales were notable highlights. However, there were some challenges, such as expected flat to slightly down throughput in the DJ Basin and a slight decrease in gross margin for produced water. Overall, the sentiment leans positive due to the strong performance and strategic growth plans.Highlights
Record Throughput Growth
Double-digit and record throughput growth across all three product lines for 2024, with natural gas throughput increasing by 16%, crude oil and NGLs throughput by 12%, and produced water throughput by 11% year-over-year.
Pathfinder Pipeline Project
Announcement of the Pathfinder Pipeline, a major midstream project in the Delaware Basin able to transport over 800,000 barrels per day of produced water, supported by a long-term agreement with Occidental Petroleum.
Significant EBITDA and Free Cash Flow Growth
Annual adjusted EBITDA and free cash flow growth of 13% and 37%, respectively, for 2024, with expectations of a 5% adjusted EBITDA growth in 2025.
Distribution Increase
Record distribution payout in 2024, including a 52% increase to the base distribution. A planned 4% increase in the distribution for 2025, targeting mid to low single-digit annual growth rates.
Successful Integration and Asset Sales
Successful integration of Meritage Midstream and completion of non-core asset sales totaling $795 million.
Lowlights
Flat to Slightly Down Throughput in DJ Basin
Expectations for DJ Basin throughput in 2025 to remain flat for natural gas and flat to slightly down for crude oil and NGLs due to a decrease in the number of wells coming to market.
Slight Decrease in Produced Water Gross Margin
Expected slight decrease in produced water per barrel adjusted gross margin in the first quarter of 2025 due to new amendments with Oxy and cost of service rate changes.
Retirement of Enhanced Distribution
Decision to retire the enhanced distribution concept in favor of focusing on sustainable base distribution growth.
Company Guidance
In the Western Midstream Partners Fourth Quarter and Full Year 2024 Earnings Conference Call, the company outlined significant guidance metrics, including a planned expansion of their produced water gathering and disposal infrastructure in the Delaware Basin. This includes the Pathfinder Pipeline, a 30-inch long haul pipeline designed to transport over 800,000 barrels per day of produced water, underpinned by a long-term agreement with Occidental Petroleum for 280,000 barrels per day of firm gathering and transportation capacity and 220,000 barrels per day of firm disposal capacity. The company achieved double-digit and record throughput growth across all three product lines, with annual adjusted EBITDA and free cash flow growth of 13% and 37% respectively. For 2025, Western Midstream projects adjusted EBITDA to range between $2.35 billion and $2.55 billion and plans to allocate approximately $625 million to $775 million in capital expenditures. The company also announced a base distribution increase, targeting a mid to low-single-digit annual percentage growth rate, aligning with their strategy to prioritize capital efficient organic growth and high returns for unitholders.Western Midstream Partners Corporate Events
Executive/Board Changes
Western Midstream Partners Announces Leadership Transition
Neutral
Feb 18, 2025
On February 18, 2025, Robert W. Bourne, Senior Vice President and Chief Commercial Officer of Western Midstream Holdings, LLC, entered into a Retirement Agreement with Western Midstream Partners, LP, under which he will transition to an advisory role until March 3, 2025, and then serve as a consultant for six months. The agreement outlines various retirement benefits, including pro rata bonuses, equity vesting, and participation in benefit plans, along with confidentiality and non-compete clauses, potentially impacting stakeholder interests and company operations.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.