Net debt ÷ owner earnings
5.2×peak FY2019
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HESM, Hess Midstream LP
Oil & Gas Producers capital-intensive
We are a fee-based, growth-oriented, limited partnership that owns, operates, develops and acquires a diverse set of midstream assets and provides fee-based services to our Sponsor, its subsidiaries, and third-party customers.
We substantially completed our multi-year projects to expand our compression capacity to support Chevron's and third parties' production in the Bakken.
Construction was also completed on an additional greenfield compressor station, which was placed in service in early 2026 and which further increased compression capacity by approximately 50 MMcf/d in 2026.
The business
What it sells, where the money comes from, the kind of company it is.
Revenue · FY2025
$1.6B
+8.4% YoY · 8% 5-yr CAGR
Vital signs · TTM, with 5-yr average
Revenue $1.6B 5-yr avg $1.4B
Revenue $389M +2.0% vs yr-ago qtr
Operating margin 61.3% yr-ago 62.3%
Net income $158M yr-ago $161M
Net margin 40.6% yr-ago 42.4%
The business in brief
read the 10-K →What this business is and what moves its needle, from its own SEC filings.
- What moves the needle
- Operating margin has run about 60% through the cycle, a wide margin for the work it does — whether that reflects a durable edge or one that can fade is what the record weighs. That margin has stayed fairly steady relative to where it runs (44%–62% over the years), so unit growth and cost discipline, not a moving line, are the lever. Capital spending runs about 20% of sales, well above depreciation, so the return earned on what it sinks into that plant weighs as much as the margin. Read this kind of business on the commodity price, and the cost to lift a barrel. On its own account, the filing leans hardest on pricing power & competition, set against the numbers in what the filing emphasizes, below.
Every line is arithmetic on the company's filings, shown in full in the sections below.
The record
Ten years of arithmetic, read across the cycle.
The record, 2017–2025
realized figures from each filing · older years to the left| 2017’17 | 2018’18 | 2019’19 | 2020’20 | 2021’21 | 2022’22 | 2023’23 | 2024’24 | 2025’25 | TTMTTMMar 2026 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Income statement | ||||||||||
| $580M | $713M | $848M | $1.1B | $1.2B | $1.3B | $1.3B | $1.5B | $1.6B | $1.6B | RevenueRevenue |
| 2% | 2% | 6% | 2% | 2% | 2% | 2% | 2% | 2% | 2% | SG&A / revenueSG&A/rev |
| $263M | $378M | $377M | $577M | $727M | $791M | $817M | $919M | $1.0B | $1.0B | Operating incomeOp. inc. |
| 45.4% | 53.1% | 44.4% | 52.8% | 60.4% | 62.0% | 60.6% | 61.5% | 62.2% | 61.9% | Operating marginOp. mgn |
| $41M | $71M | $70M | $24M | $46M | $84M | $119M | $223M | $353M | $369M | Net incomeNet inc. |
| — | — | -0% | 23% | 24% | 24% | 24% | 24% | 24% | 24% | Effective tax rateTax rate |
| Cash flow & returns | ||||||||||
| $337M | $467M | $471M | $642M | $796M | $861M | $866M | $940M | $984M | $1.0B | Operating cash flowOp. cash |
| $117M | $127M | $143M | $157M | $166M | $181M | $193M | $203M | $214M | $221M | DepreciationDeprec. |
| $179M | $268M | $257M | $459M | $582M | $594M | $554M | $512M | $415M | $443M | Working capital & otherWC & other |
| $144M | $242M | $306M | $301M | $163M | $238M | $224M | $306M | $256M | $239M | CapexCapex |
| 24.9% | 33.9% | 36.1% | 27.6% | 13.6% | 18.7% | 16.6% | 20.5% | 15.8% | 14.7% | Capex / revenueCapex/rev |
| $192M | $340M | $328M | $485M | $632M | $680M | $643M | $737M | $728M | $796M | Owner earningsOwner earn. |
| 33.2% | 47.7% | 38.7% | 44.4% | 52.5% | 53.3% | 47.7% | 49.3% | 44.9% | 48.8% | Owner earnings marginOE mgn |
| $192M | $225M | $164M | $341M | $632M | $623M | $643M | $634M | $728M | $796M | Free cash flowFCF |
| 33.2% | 31.6% | 19.4% | 31.2% | 52.5% | 48.8% | 47.7% | 42.4% | 44.9% | 48.8% | Free cash flow marginFCF mgn |
