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It has been about a month since the last earnings report for Enterprise Products Partners (EPD). Shares have lost about 5.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Enterprise Products due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Enterprise Products Q3 Earnings Meet Estimates
The partnership reported third-quarter 2021 adjusted earnings per limited partner unit of 52 cents, in line with the Zacks Consensus Estimate. The bottom line improved from the year-ago profit of 48 cents.
Total quarterly revenues of $10,831.3 million surpassed the Zacks Consensus Estimate of $8,953 million. Also, the top line significantly increased from $6,922 million in the prior-year quarter.
Third-quarter results were primarily supported by higher pipeline volumes. Natural Gas Pipelines and Services, and Petrochemical & Refined Products Services businesses buoyed the partnership’s third-quarter performance.
Pipeline volumes in NGL, crude oil, refined products & petrochemicals were recorded at 6.3 million barrels per day (bpd),
higher than the year-ago quarter’s 6 million bpd. Natural gas pipelines volumes were 14.6 trillion British thermal units per day (TBtus/d), up from 13.1 TBtus/d a year ago. Marine terminal volumes were 1.5 million bpd, in line with the year-ago quarter.
Gross operating income at NGL Pipelines & Services marginally decreased from $1,028.1 million in the year-ago quarter to $1,022.9 million, primarily due to the impacts related to Hurricane Ida.
Natural Gas Pipelines and Services’ gross operating income increased to $223.3 million from $208.4 million in the year-ago quarter. The increase was due to higher natural gas transportation volumes. Improved performance from its Acadian Gas System and Haynesville Gathering System aided the segment.
Crude Oil Pipelines & Services recorded a gross operating income of $422.9 million, which decreased from $481.8 million in the prior-year quarter, owing to a drop in storage and other fee revenues at EHT located on the Houston Ship Channel. Also, decreased average transportation fees from the South Texas Crude Oil Pipeline affected the segment.
Gross operating income at Petrochemical & Refined Products Services amounted to $411.3 million compared with $315 million a year ago, thanks to higher average sales margins at Chambers County Propylene Production facilities. Increased by-product sales from butane isomerization operations and improved sales volumes from the octane enhancement business aided the segment.
Quarterly distribution remained at 45 cents per common unit or $1.80 per unit on an annualized basis.
Adjusted distributable cash flow was $1,613.2 million, slightly down from $1,647 million a year ago, and provided coverage of 1.6X. The partnership retained $624 million of distributable cash flow in the September-end quarter. Free cash flow for the quarter was $1,839 million, significantly up from $430 million a year ago.
For third-quarter 2021, Enterprise Products’ total capital expenditure was $504.9 million.
As of Sep 30, 2021, its outstanding total debt principal was $29.8 billion, up sequentially from $28.8 billion. Enterprise Products’ consolidated liquidity amounted to $6.7 billion, up sequentially from $5.4 billion. The total liquidity amount included unrestricted cash on hand and available borrowing capacity under its revolving credit facility. It had a long-term debt to capitalization of 51.3%.
The partnership still expects growth capital spending of $1.7 billion and $800 million, respectively, for 2021 and 2022. In 2022, the figure might rise to the range of $1-$1.5 billion. It reiterated its sustaining capital spending of $440 million for 2021. It has around $2.9 billion worth of capital projects under construction.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
At this time, Enterprise Products has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, Enterprise Products has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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