MPLX shares represent an opportunity for dividend-oriented investors

By: Stanko Iliev
Stanko Iliev
Stanko dedicates himself to providing investors with relevant information they can use to make investment decisions. He loves the outdoors, enjoys… read more.
on Jun 9, 2021
  • MPLX began the second quarter in a strong position
  • The current dividend yield is around 9%
  • Shares of this company have upside potential

MPLX (NYSE: MPLX) shares have been moving in an uptrend last several months, and the technical picture implies that the price could stabilize above $30 resistance this June. The oil price also remains supported, and OPEC expects a stronger oil demand recovery in the second half of this year.

Fundamental analysis: MPLX began the second quarter in a strong position

MPLX is a natural gas company that owns and operates crude oil and natural gas gathering systems and pipelines as well as natural gas and natural gas liquids (NGL) processing and fractionation facilities in key U.S. supply basins.

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MPLX reported better than expected first fiscal quarter results at the beginning of May; total revenue has increased by 135.9% Y/Y to $2.34 billion, while the GAAP EPS was $0.68  (beats by $0.06). The company demonstrated strong execution in the first quarter and achieved significantly higher levels of profitability.

Total revenue has increased above expectations (+200 million) while the company generated $1.1 billion in net cash provided by operating activities during the first quarter. It is also important to mention that MPLX returned $155 million to shareholders during the first quarter through the repurchase of over 6 million shares.

“With our continued capital and expense, discipline and rose in EBITDA, we expect to continue generating excess cash flow for 2021, providing financial flexibility to pursue value-creating opportunities for our unitholders, including unit repurchases,” said Pam Beall, Chief Financial Officer of MPLX.

MPLX began the second quarter in a strong position, concerns over the pace of vaccination campaigns in many parts of the world still represent an issue, but despite this, OPEC expects a stronger oil demand recovery in the second half of this year.

MPLX represents an opportunity for dividend-oriented investors, the current dividend yield is around 9%, and with a market capitalization of $30 billion, shares of this company are not expensive. Oil price continues to perform well, and maybe now is the right moment to buy MPLX shares.

MPLX trades at less than seven times 2020 EBITDA, and thanks to resilient operations and a healthy balance sheet, shares of this company have upside potential.

Technical analysis: The positive trend remains intact

Data source: tradingview.com

MPLX shares are advancing at the beginning of June, and for now, the positive trend remains intact. If the price jumps above $32, the next target could be around $34, but if the price falls below the $28 support level, it would be a “sell” signal.

Summary

MPLX reported better than expected first-quarter results, and the technical picture implies that the price could stabilize above $30 resistance this June. MPLX trades at less than seven times 2020 EBITDA, and thanks to resilient operations and a healthy balance sheet, shares of this company have upside potential.

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