Investment Thesis
Western Midstream generates strong operating margins (41.8%) and positive free cash flow ($109M), typical of regulated natural gas transmission. However, flat revenue growth (0% YoY) and declining net income (-2.6% YoY) signal business maturity without expansion. Adequate debt service coverage (4.1x) but tight liquidity (1.09x current ratio) limits financial flexibility.
Strengths
- Exceptional operating margins of 41.8% and net margins of 31.2% reflect efficient utility-like business model
- Positive free cash flow of $109M with strong OCF of $469.9M provides distribution support for unitholders
- Interest coverage ratio of 4.1x indicates manageable debt servicing capacity relative to earnings
Risks
- Zero revenue growth (0% YoY) with declining net income (-2.6% YoY) suggests business maturity and limited upside
- Tight liquidity position (1.09x current ratio) constrains financial flexibility for capital needs or economic stress
- High absolute debt burden ($8.2B) against modest free cash flow ($109M) limits growth investment capacity
Key Metrics to Watch
- Free cash flow trend and distribution coverage ratio for unitholder sustainability
- Revenue growth rate inflection - any recovery from current 0% would signal renewed demand
- Debt-to-EBITDA ratio to monitor leverage trends relative to cash generation
Financial Metrics
Revenue
1.1B
Net Income
350.3M
EPS (Diluted)
$0.00
Free Cash Flow
109.0M
Total Assets
14.9B
Cash
647.5M
Profitability Ratios
Gross Margin
N/A
Operating Margin
41.8%
Net Margin
31.2%
ROE
N/A
ROA
2.3%
FCF Margin
9.7%
Balance Sheet & Liquidity
Current Ratio
1.09x
Quick Ratio
1.09x
Debt/Equity
N/A
Debt/Assets
76.5%
Interest Coverage
4.14x
Long-term Debt
8.2B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-08T13:03:11.180347 |
Data as of: 2026-03-31 |
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