Timely thematic topic: Are the stars aligning for midstream investors? We think so!

Energy 5/20/2021
Download as PDF

 

Yet valuations are still below long-term averages – approximately 30% below fair value! And this excludes any returns from distributions.

Compelling valuation and yield

Source: Bloomberg, TCA Estimates; as of 3/31/2021. Note: Dashed line approximates +/-1 Standard Deviation. Midstream C-Corps represented by Tortoise North American Pipeline Index (TNAP).

 

Midstream, unlike the broad market, is cheap while providing high current income.

Yield comparison

Growing free cash flow yield

As of 4/15/2021. Sources: Tortoise Capital Advisors, Goldman Sachs, UBS, Barclays.
Reflects Tortoise Capital Advisors’ views and opinions as of date herein which are subject to change at any time based on market and other conditions. *S&P estimates exclude Financials and Real Estate; **Utilities = S&P Utilities Select Sector Index, REITs=FTSE NAREIT Equity REIT Index, 10 Yr=10 Year Treasury. Please see index descriptions for description of indices. Projections on this page are shown for informational purposes only and no guarantee of future outcomes.

 

  • We believe midstream free cash flow yield attractive versus broad market
  • Capital returned directly to shareholders via dividends, debt pay down and share buybacks

This commentary contains certain statements that may include “forward-looking statements.” All statements, other than statements of historical fact, included herein are “forward-looking statements.” Although TortoiseEcofin believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect; actual events could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors. You should not place undue reliance on these forward looking statements, which speak only as of the date of this publication. TortoiseEcofin does not assume a duty to update these forward-looking statements. The views and opinions in this commentary are as of the date of publication and are subject to change. This material should not be relied upon as investment or tax advice and is not intended to predict or depict performance of any investment or any fund managed by TortoiseEcofin. This publication is provided for information only and shall not constitute an offer to sell or a solicitation of an offer to buy any securities.

Past performance is no guarantee of future results.