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Enterprise (EPD) to Report Q4 Earnings: What's in the Cards?

Zacks Equity Research

Enterprise Products Partners LP EPD is set to report fourth-quarter 2019 results on Jan 30, before the opening bell.

The midstream infrastructure provider managed to beat the Zacks Consensus Estimate for earnings in three of the past four quarters, the average positive surprise being 9.9%. This is depicted in the graph below:

Enterprise Products Partners L.P. Price and EPS Surprise

 

Enterprise Products Partners L.P. Price and EPS Surprise

Enterprise Products Partners L.P. price-eps-surprise | Enterprise Products Partners L.P. Quote

In the last reported quarter, the partnership reported earnings of 50 cents per unit, missing the Zacks Consensus Estimate of 53 cents. The underperformance stemmed from lower processing margins, increased NGL Pipelines & Services’ operating expenses and reduced equity natural gas liquids (NGLs) production. Let’s see how things are shaping up prior to the announcement.

Estimate Scenario

The Zacks Consensus Estimate for fourth-quarter earnings of 54 cents per unit has seen no upward revisions and three downward movements in the past 60 days. The figure suggests a year-over-year decline of 8.5%.

Further, the Zacks Consensus Estimate for revenues is pegged at almost $8 billion for the quarter, indicating a decline of 13.2% from the year-ago reported figure.

Factors to Consider

Conservative capital spending by explorers is expected to have slowed down onshore North American crude production in fourth-quarter 2019. This is likely to have affected commodity volumes transported through pipelines. Being a leading provider of midstream services in the continent, the partnership is expected to have seen a drop in earnings from the Crude Oil Pipelines & Services segment in the December quarter.

The Zacks Consensus Estimate for fourth-quarter gross operating margin at the Crude Oil Pipelines & Services segment is pegged at $474 million, suggesting a drop of 26.4% from $644 million reported in the year-ago quarter.

However, with growing demand for NGLs, across almost all sectors of the economy, the partnership is likely to have benefited from higher transported volumes of hydrocarbons in the quarter under review. The Zacks Consensus Estimate for fourth-quarter gross operating margin from the NGL Pipelines & Services unit is pinned at $1,056 million, indicating a rise of 9% from $969 million a year ago.

Earnings Whispers

Our proven model does not indicate an earnings beat for Enterprise Products. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases chances of an earnings beat. But that’s not the case here as you will see below.

Earnings ESP: The partnership’s Earnings ESP is 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 54 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Enterprise Products currently carries a Zacks Rank #3.

Energy Stocks With Favorable Combination

Here are a few companies from the energy space which, according to our model, have the right combination of elements to post an earnings beat in the upcoming quarterly reports.

Chevron Corporation CVX has an Earnings ESP of +3.68% and a Zacks Rank of 2. The firm is expected to release earnings on Jan 31. You can see the complete list of today’s Zacks #1 Rank stocks here.

Antero Resources Corporation AR has an Earnings ESP of +6.02% and is Zacks #3 Ranked. The company is scheduled to release earnings on Feb 12.

NuStar Energy L.P. NS has an Earnings ESP of +1.32% and a Zacks Rank #2. The partnership is set to release earnings on Feb 5.

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