MPLX LP (MPLX) Update - May 18

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dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

MPLX LP (MPLX) Update - May 18

Post by dan_s »

I have updated my valuation of MLPX to $40.00. My updated forecast/valuation model has been posted to the EPG website.
At the time of this post, MPLX was trading at $31.06.
The most recent quarterly cash distribution was $0.705/unit ($2.82/year) for annualized yield of 9.1%.

TipRanks:
"Since May 1st, four highly respected energy sector analysts have updated their price targets from $36.00 to $40.00 (RBC Capital on 5/4)."

From the MPLX Q1 press release on May 3
"During the quarter, MPLX generated $1,125 million in net cash provided by operating activities, $1,210 million of distributable cash flow, and free cash flow after distributions of $92 million. MPLX announced a first-quarter 2022 distribution of $0.7050 per common unit, resulting in coverage ratio of 1.65x for the quarter and a leverage ratio of 3.7x."

"MPLX's free cash flow generation enabled the return of over $850 million of capital to unitholders through both distributions and unit repurchases," said Michael J. Hennigan, MPLX chairman, president, and chief executive officer. "We are advancing several organic growth projects focused on expansions and de-bottlenecking. These actions will continue to support the growth of MPLX, allowing our business to generate free cash flow and return capital to unitholders."
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MY TAKE:
MPLX offers rock solid cash distributions and ~20% upside, based on my valuation.
MPLX is one of the large-cap midstream companies in our High Yield Income Portfolio.
It was created and is controlled by Marathon Petroleum (MPC), which owns ~63.9% of the outstanding units.
I give it an A+ safety rating.
Because it is a MLP, the cash distributions are tax deferred (at least partially).
Dan Steffens
Energy Prospectus Group
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