MPLX (NYSE: MPLX) shares have advanced from $6.87 above $23 since the middle of March, and the current price stands around $21.65. The dividend yield is 12.7% at the current share price, and MPLX is the company that long term investors should have on their watchlist.
Fundamental analysis: MPLX will lower its capital spending, but the cash flow remains relatively stable
MPLX (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. MPLX shares are currently trading around $21.65, and at the current share price, MPLX dividend yield is 12.7%.
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This very high dividend yield looks like it can be kept in place going forward, but the company’s CEO warned that global demand for MPLX products and services remains significantly below historical levels.
“Despite some recovery, global demand for our products and services remains significantly below historical levels, which continues to pressure profitability for our company and the industry,” said CEO Michael Hennigan.
MPLX has reported Q3 results at the beginning of November; total revenue has decreased by 1.3% Y/Y to $2.25B while Q3 GAAP EPS was $0.61 (beats by $0.03). The cash flow is relatively stable for MPLX, and according to the management of the company, MPLX will lower its capital spending drastically in 2021.
The company’s business will be affected by the COVID-19 pandemic certainly the next several months, but MPLX is the company that long term investors should have on their watchlist. This stock is not overvalued thanks to resilient operations and a healthy balance sheet and certainly remains a quality pick in the natural gas industry.
Despite this, maybe it is now not the best moment to buy MPLX shares, and I would wait for this stock at a lower price level. If the price falls in the upcoming period, every price in a range from $10 – $15 could be a good opportunity to invest in MPLX shares.
Technical analysis: MPLX shares have stabilized above the $20 support level
MPLX shares have stabilized above the $20 support level, and with a $22B market capitalization, this stock is reasonably valued.
The critical support levels are $20 and $16; $24 and $26 represent the resistance levels. If the price jumps above $24, it would be a signal to buy MPLX shares, and the next target could be around $26, but if the price falls below the $16 support level, it would be a firm “sell” signal.
MPLX is moving in the right direction, and at the current share price, the dividend yield is 12.7%. This very high dividend yield looks like it can be kept in place going forward, but the company’s business will be affected by the COVID-19 pandemic certainly the next several months. Maybe it is now not the best moment to buy MPLX shares, but this is the stock that long-term investors should have on their watchlist.
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