Hess Midstream LP (HESM)

Price$39.91Cached quoteAs of 2026-09-05 04:06 UTC

AI: Fair-priced

Price checkThe stock offers a strong cash yield, but its risks leave little obvious bargain.

At the observed market price, all economic units imply about $8.2 billion of equity value. Adding roughly $3.7 billion of net debt gives enterprise value—equity plus net debt—near $11.9 billion, about 9.5 times the midpoint of 2026 adjusted operating cash earnings. Midpoint adjusted free cash flow, cash left after interest and planned investment, is about $935 million, implying an 11.4% cash yield; the annualized distribution yields about 7.9%. Those are attractive, but leverage and concentration keep the margin of safety modest.

Big pictureCash generation has climbed steadily, while debt has grown even faster.

From 2020 to 2025, revenue rose 48%, adjusted operating cash earnings rose 67%, and operating cash flow rose 53% using the supplied SEC-derived history. Cash left after operating spending and capital investment increased from about $341 million to $728 million. First-half 2026 cash left after capital investment reached about $480 million, roughly 30% above the same 2025 period. Debt, however, climbed from $1.91 billion in 2020 to $3.77 billion in 2025 before easing to $3.68 billion by June 2026, so balance-sheet improvement now matters.

Business strengthLong contracts protect cash flow, but nearly one customer still drives the economics.

Substantially all revenue comes from long-term fee contracts with Chevron, and Chevron must support minimum volumes equal to 80% of its rolling three-year nominations or pay shortfall fees. Most agreements were extended through 2033 and include inflation-based pricing, which makes cash flows far steadier than an oil producer’s. Still, commodity cycles matter indirectly: lower oil prices can reduce Chevron’s future drilling, nominations, and volumes above minimum commitments. Chevron also owns about 37.7% of the operating partnership, making one sponsor both the dominant customer and a major owner.

What could change the storyFaster payouts and debt reduction could unlock upside; weaker Bakken volumes could erase it.

Reported Class A shares rose sharply since 2020, but SEC filings show sponsor Class B conversions are one-for-one and do not raise total economic units, so that headline increase is mostly not ordinary dilution. Capital returns are the bigger tradeoff: buybacks totaled about $2.25 billion from 2021-2025, and the latest $60 million repurchase was funded with revolver debt. A payout model assuming 5% distribution growth through 2028, then about 2% long-run growth, lands near the current valuation with an 11% required return. Debt reduction or stronger third-party volumes would improve the case; weaker Chevron nominations would hurt it.

AI: News

Second-quarter resultsCash flow strengthened even as revenue softened, and full-year guidance stayed intact.

On August 3, 2026, Hess Midstream reported second-quarter consolidated net income of $173.7 million and $96.4 million attributable to Class A holders. Operating cash flow was $278.6 million, while adjusted free cash flow—cash after interest and planned investment—was $231.6 million. The company reaffirmed full-year adjusted operating cash earnings of $1.225 billion-$1.275 billion and adjusted free cash flow of $910 million-$960 million. Shares ended the session almost unchanged, down about 0.2%; that timing does not prove the earnings caused the move.

Distribution increased againThe quarterly payout rose again, reinforcing management’s plan for steady income growth.

On July 27, 2026, the board raised the quarterly distribution to $0.7888 per Class A share, up $0.0096 from the prior quarter and consistent with management’s target of about 5% annual distribution growth through 2028. At the observed market valuation, the new annualized payout represents roughly a 7.9% yield. The stock fell about 2.0% that day, but the decline cannot be confidently attributed to the distribution announcement alone. The increase matters because it turns current cash generation into a tangible shareholder return.

Debt-funded repurchaseManagement bought back public and sponsor units, but used more borrowing to do it.

On March 3, 2026, Hess Midstream announced a $60 million repurchase: $42 million of public Class A shares and $18 million of Chevron-held Class B units. The public purchase ultimately retired about 1.07 million shares, while 455,811 sponsor units were cancelled. Both pieces were funded with revolving-credit borrowings. Repurchases lift cash flow and distributions per remaining unit, but debt funding means the benefit is not free: financial leverage rises unless future excess cash is used to repay borrowings. Public ownership remained roughly 62%, with Chevron near 38%.

