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    Hess Midstream (HESM) Valuation After Earnings Beat Higher Distribution And Shift To Capital Light Free Cash Flow Phase

    Simply Wall St·02/06/2026 19:06:24
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    Hess Midstream (HESM) just paired its fourth quarter 2025 earnings release with a higher cash distribution and outlined a pivot to a capital light, free cash flow focused phase after completing major infrastructure investments.

    See our latest analysis for Hess Midstream.

    Despite the earnings beat and higher cash distribution, Hess Midstream’s recent share price performance has been mixed. The stock has a 4.6% 1-month share price return and a 0.8% year-to-date share price return, while the 1-year total shareholder return shows a 6.4% decline. However, performance remains very strong over 3 and 5 years, suggesting long-term momentum has been positive even as the market reassesses shorter-term risks and income prospects.

    If this update has you thinking about where else income and infrastructure trends could lead, it may be worth checking out our screener of 22 power grid technology and infrastructure stocks as a starting point for further ideas.

    So with earnings ahead of expectations, a higher cash distribution and a capital light phase geared toward free cash flow, is Hess Midstream still flying under the radar, or is the current price already reflecting that next chapter of growth?

    Most Popular Narrative: 5.2% Undervalued

    Hess Midstream's most followed narrative pegs fair value at about $36.83 per unit, only slightly above the recent $34.92 close. This suggests investors are already pricing in much of the expected cash generation while still seeing some upside based on current fundamentals.

    Multi-year minimum volume contracts with Hess Corp (now under Chevron), providing highly predictable, inflation-resistant fee-based revenue streams through the late 2030s. This supports stable adjusted EBITDA and consistent dividend/distribution growth.

    Read the complete narrative.

    Curious what kind of revenue growth, margin profile and future earnings multiple need to hold for that fair value to make sense? The narrative walks through a detailed earnings ramp, higher profitability and a richer P/E assumption that together underpin that $36.83 figure.

    Result: Fair Value of $36.83 (UNDERVALUED)

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

    However, this hinges on Chevron keeping Bakken activity supportive and on regional production trends not leaving Hess Midstream with underused gathering and pipeline assets.

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

    Build Your Own Hess Midstream Narrative

    If you see the numbers differently or simply prefer to pressure test the assumptions yourself, you can create your own Hess Midstream story in minutes, Do it your way.

    A great starting point for your Hess Midstream research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.

    Looking for more investment ideas?

    If Hess Midstream has sharpened your focus on quality and income, do not stop here. Broaden your watchlist now so you are not late to the next opportunity.

    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.