NGL Energy Partners: Capacity Expansion Indicates Undervaluation

(15min)

Summary

  • LEX II expansion will significantly boost NGL's capacity and free cash flow, supporting strong future growth potential.
  • Recent asset sales and debt refinancing improve NGL's financial profile, lowering net debt and potentially attracting new investors.
  • NGL appears deeply undervalued, trading below net property and equipment value, with a DCF-based fair value above $6 per share.
  • Despite risks from debt and industry cycles, consistent free cash flow and strategic assets make NGL a compelling buy at current prices.

Gas Pipeline In Front Of The Oil Pump

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NGL Energy Partners LP (NGL) will most likely experience large increases in capacity thanks to LEX II expansion, which will most likely multiply free cash flow growth in the future. Also, taking into account the recent debt refinancing announced

This article was written by

Based in Europe, I am an independent investor with more than a decade of experience. I research cash flow statements and unlevered free cash flow figures. My articles may include a number of assumptions about the future free cash flow of companies. Many of those assumptions are based on previous financial figures reported, and my own forecasts about the future of the of the business model. My financial models could also include different financial figures including cost of capital, cost of debt, WACC, share count, net debt and other information. I will try to write about companies that reported financial figures for a long time. Hence, I usually do not write about growth stocks. With regards to trading multiples, I usually study EV/FCF, net income, and EV/EBITDA. I want to be part of this community because Seeking Alpha offers beneficial information to investors, readers, and analysts. I am here to learn from others, and from the market.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of NGL either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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