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Analysts were expecting Spectra Energy Partners, LP (SEP) [Chart - News - Analysis] to report earnings of $0.43 for last quarter, but SEP beat expectations with actual earnings of $0.48---5 cents above the consensus estimate.
If you compare last quarter's earnings to the $0.34 the company made per share during the same quarter a year ago, you can see that SEP’s earnings are up this year.
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Also, if you compare SEP's 6.50% projected earnings-per-share (EPS) growth rate for the next five years with the projected EPS growth rate of 7.22% for the Oil & Gas Pipelines industry as a whole during that same time frame, you can see that analysts expect SEP to underperform the industry in the future---which is a bad sign for the stock.
Drilling down a little deeper into the Oil & Gas Pipelines industry, you can see how analysts believe SEP will stack up against some of the other stocks in the industry, like El Paso Corp. (EP) [Chart - News - Analysis] and Spectra Energy Corp. (SE) [Chart - News - Analysis], in the future. Analysts believe EP's earnings are going to grow at a rate of 6.00% while SE's earnings are going to grow at a rate of 7.50%.
Earnings season can be a volatile time in the stock market. Check out these videos and articles to be better prepared to take advantage of the large price moves that tend to accompany earnings announcements.
El Paso Corporation (EP) reported an adjusted EPS of 23 cents for the third quarter of 2009, slightly above the Zacks Consensus Estimate of 22 cents, but below 35 cents posted in the same quarter a year ago. Encouraging performance in the Pipeline segment, which clocked an 17% operating earnings growth, was more than offset by lower realized commodity prices.
Reported net income, which includes the impact of production-related derivatives, ceiling test charges and other items, declined to $58 million or 8 cents per share from $436 million or 58 cents per share. Revenues dropped 39% to $981 million and operating income fell 61% to $329 million.
Operating income of Pipeline segment grew 17% to $326 million, driven primarily by incremental revenues from several expansion projects that went into service during 2008 and 2009. Results also benefited from lower operating & maintenance costs and higher volumes and realized prices on operational sales of gas not used in operations. Pipeline throughput volumes averaged 17,757 billion British thermal unit per day (BBtu/d) compared to the year-ago level of 18,905 BBtu/d.
Operating income of the Exploration and Production segment declined 83% to $88 million, mainly due to lower realized commodity prices, lower production volumes, lower hedging gains and impairment charges, partially offset by lower cash operating costs and lower DD&A expense. Realized natural gas price averaged $7.37 per Mcf (down 15%) and oil, condensate and NGL price averaged $82.25 per Bbl (down 7%).
However, per unit cash operating costs improved to $1.78 from $1.89 largely due to lower lease operating expenses and production taxes. Production volumes, including contributions from unconsolidated associates, averaged 732 million cubic feet of natural gas equivalents per day (MMcfe/d), down 8% year-over-year from 793 MMcfe/d.
The Marketing segment posted an operating loss of $28 million compared to an operating gain of $82 million a year ago largely due to hedging losses. The Power segment reported an operating loss of $8 million compared to an operating loss of $6 million in the year-ago quarter.
El Paso’s Board of Directors cut the quarterly dividend from 5 cents to 1 cent per share. The dividend reduction will result in approximately $112 million of annual cash savings. El Paso intends to sell an additional $300 million to $500 million of assets during 2010. It raised the 2009 adjusted EPS guidance to $1.15 to $1.20. Read the full analyst report on "EP" Zacks Investment Research
Utilities sector seems to be a boring sector. This is evident from average weighted alpha (an indicator of stock price changes) for the sector which ranges from 29.31 for the gas utilities to 60.01 for the telephone utilities compared to the weighted alpha range of 354.23 to -75.35 for all industry sectors.[More...]
Citigroup gave the Oil & Gas Pipelines industry some bad news as it announced a downgrade on one of its stocks.
El Paso Corp. (EP) [Chart - News - Analysis] was downgraded from Buy » Hold on 10/21/2009---a negative sign for the stock that investors will have to endure. FYI, Citigroup uses the following rating scale when analyzing stocks: Buy, Hold, Sell.
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El Paso Corp. has an average analyst recommendation score of 2.3 and competes for investment dollars with Kinder Morgan Energy Partners LP (KMP) [Chart - News - Analysis] and Spectra Energy Corp. (SE) [Chart - News - Analysis]---two other stocks in the Oil & Gas Pipelines industry that have average analyst recommendation scores of 2.5 and 2.5 respectively.
