Brigham Minerals Zooms Higher As Investors Await Q3 Earnings

Small-cap Brigham Minerals NYSE: MNRL is trading in new high ground ahead of the company's third-quarter earnings report after the market close on Wednesday.

The company will host its earnings conference call on Thursday at noon Eastern.

The stock has been on the rise since the week ended September 10, and notched a gain of nearly 21% in October. 

Austin, Texas-based Brigham is engaged in the acquisition of mineral and royalty interests in oil and gas properties across the U.S.

The stock has made some big advances recently:

One month: 20.98%

Three months: 19.81%

Year-to-date: 119.38%

One year: 176.08%

Those gains came despite a rocky history of earnings and revenue growth. The company reported a loss in 2020, while revenue also declined.

For the third quarter, Wall Street expects earnings of  $0.28 per share on revenue of $40.94 million. That's compared to a year-ago loss of $0.24 per share on revenue of $23.1 million.

Revenue bounced back in the past two quarters, growing 5% and 200%.

Earnings growth also resumed, coming in at 43% and 327%.

The most recent quarterly report offered clues as to what investors might expect this time around, and into the future.

"As I look ahead to the remainder of 2021 and into 2022, Brigham Minerals is set up extremely well in three important respects," said executive chairman and director Ben Brigham.

He cited the ability to drive production results in the upcoming 12 months, as well as a sound balance sheet that will allow the company to "acquire minerals in a highly disciplined manner, targeting drilling units with activity wells to further enhance production."

Beneficial Environment For Commodities

Third, he said, "Very importantly, it's in what looks to be an extremely conducive macro environment for commodities. In fact, this is the best macro setup I've seen in my career, and I've lived through numerous cycles. Benefiting from our diversified portfolio of high-quality mineral assets, our shareholders are positioned to benefit from what I believe is very likely a long ramp of elevated pricing for oil, NGL and natural gas prices."

Brigham also noted the company's history of dividend payments since going public in April 2019.

"Obviously, at Brigham, commencing with our IPO, we've returned capital to shareholders consistently over the past two years, and in total, have returned $2.72 to our shareholders via our nine dividends, inclusive of the dividend announced last night," he said, referring to last quarter's dividend of $0.35 per share.

That payout consisted of a base dividend of $0.14 per share of Class A common stock and a variable dividend of $0.21 per share of Class A common stock. In total, that represented a 9% sequential total dividend increase from Q1 2021.

"We were even able to distribute our dividend during the most challenging of times, the second quarter of 2020, when many companies in the energy space were just trying to stay afloat, much less return capital," said Brigham.

Small-Cap That Pays Dividends

The company's dividend history is notable, as many U.S.-listed small caps put proceeds back into growth, rather than returning it to shareholders as a dividend. The practice of paying dividends to shareholders is more common among non-U.S. listed small companies.

In the current quarter, the company implemented a base plus variable dividend structure, with a base dividend of $0.14 per or $0.56 per share per year.

With earnings just around the corner, this stock is clearly not a buy at the moment. In addition, it's extended beyond its most recent buy point above $21.94, reached on July 1.

However, the reliable dividend makes it more attractive in the long run.

There are some mixed signals when it comes to the prospects for the upcoming report. Trading volume to the upside has been higher than normal in the past two weeks, indicating investor confidence.

However, the company has a mixed history when it comes to meeting or beating views, according to MarketBeat data.

if the stock takes off following the earnings report, investors are best served by waiting for a pullback to a moving average, rather than chasing the stock as it continues to reach new highs.