WEBULL

A Look At Antero Midstream (AM) Valuation After Ripple Effect’s New Stake And Stronger Cash Generation

Simply Wall St · 3d ago

Ripple Effect Asset Management recently disclosed a new position in Antero Midstream (AM), buying 510,000 shares worth about US$9.91 million, after the midstream operator reported stronger third quarter cash generation and lower leverage.

See our latest analysis for Antero Midstream.

Against this backdrop of stronger cash generation and lower leverage, Antero Midstream’s share price has eased in recent months, with a 30 day share price return showing a 7.98% decline and a 90 day share price return showing an 8.71% decline, even as its 1 year total shareholder return of 15.95% and 5 year total shareholder return of just over 3x point to momentum that has built over a longer period.

If you are looking beyond midstream for ideas, this could be a good moment to broaden your search and check out fast growing stocks with high insider ownership.

So with Ripple Effect buying in, cash generation improving and the shares trading below the average analyst price target while historical returns remain strong, is Antero Midstream quietly undervalued, or is the market already pricing in future growth?

Most Popular Narrative Narrative: 8.5% Undervalued

Against a last close of US$17.19, the most followed narrative points to a fair value of about US$18.79, putting current pricing under its fair value estimate.

Long-term, exclusive contracts with Antero Resources, combined with over 20 years of high-quality, dedicated natural gas inventory, ensure stable minimum volume commitments. This supports earnings visibility and lowers risk for future net margins.

Read the complete narrative.

Curious how relatively modest revenue growth, wider margins, and a richer future P/E multiple all fit together into that upside gap? The full narrative lays out the assumptions step by step, including how a sub double digit discount rate feeds into projected earnings power and informs that fair value.

Result: Fair Value of $18.79 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, this upbeat story can crack if Antero Resources pulls back activity in Appalachia, or if tighter environmental rules push up costs and squeeze margins.

Find out about the key risks to this Antero Midstream narrative.

Build Your Own Antero Midstream Narrative

If you see the data differently or prefer to test your own assumptions, you can build a custom narrative in just a few minutes with Do it your way.

A great starting point for your Antero Midstream research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

Looking for more investment ideas?

If you want to keep sharpening your watchlist, this is the moment to cast the net wider and line up a few new contenders.

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.