DT Midstream, Inc. (DTM): what the price assumes

In the published model solve dated 2026-Q2, anchored at $129.53, DT Midstream, Inc. (DTM) is priced for +12.7% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.

Generated: 2026-08-30 · Source: https://boothcheck.com/report/DTM

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 10: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 8.1% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.5%); the inversion above states its own rate.

Per-Model Detail (n=16)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Bullet Takeaways

• About 92% of pipeline revenue and roughly 99% of the revenue at the three joint-venture pipelines came from firm service contracts last year, which means the money arrives on schedule whether or not the gas actually flows.
• The gathering half of the business has been moving the other way: segment operating income fell from $229 million in 2023 to $210 million in 2024 to $199 million in 2025 on flat revenue, and the annual filing names Expand Energy as a customer the company depends on for a significant portion of revenue.
• The near-term thing to watch is the expansion queue: the board approved the Vector Pipeline 2028 expansion and the Millennium R2R project alongside the April 2026 quarterly results, and two further open seasons drew more customer interest than the capacity on offer.

Bull Case

Valuing a midstream company is a different exercise from valuing almost anything else in energy, and the reason is contractual rather than geological. A producer's earnings track the commodity. A pipeline's earnings track a signed agreement. DT Midstream describes the arrangement plainly in its annual filing: firm service contracts are typically long-term and structured using fixed demand charges or MVCs with fixed deficiency fee rates, which provides for fixed revenue commitments regardless of actual volumes of natural gas that flow. Roughly 92% of pipeline revenue arrived that way last year, and about 99% of revenue at the unconsolidated joint ventures did. Gathering, which is closer to the wellhead and therefore closer to the drill bit, ran about 57% firm with another 36% from gas already flowing off proved developed reserves. The right question for this business is not where gas prices go. It is how long the contracts run and who signed them.

There is a structural quirk here that a screening tool will get wrong. The company owns half of NEXUS, 40% of Vector and 52.5% of Millennium, carried at $1,253 million between them at the end of 2025, and the filing is explicit that Our operating revenues do not include revenues of unconsolidated joint ventures accounted for as equity method investments. Those pipelines contributed $138 million of earnings in 2025 against $1,243 million of reported revenue. So a meaningful slice of the earnings power sits below the revenue line entirely, and any ratio built on sales understates the business by construction. The margin looks unusually high for the same reason it is genuinely high: about 49 cents of every reported revenue dollar became operating profit last year, against WMB at 28.7% and KMI at 28.7%, and in the same band as the gathering specialists AM at 54.2% and WES at 41.0%.

What has actually been growing is the interstate pipeline side. Segment operating income went from $242 million in 2023 to $279 million in 2024 to $415 million in 2025, helped substantially by the Midwest Pipeline Acquisition, which contributed $212 million of the segment's $244 million revenue increase last year. The company placed the fourth LEAP expansion phase into service, taking that system to 2.1 billion cubic feet a day, and reached a final investment decision on the Guardian G3 expansion, which raises Guardian's capacity by roughly 40% and is supported by long-term negotiated rate precedent agreements with investment-grade utility customers. The first quarter of 2026 carried the momentum forward: operating income of $166 million against $148 million, and earnings from the joint ventures of $43 million against $37 million.

Capital discipline is the quieter part of the case. The company reached investment grade with all three major rating agencies during 2025. Net debt runs near 5 times operating profit and operating income covered the interest bill close to four times, which for an asset base with contracted revenue is comfortable rather than tight. Dividends declared came to $3.28 per share in 2025, and the board lifted the quarterly rate to $0.88 alongside the first-quarter 2026 results. The contract book pays for that raise, not the balance sheet.

The honest objection is that gathering has been shrinking while everything else grew. That is true, and the bull answer is not that it will stop. It is that gathering is the part of the portfolio where contract structure does the least work, and it is the smaller half. The pipeline segment plus the joint ventures now carry the earnings, and both run on paper signed years in advance by utilities and investment-grade shippers.