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Financial statements

	2025	2024	2023	2022	2021	2020	2019	2018	2017
Revenue	$1.62B	$1.49B	$1.35B	$1.27B	$1.20B	$1.09B	$847.6M	$712.0M	$579.5M
Operating expenses	$370.6M	$347.3M	$531.7M	$484.0M	$476.6M	$515.4M	$471.7M	$334.5M	$316.4M
Operating income	$1.01B	$919.0M	$816.9M	$791.2M	$727.2M	$576.5M	$376.6M	$378.2M	$263.1M
Operating margin	62.34%	61.60%	60.69%	62.14%	60.41%	52.81%	44.43%	53.12%	45.40%
EBITDA	$1.22B	$1.12B	$1.01B	$972.5M	$892.8M	$733.4M	$519.1M	$505.1M	$379.6M
EBITDA margin	75.58%	75.21%	74.99%	76.38%	74.17%	67.19%	61.24%	70.94%	65.50%
Net income	$352.9M	$223.1M	$118.6M	$83.9M	$46.4M	$24.0M	$70.1M	$70.8M	$41.2M
Net profit margin	21.82%	14.95%	8.81%	6.59%	3.85%	2.20%	8.27%	9.94%	7.11%
Basic EPSper basic share	$2.87	$2.51	$2.11	$2.03	—	—	—	—	—
Diluted EPSper diluted share	$2.86	$2.49	$2.08	$2.01	—	—	—	—	—

Review official source filings ↗

Owners

Reported shareholders

Reference date Jun 30, 2026

Reported holdings Number of shares

View holders

Top 20 reported holders of HESM
Holder	Shares held
ALPS ADVISORS INC	29.25M
GOLDMAN SACHS GROUP INC	8.39M
Invesco Ltd.	7.54M
MIRAE ASSET GLOBAL ETFS HOLDINGS Ltd.	7.06M
Blackstone Inc.	5.79M
Bank of New York Mellon Corp	4.72M
TORTOISE CAPITAL ADVISORS, L.L.C.	4.24M
NEUBERGER BERMAN GROUP LLC	2.67M
TD Asset Management Inc	1.98M
UBS Group AG	1.97M
Epoch Investment Partners, Inc.	1.95M
JPMORGAN CHASE & CO	1.91M
TWO SIGMA INVESTMENTS, LP	1.67M
ADAGE CAPITAL PARTNERS GP, L.L.C.	1.61M
MILLER HOWARD INVESTMENTS INC /NY	1.56M
CI INVESTMENTS INC.	1.29M
FMR LLC	1.21M
WESTWOOD HOLDINGS GROUP INC	1.17M
MORGAN STANLEY	1.17M
Fractal Investments LLC	1.16M

Bars compare reported share counts. A matching total for this share class and reporting period is unavailable, so percentages are not shown.

Source: SEC Form 13F ↗Updated Sep 29, 2026 · Quarterly data

Insider buys & sells

Jul 1, 2024–Jun 30, 2026

Buys0$0.00 disclosed value

Sells (SEC code S)8$1.50B disclosed value

Transaction	Insider	Type	Shares	Price	Value	Owned after
Aug 12, 2025Form 4	Gatling John A.President and COO	SellClass A Shares	62.5K	$41.59	$2.60M	0
Jun 9, 2025Form 4	Schoonman Geurt GDirector	SellClass A Shares	3.2K	$39.10	$127.1K	0
May 30, 2025Form 4	BlackRock Portfolio Management LLCTenPercentOwner	SellClass A Shares · indirect	15.02M	$36.86	$553.73M	0
Mar 11, 2025Form 4	Gatling John A.President and COO	SellClass A Shares	2.1K	$40.60	$84.7K	62.5K
Feb 19, 2025Form 4	BlackRock Portfolio Management LLCTenPercentOwner	SellClass A Shares · indirect	1.65M	$39.11	$64.53M	0

Review ownership filings at SEC.gov ↗

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Hess Midstream LP (HESM)

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