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Western Midstream Partners (WES)
NYSE:WES
US Market

Western Midstream Partners (WES) AI Stock Analysis

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Western Midstream Partners

(NYSE:WES)

Rating:74Outperform
Price Target:
$44.00
â–²(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 (WES) vs. SPDR S&P 500 ETF (SPY)

Western Midstream Partners Business Overview & Revenue Model

Company DescriptionWestern 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 MoneyWestern 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 Earnings Call Summary

Earnings Call Date:May 07, 2025
(Q1-2025)
|
% Change Since: 8.32%|
Next Earnings Date:Aug 12, 2025
Earnings Call Sentiment Neutral
The earnings call presented a balanced view with significant achievements such as the commissioning of the North Loving plant and a strong financial position. However, concerns about sequential throughput declines, market volatility, and commodity price impacts were also highlighted.
Q1-2025 Updates
Positive Updates
North Loving Plant Commissioning
The North Loving plant in the Delaware Basin was completed and became operational in February, increasing West Texas natural gas processing capacity by approximately 13% or 250 million cubic feet per day.
Strong Balance Sheet and Liquidity
Western Midstream has an investment grade credit rating, net leverage below three times, and approximately $2.4 billion of liquidity.
Positive Conversations for Pathfinder Pipeline
Positive discussions with customers and midstream providers for contracting pipe space on the Pathfinder produced water pipeline, expected to be in service by January 2027.
Adjusted Gross Margin Increases
Natural gas assets saw an adjusted gross margin increase of $0.05 per thousand cubic feet, and crude oil and NGL assets increased by $0.17 per barrel compared to the prior quarter.
Distribution Increase
Declared a quarterly distribution of $0.91 per unit, representing a 4% increase over the prior quarter's distribution.
Negative Updates
Sequential Throughput Decline
Natural gas throughput decreased by 2% and crude oil and NGL throughput decreased by 6% on a sequential quarter basis.
Revenue Recognition Adjustments
An $8 million decrease in adjusted gross margin was primarily due to decreased throughput and non-recurring favorable revenue recognition adjustments from the prior quarter.
Market Volatility and Commodity Price Concerns
Recent market volatility and commodity price weakness are causing producers to evaluate their operational plans, potentially impacting future growth.
Company Guidance
During the Western Midstream Partners First Quarter 2025 Earnings Conference Call, significant guidance was provided regarding the company's financial and operational outlook. Key metrics included a 13% increase in natural gas processing capacity with the commissioning of the North Loving plant, net leverage below three times, and approximately $2.4 billion in liquidity. The company reported a net income attributable to limited partners of $302 million, an adjusted EBITDA of $594 million, and a free cash flow of $399 million. Operationally, there was a 2% sequential decrease in natural gas throughput and a 6% decrease in crude oil and NGL throughput. Despite these declines, the company expects mid-single-digit percentage growth in natural gas and produced water throughput, and low single-digit growth in crude oil and NGLs for the year. The company maintains an investment-grade credit rating and plans to retire senior notes maturing in 2025. While maintaining its 2025 financial guidance ranges, the company acknowledged potential impacts from lower commodity prices but remains confident in its financial resilience and strategic positioning.

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
86
Very Positive
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
74
Positive
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
82
Very Positive
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue3.63B3.61B3.11B3.25B2.88B2.77B
Gross Profit2.52B2.78B2.18B2.25B2.00B2.09B
EBITDA2.11B2.66B2.00B2.17B1.71B1.78B
Net Income1.31B1.57B998.53M1.22B916.29M527.01M
Balance Sheet
Total Assets12.46B13.14B12.47B11.27B11.27B11.83B
Cash, Cash Equivalents and Short-Term Investments448.45M1.09B272.79M286.66M202.00M444.92M
Total Debt7.33B8.14B7.96B6.79B6.40B7.42B
Total Liabilities9.12B9.77B9.44B8.16B8.18B8.93B
Stockholders Equity3.18B3.24B2.90B3.11B3.10B2.90B
Cash Flow
Free Cash Flow1.44B1.27B926.25M1.21B1.45B1.21B
Operating Cash Flow2.23B2.11B1.66B1.70B1.77B1.64B
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 Price38.94
Price Trends
50DMA
38.21
Positive
100DMA
38.94
Negative
200DMA
38.55
Positive
Market Momentum
MACD
0.15
Negative
RSI
53.56
Neutral
STOCH
83.24
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

Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
AMAM
78
Outperform
$8.68B21.0719.71%4.97%5.03%7.15%
WEWES
74
Outperform
$14.85B11.6439.79%9.35%11.48%-5.67%
DTDTM
74
Outperform
$10.76B28.978.29%3.10%10.83%-10.47%
PAPAA
69
Neutral
$12.91B19.769.43%8.22%3.40%-20.48%
62
Neutral
$8.03B15.0249.74%7.43%8.77%15.22%
57
Neutral
HK$83.05B3.63-2.37%4.93%-4.66%-42.32%
56
Neutral
$14.85B26.6210.09%7.78%3.40%-15.90%
* Energy Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
WES
Western Midstream Partners
38.77
0.00
0.00%
PAA
Plains All American
18.36
0.82
4.68%
PAGP
Plains GP Holdings
19.27
0.71
3.83%
AM
Antero Midstream
17.94
4.14
30.00%
HESM
Hess Midstream Partners
37.83
3.36
9.75%
DTM
DT Midstream
104.80
37.73
56.25%

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
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: Jun 27, 2025