Bear Case

Look at gathering on its own and the picture is a business past its best point in this cycle. Revenue went $545 million, $538 million, $556 million across 2023, 2024 and 2025, essentially flat. Operating income over the same three years went $229 million, $210 million, $199 million. Flat revenue with falling profit is cost inflation arriving faster than the contracts can reprice, and gathering is 45% of the company's revenue. Throughput did rise, to 3.1 billion cubic feet a day from 2.9, so this is not a volume problem. It is a margin problem, and margin problems in gathering tend to persist until contracts are renegotiated, which happens on the customer's schedule as much as the operator's.

The joint ventures have been sliding too, more quietly. Earnings from equity method investees came in at $177 million in 2023, $162 million in 2024 and $138 million in 2025. So two of the three earnings streams shrank while the headline number grew, and the growth came from buying assets rather than from the assets already owned: the Midwest Pipeline Acquisition supplied $212 million of the pipeline segment's $244 million revenue increase in 2025, and diluted share count went from 98.4 million to 102.5 million to help pay for it. Bought growth is real growth. It is just harder to repeat, and it arrives with a purchase price attached.

Underneath sits a concentration the filing does not soften: We depend on a key customer, Expand Energy, in the Haynesville formation in the Gulf Coast and in the Marcellus formation in the Northeastern U.S. for a significant portion of our revenues. That customer is investment grade, which helps, but the same disclosure adds that We engage with other customers that are sub-investment grade. Gathering economics are downstream of somebody else's drilling decision, and drilling decisions in the Haynesville respond to a gas price this company has deliberately insulated its revenue from. Insulation cuts both ways. It protects the near-term revenue and it does nothing for the volumes that renew the contracts.

Which brings the price into it. The market values the enterprise at roughly 27 times trailing operating profit, beyond the upper quartile of its midstream peer group, and what that multiple asks for is specific: operating profit compounding at about 18.5% a year for five years. The company has run at that kind of pace recently, so the rate is not fantastical. The duration is the stretch. Of comparable fast-growing companies, only around 42% held that pace for five years. Operating income in the opening quarter of 2026 came in at $166 million against $148 million, a pace in the low teens rather than the high teens. The methods reflect the same tension: only the forward cash-flow approaches reach today's price, and they do it by projecting a terminal multiple no lower than today's. The price sits about 32% above where the peer-multiple methods land, near three times the asset-value methods, and more than seven times the earnings-power methods, which credit no growth at all. If the compounding assumption softens, there is no second method waiting anywhere near here.

The balance sheet is the least of it and still worth naming. Net debt runs about 5 times operating profit against an asset base that takes years to build and decades to depreciate, and quarterly interest expense held at $40 million into 2026. Against that, the three joint-venture stakes carried at $1,253 million are separately saleable assets whose value does not depend on the gathering thesis working, which puts a real, if modest, floor under a bad outcome. It is a floor, not a cushion: it amounts to a small fraction of what the equity trades for today.

Valuation

The revenue line on this income statement is misleading, and the filing says so directly: Our operating revenues do not include revenues of unconsolidated joint ventures accounted for as equity method investments. Three pipelines, half of NEXUS, 40% of Vector and 52.5% of Millennium, delivered $138 million of earnings in 2025 that never touched the $1,243 million of reported revenue. Any comparison built on sales therefore reads the company as far more expensive than it is, which is worth knowing before looking at any multiple at all.

On profit the picture is cleaner and still demanding. The price puts the enterprise at roughly 27 times trailing operating profit, which lands beyond the upper quartile of the midstream peer set. Invert that and the assumption becomes explicit: operating profit growing about 18.5% a year for five years, computed at a cost of capital near 8.3% with a long-run rate of 4% after that. The rate itself is inside what the business has recently produced. The persistence is the demanding part, and the reference base rate is not encouraging, with roughly 42% of comparable fast-growing companies sustaining that pace over five years.

