Western Midstream Partners (WES) AI Stock Analysis

• Market Cap: $14.85B
• Dividend Yield: 9.35%
• Average Volume (3M): 942.59K
• Price to Earnings (P/E): 11.6
• Beta (1Y): 0.51
• Revenue Growth: 11.48%
• EPS Growth: -5.67%
• Country: US
• Employees: 1,511
• Sector: Energy
• Sector Strength: 53
• Industry: Oil & Gas Midstream
• EPS (TTM): 0.79
• Shares Outstanding: 381,327,360
• 10 Day Avg. Volume: 1,053,878
• 30 Day Avg. Volume: 942,589
• PEG Ratio: 0.23
• Price to Book (P/B): 3.41
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 8.73
• Enterprise Value/Market Cap: 1.15
• Enterprise Value/Revenue: 1.20
• Enterprise Value/Gross Profit: 6.80
• Enterprise Value/Ebitda: 1.96
• 1Y Price Target: $40.33
• Price Target Upside: 3.57% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 6

• Rating: 74 Outperform
• Price Target: $44.00 ▲(12.99%Upside)

Western Midstream Partners' strong financial performance and attractive valuation underpin its high stock score. Technical indicators suggest stability, while the earnings call provided a balanced view of achievements and potential risks, especially regarding throughput declines and market volatility.

Positive Factors

Financial Performance

The free cash flow after dividends showed a significant increase from expected estimates, reflecting strong cash management.

Growth Strategy

WES is set to engage in targeted mergers and acquisitions, supported by a strong balance sheet, which could drive further growth.

Pipeline Projects

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.

Negative Factors

Capital Expenditure

WES' FY25 capex outlook of $625-775mn was higher than expected, and the partnership expects FY26 capex to be even higher.

Crude Oil and NGL Throughput

Crude oil and NGL throughput experienced a notable decline compared to both the consensus and the previous year, indicating challenges in this area.

Produced Water Segment

Produced water adjusted gross margin fell short of expectations compared to the previous quarter and consensus estimates, suggesting potential issues in this segment.

Western Midstream Partners Business Overview & Revenue Model

Company Description

Western Midstream Partners, LP, a midstream energy company, together with its subsidiaries, acquires, owns, develops, and operates primarily in the United States. It is involved in gathering, compressing, treating, processing, and transporting natural gas; gathering, stabilizing, and transporting condensate, natural gas liquids (NGLs), and crude oil; and gathering and disposing produced water. It also buys and sells natural gas, NGLs, and condensate. The company operates assets located in Texas, New Mexico, the Rocky Mountains, and North-central Pennsylvania. Western Midstream Holdings, LLC operates as the general partner of the company. The company was formerly known as Western Gas Equity Partners, LP and changed its name to Western Midstream Partners, LP in February 2019. Western Midstream Partners, LP was incorporated in 2007 and is based in The Woodlands, Texas.

How the Company Makes Money

Western Midstream Partners generates revenue through a fee-based business model, primarily earning money from gathering, processing, and transporting hydrocarbons. The company charges producers for moving natural gas, NGLs, crude oil, and produced water through its extensive network of pipelines and facilities. Key revenue streams include gathering and processing fees, transportation fees, and service agreements that often include minimum volume commitments, ensuring stable cash flows. Additionally, Western Midstream Partners benefits from strategic partnerships and long-term contracts with major oil and gas producers, providing a steady and predictable source of income. The company also engages in ancillary services, such as marketing and selling of natural gas and NGLs, which contribute to its overall earnings.

Western Midstream Partners Financial Statement Overview

Summary

Western Midstream Partners exhibits strong profitability with impressive margins and robust cash flow generation. Despite high debt levels, the company manages its equity efficiently to generate strong returns.

Income Statement

Western Midstream Partners demonstrates strong profitability with a gross profit margin of 69.2% and a net profit margin of 36% for TTM. The EBIT margin stands at 44.5%, and the EBITDA margin is impressive at 58%. Revenue growth is moderate at 0.82% TTM, indicating stable performance in a competitive industry.

Balance Sheet

The company maintains a healthy equity ratio of 25.6%, though the debt-to-equity ratio is elevated at 2.3, indicating reliance on debt financing. Return on equity is robust at 41.1% TTM, showcasing efficient use of equity to generate profits.

Cash Flow

Free cash flow growth is strong at 13.2% TTM, with a solid operating cash flow to net income ratio of 1.7, highlighting effective cash generation. The free cash flow to net income ratio of 1.1 further reflects sound cash flow management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	3.63B	3.61B	3.11B	3.25B	2.88B	2.77B
Gross Profit	2.52B	2.78B	2.18B	2.25B	2.00B	2.09B
EBITDA	2.11B	2.66B	2.00B	2.17B	1.71B	1.78B
Net Income	1.31B	1.57B	998.53M	1.22B	916.29M	527.01M
Balance Sheet
Total Assets	12.46B	13.14B	12.47B	11.27B	11.27B	11.83B
Cash, Cash Equivalents and Short-Term Investments	448.45M	1.09B	272.79M	286.66M	202.00M	444.92M
Total Debt	7.33B	8.14B	7.96B	6.79B	6.40B	7.42B
Total Liabilities	9.12B	9.77B	9.44B	8.16B	8.18B	8.93B
Stockholders Equity	3.18B	3.24B	2.90B	3.11B	3.10B	2.90B
Cash Flow
Free Cash Flow	1.44B	1.27B	926.25M	1.21B	1.45B	1.21B
Operating Cash Flow	2.23B	2.11B	1.66B	1.70B	1.77B	1.64B
Investing Cash Flow	-582.08M	-39.17M	-1.61B	-218.24M	-257.54M	-448.25M
Financing Cash Flow	-1.49B	-1.25B	-67.91M	-1.40B	-1.75B	-844.20M

Western Midstream Partners Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 38.94
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WES, the sentiment is Positive. The current price of 38.94 is above the 20-day moving average (MA) of 38.44, above the 50-day MA of 38.21, and above the 200-day MA of 38.55, indicating a bullish trend. The MACD of 0.15 indicates Negative momentum. The RSI at 53.56 is Neutral, neither overbought nor oversold. The STOCH value of 83.24 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for WES.

Western Midstream Partners Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AM	78 Outperform	$8.68B	21.07	19.71%	4.97%	5.03%	7.15%
WES	74 Outperform	$14.85B	11.64	39.79%	9.35%	11.48%	-5.67%
DTM	74 Outperform	$10.76B	28.97	8.29%	3.10%	10.83%	-10.47%
PAA	69 Neutral	$12.91B	19.76	9.43%	8.22%	3.40%	-20.48%
HESM	62 Neutral	$8.03B	15.02	49.74%	7.43%	8.77%	15.22%
Sector *	57 Neutral	HK$83.05B	3.63	-2.37%	4.93%	-4.66%	-42.32%
PAGP	56 Neutral	$14.85B	26.62	10.09%	7.78%	3.40%	-15.90%

Western Midstream Partners Corporate Events

Western Midstream Partners Announces Leadership Transition

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.