HESM
Hess Midstream LP
$30.66
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Undervalued
Trading 38.1% below fair value
You pay
$30.66
Bear
$39.62
Fair
$49.52
Bull
$59.43
Bear
$39.62
+29.2%
$2.86 × 14x P/E
Fair
$49.52
+61.5%
$2.86 × 17x P/E
Bull
$59.43
+93.8%
$2.86 × 21x P/E
Adjust Assumptions
17.3x
2.86$
Key Value Driver
Normalized P/E multiple (17x base case)
Implied Market Multiple
10.7x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (9 analysts)
$35.50
Divergence from AlphaVal
39%
Summary
Applying a 17x P/E to adjusted EPS of $2.86, the base-case value is $49.52 per share. DDM cross-check: $1058.69.
Warnings
The company pays out 108% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Dividend-based valuation: $1058.69 (above our primary estimate by 2038%). 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 39% 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