Four families of method look at the same facts and split. Only the forward cash-flow approaches reach today's price, and the way they get there matters: the exit multiple in the leading one is held flat at today's level across a seven-year projection, so the model assumes the market pays the same for these assets in 2033 as it does now. Peer multiples leave the price about 32% above where they settle. The asset-value methods, which start from a book value of $46.28 a share and the return earned on it, sit near a third of the price. The earnings-power methods, which capitalize current profit with no growth credited, sit far lower still. That spread is the premium being paid for durability, and it is large.

Cohort position sharpens rather than softens it. Operating margin ran about 49% last year on the reported revenue base, which beats WMB at 28.7% and KMI at 28.7% and sits alongside HESM at 61.9% and AM at 54.2%. The gathering-focused names carry margins in that range and trade nothing like this multiple, which locates the premium precisely: it is being paid for the interstate pipeline franchise and the contract book behind it, not for the gathering systems.

Solvency does not constrain the story here, which is unusual for an asset-heavy business. Net debt sits near 5 times operating profit, interest was covered close to four times, the company reached investment grade with all three agencies during 2025, and share count has grown about 1.4% a year over four years, most of it to fund an acquisition rather than to fund operations. Underneath the operating case, the joint venture stakes carried at about 1.25 billion dollars are assets with their own market. The downside is bounded by contracts and by saleable infrastructure. What is not bounded is the multiple.

Catalysts

The first quarter of 2026 landed on April 30 and read well: net income attributable of $130 million, or $1.27 per diluted share, against $108 million and $1.06 a year earlier. Operating cash flow was $280 million against $247 million, and plant and equipment spending stayed modest at $78 million for the quarter. The board declared a dividend of $0.88 per share payable July 15, 2026 to holders of record on June 15.

Growth announcements came with that release rather than separately. The company approved investment in the Vector Pipeline 2028 expansion and the Millennium Pipeline R2R project, placed a new power plant lateral off Midwestern Gas Transmission into service, and reported that non-binding open seasons for an expansion of Midwestern Gas Transmission and a further Vector expansion each drew customer interest exceeding the capacity offered. Oversubscribed open seasons are not contracts, but they are the step immediately before contracts, and they say something about demand for takeaway capacity from power generation in the Midwest.

Two items sit on the near calendar. Second quarter results are scheduled for July 30, 2026, announced in a July 15 release. And the Bluestone Extended Supply Transportation agreement between Bluestone and Millennium received FERC approval during 2025, subject to a filed appeal, which would create a new transportation path between Millennium and the Tennessee pipeline if it survives. The appeal is the kind of item that produces no headline until it resolves and then changes a supply route.

Peer Cohorts (Per Segment, With Filing Citations)

Pipeline (reported)

