Western Midstream Partners LP Common Units Representing Limited Partner Interests (WES)

FairStock Score: 63/100 — STEADY

Key Financials

Strengths

• Generates $794 million in annual free cash flow (4.8% yield on market cap)
• High return on equity of 32.2% demonstrating efficient capital deployment
• Attractive 9.1% dividend yield providing steady income returns

Concerns

• Trades significantly above Graham Number ($26) with negative 59% margin of safety—limited downside protection
• High leverage at 2.12x debt-to-equity increases financial risk and interest expense burden
• Weak Piotroski F-Score of 3/9 suggests deteriorating financial quality across multiple dimensions
• Altman Z-Score of 1.1 places it in the financial distress zone—elevated bankruptcy risk

AI Analysis

Western Midstream Partners LP Common Units Representing Limited Partner Interests is a mid-cap energy company valued at $16.7 billion. The business generates $3.8 billion in annual revenue with a 4.9% net margin and $794 million in free cash flow. From a quality standpoint, Western shows weak Piotroski F-Score of 3/9 signaling deteriorating fundamentals and distressed Altman Z-Score of 1.1 warrants caution. On valuation, the stock is attractively valued at 13.8x earnings, with trades above its Graham Number with a negative 59% margin. Growth dynamics show revenue growing at 11.1% and profit growth of -42.8%. The 9.1% dividend yield adds an income component for patient holders. Our composite FairStock Score of 63/100 reflects above-average fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

The market underappreciates Western's consistent 32% ROE at just 14x earnings—a re-rating toward sector peers could unlock 30-50% upside. With $794 million in annual free cash flow (4.8% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

Elevated leverage at 2.1x D/E means rising interest rates or revenue weakness could strain debt covenants and force asset sales at distressed prices. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer