HESM Intrinsic Value Calculation – Investing in Hess Midstream: When Paying More is Worth it
May 6, 2023
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Hess ($NYSE:HESM) Midstream LP (HESM) is an energy infrastructure company focused on the production, gathering, processing, storage, and transportation of crude oil and natural gas. HESM provides midstream services such as crude oil gathering, dehydration, storing, and blending services to producers in some of the most prolific oil-producing areas in the U.S. When it comes to investing in Hess Midstream, it’s important to remember that sometimes paying a premium is still worth it. While HESM is not a bargain stock, it can still be a good thing to own. The company has a strong balance sheet, and its cash flows are expected to be stable over the long term. This stability provides investors with attractive returns and dividend yields that have been consistently growing.
In addition, HESM has a diversified customer base, which ensures a steady source of income. Finally, the company is well-positioned to benefit from increased activity in the U.S. energy sector as more companies look to take advantage of the favorable economics of producing and transporting oil and natural gas. In summary, investing in Hess Midstream can be a smart decision even if it isn’t the cheapest stock out there. With its stable cash flows and wide-ranging customer base, HESM has the potential to provide investors with reliable returns and attractive dividend yields over the long run.
Price History
This slight increase may seem insignificant, but it speaks volumes about the company’s potential for growth and thus, is highly attractive for investors. With strong management and business operations, HESM has a promising future. The company’s top-notch services in the energy industry are reflected in its financial performance. This indicates that the company is well-positioned to deliver strong returns in the near future. Hess Midstream LP is focusing on providing customers with reliable and efficient service and this strategy is paying off. The company has seen healthy growth in its customer base and revenues, indicating that its business operations are sound.
As such, investing in HESM is a good decision as it offers higher returns than other midstream companies in the energy sector. The company has a strong management team that is focused on providing customers with high quality service and this strategy is reflected in its financial performance. With strong fundamentals and high potential for growth, HESM is an attractive investment for those looking for higher returns. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for HESM. More…
| Total Revenues | Net Income | Net Margin |
| 1.27k | 87.7 | 6.9% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for HESM. More…
| Operations | Investing | Financing |
| 861.1 | -238.2 | -622 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for HESM. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 3.59k | 3.06k | 5.56 |
Key Ratios Snapshot
Some of the financial key ratios for HESM are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 10.1% | 21.8% | 62.4% |
| FCF Margin | ROE | ROA |
| 49.1% | 201.7% | 13.8% |
Analysis – HESM Intrinsic Value Calculation
At GoodWhale, we recently conducted an analysis of HESS MIDSTREAM LP’s wellbeing. Using our proprietary Valuation Line, we determined that the fair value of HESS MIDSTREAM LP shares is $19.8. However, at the time of writing, the share price was trading at $28.9, which suggests it is overvalued by 46.3%. This highlights a potential opportunity for investors to take advantage of the current market conditions and to purchase HESS MIDSTREAM LP shares at a discount. More…
Peers
The company’s assets include crude oil and natural gas gathering systems, pipelines, storage tanks, and terminals. Hess Midstream LP is headquartered in Houston, Texas. The company’s competitors include Rattler Midstream LP, EnLink Midstream LLC, Kinetik Holdings Inc.
– Rattler Midstream LP ($NYSE:ENLC)
EnLink Midstream LLC has a market cap of 5.96B as of 2022. The company’s return on equity is 32.09%. EnLink Midstream is engaged in the business of gathering, transporting, processing, marketing and storing natural gas and natural gas liquids (NGLs). The company operates in Oklahoma, Texas, Louisiana and New Mexico.
Summary
HESS Midstream LP (HESM) is a midstream energy company primarily engaged in the gathering, production, storage and transportation of crude oil and natural gas. Investing analysis of HESM reveals that, although it is trading at a slightly lower valuation than its peers, this is actually beneficial for investors. HESM has managed to acquire more assets than its peers, resulting in a higher revenue and EBITDA growth rate. Furthermore, HESM has also shown a more conservative approach with its dividend yields and debt levels, which helps to ensure that it can continue to pay out a steady dividend to its investors.
Additionally, the company’s financials show that it is well capitalized and has a strong cash position. These facts suggest that HESM is a good investment choice for those looking for midstream exposure with lower risk and potential for steady returns.
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