HESM
Hess Midstream LP
$39.98
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Mild
·
Conviction
Fair Value
Trading 14.5% below fair value
You pay
$39.98
Bear
$37.42
Fair
$46.76
Bull
$56.12
Bear
$37.42
-6.4%
$2.86 × 14x P/E
Fair
$46.76
+17.0%
$2.86 × 17x P/E
Bull
$56.12
+40.4%
$2.86 × 21x P/E
Key Value Driver
Normalized P/E multiple (17x base case)
Implied Market Multiple
14.0x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $35.50 from 9 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $46.76 per share.
Warnings
The company pays out 106% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Dividend-based valuation: $2235.28 (above our primary estimate by 4408%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $35.50 (from 9 analysts). Our estimate is 40% above the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples