New MLP Hitting the Market Soon: Phillips 66 (PSX), Chevron Corporation (CVX)

For the expected valuation of the MLP, we can look at other similar MLPs such as Alon USA Partners LP (NYSE:ALDW) EBITDA and Northern Tier Energy LP (NYSE:NTI) that trade at 4.3 times and 4 times TTM EBITDA, respectively.  Analysts are expecting around a 5 EBITDA multiple for Phillips 66 (NYSE:PSX) MLP.  Like many MLPs, these two have low D/E ratios and high yields.  Alon yields 8.7% and Northern yields 16% for investors.  These dividends for both MLPs are significantly higher than the recent net earnings of the companies.

Conclusion

Following the announcement at the Analyst Day in December, the stock declined slightly.  While initially met with some disappointment due to fewer than expected assets included in the MLP, it is generally a positive for shareholders of PSX. The firm can create value for itself and future MLP holders as well as continue to invest in and develop its core business.  Next up is a filing of the S-1 that will likely occur in April 2013 which will give more details on the assets included.

The article New MLP Hitting the Market Soon originally appeared on Fool.com and is written by Mike Thiessen.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.