BUCKEYE PARTNERS L.P. $48 (New York symbol BPL; Income Portfolio, Utilities sector; Units outstanding: 97.8 million; Market cap: $4.7 billion; Price-to-sales ratio: 1.0; Dividend yield: 8.6%; TSINetwork Rating: Average; www.buckeye.com) operates over 9,600 kilometres of pipelines in the northeastern and midwestern U.S. Its network pumps gasoline, jet fuel and other petroleum products. Buckeye also owns oil and natural gas storage terminals and other related businesses.
The partnership continues to expand by acquisition. In February 2012, it agreed to buy a terminal in New York Harbour. That gives it access to the Atlantic Ocean, which makes it easier for Buckeye to import oil from foreign producers. From there, it can pump the oil through its pipelines to its customers.
Buckeye will pay $260 million for this terminal when the purchase closes later this year. It recently sold $250 million of new units to cover most of this cost.
Meanwhile, Buckeye earned $52.0 million in the first quarter of 2012. That’s down 21.9% from $66.5 million a year earlier. Because of more units outstanding, earnings per unit fell 31.6%, to $0.54 from $0.79. The drop was mainly because mild winter weather cut demand for home heating oil. Revenue rose 0.6%, to $1.26 billion from $1.25 billion.
Buckeye trades at 16.9 times its likely 2012 earnings of $2.84 a unit. The $4.15 annual distribution rate yields 8.6%.
Buckeye is a hold.
