Hess Midstream (HESM): Assessing Valuation Following Strong Q3 Results and Dividend Hike
Hess Midstream (HESM) put out a strong third quarter update, showing solid gains in both revenue and net income compared to last year. The company also hiked its full-year earnings guidance, completed a share buyback, and boosted its quarterly dividend. This drew attention from investors focused on ongoing performance and shareholder value.
See our latest analysis for Hess Midstream.
After a choppy few months for energy stocks, Hess Midstream’s strong results, raised guidance, and generous dividend boost have caught investors’ attention. While the share price has dipped around 10% year-to-date, the story looks very different over the longer term. The company delivered a 4.4% total shareholder return over the past year and a 194% total return over five years, suggesting underlying momentum is still very much alive.
If you’re inspired by this combination of financial strength and steady returns, it could be the perfect moment to broaden your investing search and discover fast growing stocks with high insider ownership
The numbers show clear progress. With shares trading at a discount to analyst targets and strong growth in underlying metrics, is there real value left to be claimed, or has the market already priced in future gains?
Most Popular Narrative: 8.4% Undervalued
Compared to its last close at $33.91, the most widely followed narrative values Hess Midstream at $37, suggesting the stock still trades at a discount. This valuation focuses on robust fee-based contracts, high cash returns, and core infrastructure, while also acknowledging the impact of more cautious industry growth assumptions.
Multi-year minimum volume contracts with Hess Corp (now under Chevron), provide highly predictable, inflation-resistant fee-based revenue streams through the late 2030s. This supports stable adjusted EBITDA and consistent dividend/distribution growth.
Want to know what’s behind this discount? The narrative’s fair value calculation is powered by unusually aggressive long-term margin expansion and premium-level profit multiples. Curious which business drivers and financial tailwinds contribute to this future upside? Read on to unpack the bold projections beneath this surface-level undervaluation.
Result: Fair Value of $37 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, sustained weakness in Bakken activity or shifts in Chevron's strategy could quickly curb throughput growth and challenge the current bullish outlook.
Find out about the key risks to this Hess Midstream narrative.
Build Your Own Hess Midstream Narrative
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A great starting point for your Hess Midstream research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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