Undervalued Stock #2: EQT Midstream Partners LP (EQM)
8EQT Midstream Partners LP (EQM) owns, operates, acquires and develops midstream assets in the Appalachian Basin. Midstream assets include the processing, storing, transporting and marketing of oil, natural gas and natural gas liquids. EQT Midstream operates through two segments: Transmission and Storage, and Gathering Systems.
EQT Midstream’s operations are primarily focused in southwestern Pennsylvania and northern West Virginia, a strategic location in the core of the natural gas shale areas known as the Marcellus and Utica Shales. EQM has become a leading Appalachian Basin midstream energy company.
Sales will likely advance 15% and EPS will rise 7% to $5.68 in 2017. Management expects rapid growth in 2017, which could receive a boost from the Trump administration if pipeline construction restrictions are loosened. With a price to earnings ratio (P/E) of 13.2 times current EPS, EQM shares are clearly undervalued. EQT Midstream raised its quarterly dividend for the 20th consecutive quarter. The raise to $0.89 from $0.85 increases the dividend yield to 4.5%. EQM forecasts 20% growth in its annual per unit distribution for 2017. Buy.