Enterprise Products Partners LP EPD has witnessed upward earnings estimate revisions for 2022 and 2023 in the past seven days. In the past year, the stock, carrying a Zacks Rank #2 (Buy), has gained 15.3%, outpacing the 12% rise of the composite stocks belonging to the industry.
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What’s Favoring the Stock?
Enterprise Products has a stable business model and is not significantly exposed to the volatility in oil and gas prices. It generates stable fee-based revenues from its extensive pipeline network across nearly 50,000 miles, transporting natural gas, natural gas liquids (NGLs), crude oil petrochemicals and refined products.
The midstream infrastructure provider also has storage assets that can store roughly 260 million barrels of NGL, petrochemical, refined products and crude oil. These assets can also store 14 billion cubic feet of natural gas. Moreover, Enterprise Products has $5.5 billion of major capital projects under construction that are likely to provide incremental fee-based revenues.
The partnership’s balance sheet has lower debt exposure than the composite stocks belonging to the industry. Its debt-to-capitalization ratio of 0.53 is lower than the industry’s 0.54. In fact, the ratio has persistently been lower than the stocks in the industry in the past few years. The liquidity profile of Enterprise Products is impressive, as completed the second quarter with consolidated liquidity of $4.1 billion, which incorporates available borrowing capacity along with unrestricted cash.
Other Stocks to Consider
Other top-ranked stocks in the energy space include Exxon Mobil Corporation XOM, BP plc BP and Range Resources RRC. While Range Resources carries a Zacks Rank #2, ExxonMobil and BP sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
ExxonMobil’s upstream operation is benefiting from high oil price. Recently, XOM reported strong earnings thanks to higher realized commodity prices and solid refinery utilization, offset partially by increased ethane feed costs in North America. In 2022, ExxonMobil is likely to see earnings growth of 131%.
High oil prices are aiding BP’s upstream operations. Its sizable refining and marketing operations will protect it if the crude pricing scenario turns unfavorable again. For 2022, it is likely to witness earnings growth of 108.6%. Over the past few quarters, BP has successfully been reducing long-term debt.
Efficient operations and higher prices of commodities are aiding Range Resources in generating significant cashflows. For 2022, Range Resources is likely to witness earnings growth of 167.3%.
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