| — | — | — | — | $750M | $400M | $400M | $300M | $400M | — | BuybacksBuybacks |
| Balance sheet | ||||||||||
| — | $109M | $3M | $3M | $2M | $3M | $5M | $4M | $2M | $5M | Cash & investmentsCash+inv |
| — | — | — | — | — | $123M | $123M | $135M | $144M | $149M | ReceivablesReceiv. |
| — | $19M | $31M | $30M | $27M | $28M | $41M | $34M | $27M | $23M | Accounts payablePayables |
| — | — | — | — | — | $95M | $81M | $102M | $117M | $127M | Operating working capitalOper. WC |
| — | $180M | $96M | $101M | $133M | $132M | $137M | $149M | $159M | $166M | Current assetsCur. assets |
| — | $138M | $176M | $125M | $171M | $160M | $210M | $219M | $188M | $181M | Current liabilitiesCur. liab. |
| — | 1.3× | 0.5× | 0.8× | 0.8× | 0.8× | 0.7× | 0.7× | 0.8× | 0.9× | Current ratioCurr. ratio |
| — | $3.0B | $3.3B | $3.4B | $3.5B | $3.6B | $3.8B | $4.2B | $4.4B | $4.3B | Total assetsAssets |
| — | $981M | $1.8B | $1.9B | $2.6B | $2.9B | $3.2B | $3.5B | $3.8B | $3.8B | Total debtDebt |
| — | $872M | $1.8B | $1.9B | $2.6B | $2.9B | $3.2B | $3.5B | $3.8B | $3.8B | Net debt / (cash)Net debt |
| 0.0% | 0.1% | 0.2% | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% | Stock comp / revenueSBC/rev |
The record, charted
FY2017–2025Each measure over its full record; the current point and the worst year marked.
Owner earnings vs. net income
Owner earningsNet incomeThe accountant's number, and the cash an owner can take; the gap is the tell.
$728Mowner earningsvs.$353Mnet incomelow FY2017
Where the cash went
ReinvestBuybacksDividendsAcquisitionsRetainedEach year's operating cash, by what management did with it: the mix, and how it drifts.
FY2017FY2025
Net income is the accountant's number; owner earnings is the cash an owner could take out. The walk between them, off the cash-flow statement, and whether the gap is widening or holding.
In fiscal 2025 the business turned $353M of profit into $728M of owner earnings: more cash than the profit line showed, after the non-cash charges and the capital it put back in.
| FY2025 | FY2024 | FY2023 | FY2022 | FY2021 | |
|---|---|---|---|---|---|
| Reported net income | $353M | $223M | $119M | $84M | $46M |
| Depreciation & amortizationnon-cash charge added back | +$214M | +$203M | +$193M | +$181M | +$166M |
| Stock-based compensationreal costnon-cash, but a real cost | +$2M | +$2M | +$2M | +$2M | +$1M |
| Working capital & othertiming of cash in and out, other non-cash items | +$415M | +$512M | +$554M | +$594M | +$582M |
| Cash from operations | $984M | $940M | $866M | $861M | $796M |
| Maintenance capital expenditurethe spending needed just to hold position and volume | −$256M | −$203M | −$224M | −$181M | −$163M |
| Owner earnings | $728M | $737M | $643M | $680M | $632M |
| Growth capital expenditurediscretionary; spent to get bigger, not to stand still | — | −$103M | — | −$57M | — |
| Free cash flow | $728M | $634M | $643M | $623M | $632M |
| Owner-earnings marginowner earnings ÷ revenue | 45% | 49% | 48% | 53% | 53% |
Owner earnings is the cash an owner could pull out without starving the business: operating cash less the capital it must spend to hold its position . The cash-flow statement also adds stock comp back as non-cash, but it is a real cost paid in shares; counted as the expense it is (less $2M), owner earnings is nearer $727M.
Maintenance capex is estimated as depreciation where a growing business invests above it; free cash flow is the figure the scorecard's free-cash margin reads.
Quality & stewardship
Returns, the balance sheet, capital allocation, and pay.
Owner’s Scorecard
FY2025 10-K · source on SEC EDGAR →
Will it survive?
- Interest expense not tagged in the data
What this means
No usable interest-expense line was tagged in the filing data, but the balance sheet carries real net debt — so the interest burden here is unknown, not absent. Read the debt on the net-debt check below.