• WMB (WILLIAMS COMPANIES, INC.)
• FY2025 10-K: …cybersecurity practices and incident responses; and (3) conduct comprehensive reviews of cybersecurity practices, identify gaps, and report results to TSA and CISA. Additionally, Security Directive Pipeline-2021-02E, effective July 27, 2024, builds on previous directives by requiring pipeline operators to: (1)…
• FY2025 10-K: …us-gaap:OtherCapitalizedPropertyPlantAndEquipmentMember 2024-12-31 0000107263 srt:MinimumMember wmb:NorthwestPipelineLLCMember us-gaap:GasTransmissionAndDistributionEquipmentMember 2025-01-01 2025-12-31 0000107263 srt:MaximumMember wmb:NorthwestPipelineLLCMember us-gaap:GasTransmissionAndDistributionEquipmentMember…
• KMI (KINDER MORGAN, INC.)
• FY2025 10-K: …and governmental regulations, the ability to convert to alternative fuels, and weather. 9 Products Pipelines Our Products Pipelines business segment consists of our refined petroleum products, crude oil, and condensate pipelines, and associated terminals, our condensate processing facility, and our transmix…
• FY2025 10-K: …base salaries in the markets in which we operate and competitive benefits, including retirement plans, opportunities for annual bonuses, and, for eligible employees, long-term incentives and an employee stock purchase plan. Properties and Rights-of-Way We believe we generally have satisfactory title to the properties…
• OKE (ONEOK INC /NEW/)
• FY2025 10-K: . See further discussion in the "Regulatory, Environmental and Safety Matters" section. Natural Gas Pipelines Overview of Operations - In our Natural Gas Pipelines segment, we receive residue natural gas from third parties and our own natural gas processing plants and interconnecting pipelines. Residue natural gas is…
• FY2025 10-K: …pipeline, the construction will occur over an extended period of time, and we will not receive any material increases in revenues until after completion of the project; • we may construct facilities to capture anticipated future growth in production or downstream demand in which anticipated growth does not…
• ET (ENERGY TRANSFER LP)
• FY2025 10-K: …hubs as well as major western markets in Arizona, New Mexico, Nevada and California. Transwestern's customers include local distribution companies, producers, marketers, electric power generators and industrial end-users. An expansion of the Transwestern Pipeline, including upsizing pipeline diameter to increase…
• FY2025 10-K: …and diesel, increase our compliance and operating costs and consequently adversely affect our business. If we do not continue to construct new pipelines, our future growth could be limited. Our results of operations and ability to grow and to increase distributable cash flow per unit will depend, in part, on our…
• EPD (ENTERPRISE PRODUCTS PARTNERS L.P.)
• FY2025 10-K: …service in the first half of 2026. Crude Oil Pipelines & Services This business segment includes our crude oil pipelines, crude oil storage and marine terminals, and related crude oil marketing activities. Crude oil pipelines We have crude oil gathering and transportation pipelines located in Oklahoma, New Mexico and…
• FY2025 10-K: …1 billion pounds per year of isobutylene. Production from the iBDH plant enables us to optimize our octane enhancement and HPIB facilities and meet growing market demand for isobutylene. Steam crackers and refineries have historically been the major source of propane and butane olefins for downstream use; however,…
• TRGP (TARGA RESOURCES CORP.)
• FY2025 10-K: …for repairs or upgrades deemed necessary to ensure the continued safe and reliable operation of our pipelines. The imposition of new or enhanced safety requirements, or any issuance or reinterpretation of guidance by PHMSA or any other state or federal agencies with respect thereto, may require us to install new or…
• FY2025 10-K: …of time and we will not receive any material increases in revenues until the project is completed. Moreover, we may construct pipelines or facilities to capture anticipated future growth in production in a region in which such growth does not materialize. For example, we do not possess reserves estimation expertise,…
• MPLX (MPLX LP)
• FY2025 10-K: …pipeline systems which we have an interest in through ownership of our equity method investments as of December 31, 2025. Diameter Length (miles) Ownership Percentage Crude Systems: MarEn Bakken Company LLC (1) 30" 1,916 25% Minnesota Pipe Line Company LLC 16" - 24" 975 17% W2W Holdings LLC (2) 24" - 36" 652 50%…
• FY2025 10-K: …investments included in the above tables, we also have ownership interests in natural gas and NGL pipeline systems through the following entities: Diameter Length (miles) Ownership Percentage Natural Gas Pipelines: Delaware Basin Residue, LLC (1) 10" - 42" 298 10% MXP Parent, LLC (2) 36" - 42" 580 10% WPC Parent, LLC…
• ENB (ENBRIDGE INC.)
• FY2025 10-K: …To achieve our vision, we emphasize specific capabilities, including the ability to offer integrated and differentiated solutions, that will help us grow and build competitive advantages within our core and potential new businesses. We continue to focus on our customers so that we are responsive to their needs. We…
• FY2025 10-K: …and logistical services to North American refiners, producers, and other customers. The business is primarily focused on servicing customers across the value chain and capturing value from quality, time, and location price differentials when opportunities arise. To execute these strategies, the crude oil marketing…

Gathering (reported)