Analyst recommendations are averaged and scored using the following rating scale:
- 1.0 = Strong Buy
- 2.0 = Buy
- 3.0 = Hold
- 4.0 = Sell
- 5.0 = Strong Sell
Why are Upgrades and Initiations Good and Downgrades Bad?
One event that is almost certain to get a reaction from Wall Street is an analyst upgrade or downgrade. Everyone is looking for an edge in the stock market, and quite often, traders turn to stock analysts to get that edge.
Upgrades and coverage initiations are typically good for stocks because they show that analysts either believe that the stock is going to perform better in the future or that the stock is worth covering and providing analysis on.
Downgrades are typically bad for stocks because they show that analysts believe that the stock is going to perform worse in the future.
A stock analysts is a person---typically employed by a large bank, investment firm or analysis company---who devotes his/her life to learning and making predictions about a company and its future performance.
Stock analysts sift through company reports and filings, talk to company management, probe customers and competitors and basically do whatever they can to find out if a company is healthy and growing or sick and shrinking. Because this is incredibly demanding work, stock analysts typically only monitor one or two companies at a time.
Companies featured in this segment: Valero Energy (NYSE:VLO), Marathon Oil (NYSE:MRO), Chevron Corporation (NYSE:CVX), Exxon Mobil Corporation (NYSE:XOM), Jacobs Engineering Group (NYSE:JEC), Fluor Corporation (NYSE:FLR), Areva SA (EPA:CEI), El Paso Corporation (NYSE:EP), Rio Tinto plc (NYSE:RTP), BHP Billiton Limited (NYSE:BHP), Baoshan Iron and Steel Company (SHA:600019), ArcelorMittal (NYSE:MT), ABB Limited (NYSE:ABB), Abengoa Solar SA (MCX:ABG), Deutsche Bank AG (NYSE:DB), E.ON AG (OTC:EONGY), Munich Re (BIT:MUV2), RWE AG (OTC:RWEOY), Siemens AG (NYSE:SI), Wisconsin Energy Corporation (NYSE:WEC), Iberdrola SA (OTC:IBDRY), BHP Billiton Limited (NYSE:BHP), China Shenhua Energy Company Limited (SHA:601088), Peabody Energy Corporation (NYSE:BTU), Vale SA (NYSE:VALE), Gazprom OAO (OTC:OGZPY),
Deutsche Bank AG (NYSE:DB), JPMorgan Chase & Company (NYSE:JPM), Rio Tinto plc (NYSE:RTP), Severstal’ OAO (MCX:CHMF), Itochu Corporation (OTC:ITOCY)
Companies featured in this segment: Sysco Corporation (NYSE:SYY), Foster Wheeler AG (NASDAQ:FWLT), Nevsun Resources (TSX:NSU), El Paso Corporation (NYSE:EP), and Bharat Heavy Electricals Limited (BSE:500103)
Companies featured in this segment: KBR Incorporated (NYSE:KBR), Energy Transfer Partners LP (NYSE:ETP), Silver Standard Resources Incorporated (NASDAQ:SSRI), Barrick Gold Corporation (NYSE:ABX), Goldcorp Incorporated (NYSE:GG), and El Paso Corporation (NYSE:EP).
Companies featured in this segment: Inergy LP (NASDAQ:NRGY), Inergy Holdings LP (NASDAQ:NRGP), Southern Union Company (NYSE:SUG), El Paso Corporation (NYSE:EP), FPL Group Incorporated (NYSE:FPL), Progress Energy Incorporated (NYSE:PGN), Exelon Corporation (NYSE:EXC), and ThyssenKrupp AG (FRA:TKA),
Companies featured in this segment: Alcoa Incorporated (NYSE:AA), Aluminum Corporation of China (NYSE:ACH), Sterlite Technologies India Limited (NYSE:SLT), ONEOK Incorporated (NYSE:OKE), Dongfang Electric Corporation (SHA:600875), Duke Realty Corporation (NYSE:DRE), Sunoco Incorporated (NYSE:SUN), E.ON AG (OTC:EONGY), El Paso Corporation (NYSE:EP)
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