- How heavy is the debt, net of cash? $3.8B · 3.7× operating profitMeaningful net debtCash $2M − debt $3.8B
What this means
Netting $2M of cash and short-term investments against $3.8B of debt leaves $3.8B owed, about 3.7× a year's operating profit. Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.
- Not enough data
What this means
The filing data didn't include the inputs for this check.
Is it a good business?
- Not enough dataIndustry peers: median 7%
What this means
The filing data didn't include the inputs for this check.
- High through the cycle9-yr median margin, range 33%–53%; latest $728M = operating cash $984M − maintenance capex $256MIndustry peers: median 15%
What this means
What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 45% of revenue this year, a 48% median across 9 years. Treating stock comp as the real expense it is (less $2M of SBC) leaves $727M.
- Cash-backedCash from ops $984M ÷ net income $353M
What this means
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.
How is the cash used?
- Returns about halfDividends + buybacks $400M ÷ Owner Earnings $728M
What this means
Of $728M Owner Earnings, $400M (55%) went back to shareholders, $0 dividends, $400M buybacks. Net of $2M stock comp, the real buyback was about $398M. Returning most of it is the mark of a mature business with little left to reinvest at a high return; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
- Investing or harvesting? 1.19×MaintainingCapex $256M ÷ depreciation $214M
What this means
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.
Graham’s defensive tests · 2 of 6 met
Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.
- Adequate size NearRevenue ≥ $2B · $1.6B
What this means
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
- Strong liquidity MissCurrent ratio ≥ 2× · 0.85×
What this means
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
- Conservative debt MissDebt ≤ working capital · $3.8B vs ($29M) WC
What this means
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
- Earnings stability PassA profit every year (9-yr record) · no losses
What this means
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
- Dividend record MissUninterrupted dividends · none paid
What this means
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
- Earnings growth PassEarnings +33% over the record · +281%
What this means
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
- Moderate price —P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
What this means
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $1.80/share (latest year $2.75), the averaged base the calculator's gate runs on. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.
Durability & moat, 2017–2025
Whether the record’s returns held, and what the capital reinvested earned.
- Profitable years 9 of 9
What this means
Never lost money over the record, the earnings stability Graham insisted on.
- Operating margin 48% → 61% (3-yr avg ends)
What this means
Through the cycle the operating margin widened — about 48% early to 61% lately, median 60% — pricing power intact or improving.
- Owner earnings growth +13%/yr
What this means
Owner earnings grew about 13% a year over the record.
- Worst year 2019 · 44.4% op. margin
What this means
Stayed profitable even in its hardest year, the resilience that survives recessions.
Does AI threaten the moat?
Low contestabilityThe moat is physical, regulated or balance-sheet-funded, the kind AI cuts costs within but does not contest.
In its own filing Raised, but not as a competitor
The filing raises AI among its risks, but in other terms (security, regulation, energy or the like), not as a competitor to its product.
AI is unlikely to contest a moat that is physical, regulated or balance-sheet-funded; here it reads more as a cost tool than a threat.
Read from the filing's own risk factors, paired with the industry's structure under its SIC code; the durability is read above, the price below.
All figures as filed; the source filing is linked above.
Current Position
as of the latest quarter, Mar 31, 2026Can the business pay what it owes this year, off the freshest balance sheet: the quality of the assets, the debt actually coming due, and what a low ratio means here.
Current assets$166M
- Cash & short-term investments$5M
- Receivables$149M
- Other current assets$12M
Current liabilities$181M
- Debt due within a year$35M
- Accounts payable$23M
- Other current liabilities$123M
Current ratio0.92×all current assets ÷ what's due · Graham looked for 2×
Quick ratio—inventory untagged this quarter, so withheld rather than shown equal to the current ratio
Cash ratio0.03×strictest: cash alone against what's due
Working capital($15M)the cushion left after near-term bills
Debt due this year vs. cash$35M due · $5M cash
cash alone won't cover the maturities; it leans on refinancing or operating cash · both figures from the Mar 31, 2026 balance sheet
Revenue, latest quarter vs. a year ago+2.0%the freshest read on whether the business is still growing
Current ratio, recent quarters1.1× → 0.9×
Deeper floors
Net current asset value($3.8B)Graham's net-net: current assets less all liabilities
Debt incl. operating leases$3.8B$800K of it operating leases
Deferred revenue$16Mcustomer cash collected before delivery; operating float
From the company's latest filing.
