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Enterprise (EPD) Jumps 25% QTD: Is There More Room to Run?

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Zacks Equity Research
·3 min read
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Units of Enterprise Products Partners LP EPD have jumped 25% quarter to date (QTD) versus the industry’s 24.3% growth. Notably, the Zacks Rank #3 (Hold) stock has witnessed upward earnings estimate revisions for 2021 in the past 30 days.

Let’s delve into factors driving the stock price.

What’s Favoring the Stock?

The partnership’s business model is very stable and has lesser exposure to the coronavirus-induced commodity price fluctuations. This is because the fully-integrated midstream energy player generates stable fee-based revenues from the pipeline network and storage assets that are being booked by shippers for a length of time. Notably, Enterprise’s pipelines spread across almost 50,000 miles, transporting crude oil, natural gas liquids (NGLs), petrochemicals and refined products.

There has also been a steady cash inflow since the partnership operates storage facilities that can store 260 million barrels of (MMBbls) of NGL, petrochemical, refined products and oil. The partnership also has the capacity to store 14 billion cubic feet (Bcf) of natural gas.

Moreover, in the midstream energy space, the partnership’s credit rating is among the highest, reflecting a strong balance sheet. The partnership is also strongly focused on rewarding unitholders since it has hiked distributions for more than 21 consecutive years.

Most importantly, the pandemic has created fresh demand for petrochemical products, comprising ethylene and propylene. Rising need for single-use plastics (ethylene) along with health-care PPE and household cleaners (propylene) has been benefiting the partnership. This is because Enterprise generates cashflows while delivering key raw materials that are being used in everyday life.

Thus, being a leading midstream energy stock, the Houston, TX-based partnership is poised for further upside in the days to come.

Stocks to Consider

Meanwhile, a few better-ranked players from the energy space are Summit Midstream Partners, LP SMLP, DCP Midstream, LP DCP and HighPoint Resources Corporation HPR. While Summit Midstream carries a Zacks Rank #2 (Buy), DCP Midstream and HighPoint sport aZacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Summit Midstream has seen upward earnings estimate revisions for 2020 in the past seven days.

DCP Midstream has seen upward estimate revisions for 2020 earnings in the past 30 days.

HighPoint is likely to see earnings growth of 167.5% in 2020.

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Enterprise Products Partners L.P. (EPD) : Free Stock Analysis Report
 
Summit Midstream Partners, LP (SMLP) : Free Stock Analysis Report
 
DCP Midstream Partners, LP (DCP) : Free Stock Analysis Report
 
HIGHPOINT RESOURCES CORP (HPR) : Free Stock Analysis Report
 
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Zacks Investment Research