Hess Midstream (HESM, Financial) has declared a quarterly cash distribution of 70.98 cents per Class A share for the first quarter of 2025. This marks an increase of 0.86 cents compared to the previous quarter's payout. The decision aligns with the company's strategic plan to boost annual distributions by 5% per Class A share until 2027.
According to Hess Midstream's Chief Financial Officer, the company's financial strategy focuses on ensuring consistent capital returns to shareholders. They anticipate maintaining financial flexibility exceeding $1.25 billion through 2027. This capital reserve supports their framework for returning value to shareholders and may potentially fund unit repurchases, further enhancing distribution per share in the future.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 4 analysts, the average target price for Hess Midstream LP (HESM, Financial) is $44.75 with a high estimate of $48.00 and a low estimate of $42.00. The average target implies an upside of 15.04% from the current price of $38.90. More detailed estimate data can be found on the Hess Midstream LP (HESM) Forecast page.
Based on the consensus recommendation from 5 brokerage firms, Hess Midstream LP's (HESM, Financial) average brokerage recommendation is currently 2.2, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Hess Midstream LP (HESM, Financial) in one year is $17.49, suggesting a downside of 55.04% from the current price of $38.9. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Hess Midstream LP (HESM) Summary page.
HESM Key Business Developments
Release Date: January 29, 2025
- Net Income (2024): $659 million.
- Adjusted EBITDA (2024): $1.136 billion, a 12% increase from 2023.
- Gas Processing Volumes (Q4 2024): 447 million cubic feet per day.
- Crude Terminaling Volumes (Q4 2024): 127,000 barrels of oil per day.
- Water Gathering Volumes (Q4 2024): 130,000 barrels of water per day.
- Capital Expenditures (2025): Approximately $300 million.
- Projected Adjusted EBITDA (2025): $1.235 billion to $1.285 billion, an 11% increase at the midpoint compared to 2024.
- Net Income (Q4 2024): $172 million.
- Adjusted EBITDA (Q4 2024): $298 million.
- Gross Adjusted EBITDA Margin (Q4 2024): Approximately 80%.
- Adjusted Free Cash Flow (Q4 2024): Approximately $164 million.
- Leverage Ratio: Approximately 3.1 times adjusted EBITDA.
- Distribution Growth (2024): Increased by over 10%.
- Shareholder Returns (Since 2021): $1.95 billion returned through repurchases.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Hess Midstream LP (HESM, Financial) reported a 14% year-over-year growth in gas processing throughputs for 2024.
- The company extended its guidance release, projecting gas volumes to grow by more than 25% from 2024 through 2027.
- Hess Midstream LP (HESM) achieved a full year adjusted EBITDA of $1.136 billion in 2024, representing a 12% growth from 2023.
- The company plans to maintain a 4-rig drilling program in 2025, supporting continued production growth.
- Hess Midstream LP (HESM) has a strong financial strategy with a focus on returning capital to shareholders, having returned $1.95 billion since 2021.
Negative Points
- Severe winter weather in January 2025 is expected to impact first-quarter volumes, potentially affecting financial performance.
- The company anticipates a temporary reduction in gas volumes in 2027 due to planned regulatory inspections and maintenance at the Tioga Gas Plant.
- Capital expenditures are expected to remain high, with $300 million planned for 2025, which may impact free cash flow.
- Hess Midstream LP (HESM) faces potential challenges in maintaining growth beyond 2027 without further infrastructure investments.
- The company's growth is heavily reliant on Hess Corporation's development activity, which could pose risks if there are changes in Hess's strategy.