How the cash was used, 2017–2025
Over the record, the business generated $6.4B of operating cash; how management split it reads as a balanced allocator, splitting cash between the business, owners, and the balance sheet.
- Reinvested$2.2B · 34%
- Buybacks$2.3B · 35%
- Retained (debt / cash)$1.9B · 30%
- Returned to owners$2.3B
47% of the owner earnings the business produced over the span, $0 as dividends and $2.3B as buybacks.
- Average price paid for buybacks—
Buybacks ran $2.3B over the span, but the filings don't tag the share count needed to deduce the average price paid.
- Net change in share count—
No continuous share count across the span.
- Dividend record—
No dividend line was reported in the filing data over the span; the record here neither confirms nor rules out a payout.
Buybacks are gross of stock issued to staff; the share-count line above is the net of that, the figure that decides whether owners gained. The average price paid blends a year of purchases (and any accelerated repurchase), so it is close, not exact. The record of where the cash went and on what terms.
Management, ownership & pay
From the proxy: how much of the business the people running it own, and how they are paid.
- Stock-based compensation$2M
The slice of the business handed to employees in shares this year, 0% of revenue, equal to 0% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. One trap: the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.
Peers, Oil & Gas Producers
The same industry, side by side on owner economics. Each figure is a through-cycle median, so a peak or trough year can’t distort it; the group median at the foot is the line to read each against.
| Company | Revenue | Gross margin | Op. margin | ROIC | Owner earn. margin |
|---|---|---|---|---|---|
| CNXCNX Resources | $2.2B | — | -3.2% | -0% | 24% |
| DECDiversified Energy Company | $1.8B | — | 29.2% | 14% | 15% |
| TALOTalos Energy Inc. | $1.8B | — | 12.7% | 6% | 5% |
| HESMHess Midstream LP | $1.6B | — | 60.4% | — | 48% |
| GPORGulfport Energy | $1.4B | 69% | 0.5% | 7% | 23% |
| KOSKosmos Energy Ltd. Common Shares (DE) | $1.3B | — | -5.2% | -1% | 12% |
| MNRMach Natural Resources LP Common | $1.2B | — | 39.6% | — | 41% |
| AESIAtlas Energy Solutions Inc. | $1.1B | — | 27.3% | 9% | 15% |
| Group median | — | — | 20.0% | — | 19% |
The price
What a price has to assume.
What the price implies
reverse-DCFType today's close and see the owner-earnings growth you'd have to believe to justify it, beside what Hess Midstream LP has delivered.
$
Through the cycle, Hess Midstream LP earns about $773M on its 47.7% median owner-earnings margin. This year’s 44.9% margin runs in line with that. Normalize, below, values the price on that through-cycle figure rather than the latest year.
Base
—
The assumptions
9.0% = the 4.55% 10-year Treasury (Jul 15, 2026) + 4.45 points of equity premium. The rate you require is yours to set.
Enter a price above to run it.
A dated snapshot of the price you typed, the assumptions you set, and what the page showed for them. A snapshot is never edited after it is saved. Your notebook is yours alone — the commitment states what is stored and what we will never do.
Implied by the price—
Owner-earnings growth · ’21→’25+3%/yr
Owner-earnings growth · ’17→’25+16%/yr
Owner-earnings growth · ’17→’25+13%/yr
Owner-earnings yield—
What a growth belief costs, in multiples
The growth each return requires, at your price
Against a high-grade bond: Graham’s yardstick bond yield%
Prefilled with the 10-year Treasury (4.55%, as of Jul 15, 2026). Edit it for today’s exact figure, or a AAA corporate yield.
Graham measured a stock against the bond you could own instead, the heart of his margin of safety. Enter a price above to weigh the owner-earnings yield against this bond.
Owner-earnings yield—
High-grade bond yield—
Margin over the bond—
Owner earnings $796M on 128M shares outstanding, per the 10-Q cover, as of 2026-04-30; net debt $3.8B. The base is the latest year by default; Normalize values it on the through-cycle median owner-earnings margin (to avoid paying on a peak year). Net of stock comp treats option pay as the expense it is. The dials set the multiple a growth belief justifies; the price, and every dollar on this page, is yours.
Cite: Owner Scorecard, "Hess Midstream LP (HESM), the owner's record," https://ownerscorecard.com/c/HESM, data as of 2026-07-09.
Manual order: ← HES its page in the Manual HFWA →
Industry order: ← GTE the Oil & Gas Producers chapter INR →