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What Will NGL Energy Partners' (NGL) Q4 Earnings Unveil?

Zacks Equity Research
·4 min read

NGL Energy Partners LP NGL is set to release fiscal fourth-quarter 2023 results on May 31. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 15 cents per share on revenues of $2.3 billion.

Let’s delve into the factors that might have influenced the diversified energy master limited partnership’s performance in the March quarter. But it’s worth taking a look at NGL’s previous-quarter performance first.

Highlights of Q3 Earnings & Surprise History

In the last reported quarter, this Tulsa, OK-based midstream operator beat the consensus mark on the back of higher water disposal volumes. NGL had reported earnings per unit of 19 cents, 7 cents above the Zacks Consensus Estimate. However, revenues of $2.1 billion generated by the firm came in below the Zacks Consensus Estimate of $2.6 billion due to weak sales from the Liquids Logistics unit.

NGL missed the Zacks Consensus Estimate in three of the last four quarters and beat in the other, which resulted in a negative earnings surprise of 207.3%, on average. This is depicted in the graph below:

 

NGL Energy Partners LP Price and EPS Surprise

NGL Energy Partners LP price-eps-surprise | NGL Energy Partners LP Quote

Factors to Consider

NGL is expected to have reaped the reward of strong growth in its Water Solutions business, which specializes in services for the treatment and disposal of wastewater generated from oil and gas production. In the previous three-month period, the segment’s operating income more than tripled year over year to $59.7 million. This positive momentum is most likely to have continued in the fiscal fourth quarter, thanks to higher produced water processing on a daily basis at its network of large diameter pipelines. This is likely to have buoyed the results of NGL.

On a somewhat bearish note, the decrease in the partnership’s Liquids Logistics operating income might have dented its to-be-reported bottom line. NGL’s fiscal third-quarter operating income from the segment — purchasing refined and other products and shipping to retailers, refiners, or other wholesalers — totaled $20.5 million, down from the $23.2 million in the year-ago period. The downward income trajectory is likely to have continued in the fiscal fourth quarter due to higher product costs and unfavorable weather.

What Does Our Model Say?

The proven Zacks model does not conclusively show that NGL Energy Partners is likely to beat estimates in the fiscal fourth quarter of 2023. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: NGL has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 15 cents per share each.

Zacks Rank: NGL currently carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult this earnings season.

Stocks to Consider

While an earnings beat looks uncertain for NGL, here are some firms that you may want to consider on the basis of our model:

Ferguson plc FERG has an Earnings ESP of +7.64% and a Zacks Rank #2. The firm is scheduled to release earnings on Jun 6.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Ferguson beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other. It has a trailing four-quarter earnings surprise of 4.7%, on average. Valued at around $29.5 billion, FERG has gained 18.9% in a year.

lululemon athletica inc. LULU has an Earnings ESP of +0.24% and a Zacks Rank #3. The firm is scheduled to release earnings on Jun 1.

lululemon athletica beat the Zacks Consensus Estimate for earnings in each of the last four quarters. It has a trailing four-quarter earnings surprise of 6.8%, on average. Valued at around $43.8 billion, LULU has gained 16.6% in a year.

Macy’s, Inc. M has an Earnings ESP of +2.81% and a Zacks Rank #3. The firm is scheduled to release earnings on Jun 1.

Macy’s expected EPS growth rate for three to five years is currently 12%, which compares favorably with the industry's growth rate of 10%. Valued at around $4.1 billion, M has lost 40.1% in a year.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Zacks Investment Research