2024-03-16 06:23:29 ET
Summary
- Western Midstream's recent 50% distribution increase is impressive.
- This increase may raise some eyebrows due to the unusually large increase.
- The company's financials show adequate amounts of free cash flow to sustain the raise but project to create a slight cash burn in 2024.
- Any operational disruptions could cause the company to have to take on debt to cover the negative cash flow.
- The risk versus reward is an asymmetric bet which leads me to rate the company as a BUY.
Thesis
I last covered Western Midstream ( WES ) in February 2023 with a buy rating at a price of $27.17/unit. Investors have enjoyed a total return of 35% since the original publication....
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For further details see:
Western Midstream: Redlining The Balance Sheet