• AM (ANTERO MIDSTREAM CORPORATION)
• FY2025 10-K: …with Antero Resources for the provision of processing and fractionation services. For a description of these contracts, see "-Our Relationship with Antero Resources-Operational and Managerial Arrangements with Antero Resources." However, we face competition in attracting third- party volumes to our gathering and…
• FY2025 10-K: "Mountaineer gathering and compression agreement," and together with the 2019 gathering and compression agreement, the Marcellus gathering and compression agreement and the Utica compression agreement, the "gathering and compression agreements"). See Note 3-Transactions and Note 6-Revenue to our consolidated financial…
• WES (Western Midstream Partners, LP)
• FY2025 10-K: …plants, as well as EOG's Jewell gas-processing plant, are delivered via our Thunder Creek NGL pipeline to ONEOK, Inc.'s Well Draw delivery point. Southwest Wyoming Granger gathering system • Customers. For the year ended December 31, 2025, Granger complex throughput was from numerous third-party customers, with the…
• FY2025 10-K: …party thereto, for the Commercial Paper Program (incorporated by reference to Exhibit 10.1 to Western Midstream Partners, LP's Current Report on Form 8-K filed on November 16, 2023, File No. 001-35753). † 10. 20 Gas Gathering Agreement effective July 1, 2010 between Kerr-McGee Gathering LLC and Kerr-McGee Oil & Gas…
• HESM (HESM)
• FY2025 10-K: …gathering and processing infrastructure, and enhanced communication and coordination with third-party gatherers. Segments Our assets and operations are organized into the following three reportable segments: (i) gathering, (ii) processing and storage and (iii) terminaling and export. Gathering Our gathering segment…
• FY2025 10-K: …hesm:MayTwoThousandTwentyFiveMember 2025-01-01 2025-12-31 0001789832 us-gaap:NaturalGasProcessingPlantMember us-gaap:EquipmentMember 2024-12-31 0001789832 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember hesm:ChevronCorporationMember 2024-01-01 2024-12-31 0001789832…
• EQT (EQT Corporation)
• FY2025 10-K: -12-30 0000033213 eqt:MidstreamJointVentureMember eqt:BXCIAffiliateMember eqt:DistributionTimingPeriodOneMember us-gaap:CapitalUnitClassBMember 2024-12-30 2024-12-30 0000033213 eqt:MidstreamJointVentureMember eqt:BXCIAffiliateMember eqt:DistributionTimingPeriodTwoMember us-gaap:CapitalUnitClassAMember 2024-12-30…
• FY2025 10-K: :PipelineAndOtherMember 2025-01-01 2025-12-31 0000033213 us-gaap:MaterialReconcilingItemsMember eqt:PipelineAndOtherMember 2025-01-01 2025-12-31 0000033213 us-gaap:OperatingSegmentsMember eqt:SalesOfNaturalGasNGLsAndOilAtProductionMember eqt:UpstreamSegmentMember 2024-01-01 2024-12-31 0000033213…
• MPLX (MPLX LP)
• FY2025 10-K: …for the FERC-regulated pipelines, and comply with additional FERC reporting requirements. In the states in which we operate, regulation of gathering facilities and intrastate pipeline facilities generally includes various safety, environmental and, in some circumstances, open access, non-discriminatory take…
• FY2025 10-K: …2025-12-31 0001552000 mplx:NaturalGasAndNGLServicesMember mplx:GasGatheringAndTransmissionEquipmentAndFacilitiesMember 2024-12-31 0001552000 srt:MinimumMember mplx:NaturalGasAndNGLServicesMember mplx:ProcessingFractionationAndStorageFacilitiesMember 2025-12-31 0001552000 srt:MaximumMember…
• EPD (ENTERPRISE PRODUCTS PARTNERS L.P.)
• FY2025 10-K: …in the Piceance Basin. The facility enables producers to access six interstate natural gas pipelines and has a gross throughput capacity of 3 Bcf/d of natural gas. • The BTA Gathering System , which is located in East Texas, gathers and treats natural gas from the Haynesville Shale and Bossier, Cotton Valley and…
• FY2025 10-K: …in February 2026, we announced plans to construct further expansions of our sour gas treating system, including the extension of trunk lines in our gathering system in Lea County, New Mexico, the construction of a fifth treater and the addition of a third acid gas injection well. These additional facilities are…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.