MPLX (MPLX) Completed Major Debt Offerings, Does It Look Fully Valued?
Why MPLX stock is in focus after its latest financing move
MPLX (MPLX) has come into focus after completing more than US$2b of fixed income offerings across several maturities. These new senior unsecured notes reshape the company’s funding mix for future requirements.
See our latest analysis for MPLX.
The recent fixed income offerings sit alongside other corporate moves from MPLX, including ongoing share repurchases and recent earnings, with the stock’s 30 day share price return of 4.77% and 1 year total shareholder return of 30.36% indicating building momentum.
If you want to see what else income focused investors are watching in energy infrastructure, it could be worth scanning 36 power grid technology and infrastructure stocks
MPLX trades only slightly below the average analyst price target, while some models suggest a much larger discount to estimated fair value after the latest bond issuance. Is the market being cautious for good reason, or overly restrained?
Most Popular Narrative: 1.3% Undervalued
MPLX is trading at $59.94 against a most followed narrative fair value of $60.71, which frames the recent bond deal inside a broader long term growth story.
Large-scale expansions in sour gas treating, NGL fractionation, and Permian processing capacity targeting rising natural gas and NGL production and export demand leverage global growth in energy consumption (particularly in emerging markets) and the continued critical role of fossil fuels in electricity generation, positioning MPLX to benefit from stable or growing revenues and EBITDA through at least the late 2020s.
Want to see what sits behind that growth path for MPLX? The narrative focuses on steady top line expansion, firm margins and a higher future earnings multiple.
Result: Fair Value of $60.71 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, MPLX still faces real swing factors, including concentrated exposure to U.S. oil and gas cycles and the risk that large expansion projects fail to earn expected returns.
Find out about the key risks to this MPLX narrative.
Another view on MPLX valuation
One perspective suggests MPLX is only 1.3% undervalued. However, our DCF work presents a different view. At $59.94, MPLX trades well below an SWS DCF model estimate of $130.35, indicating a much larger gap. Which set of assumptions seems more realistic to you?
Look into how the SWS DCF model arrives at its fair value.
Next Steps
Given the mixed signals around MPLX in this article, it makes sense to move quickly and check the underlying data yourself so you can decide how much weight to give both the concerns and the potential upside. To go deeper into both sides of the story, review the 3 key rewards and 2 important warning signs
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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