Reasons to Retain Enterprise Products (EPD) in Your Portfolio
Enterprise Products Partners LP EPD is a leading midstream energy player with low exposure to volume and price risks. The Zacks Consensus Estimate for the partnership’s 2024 earnings per unit is pegged at $2.61, indicating a year-over-year increase of 5.3%.
Factors Working in Favor
Enterprise Products, which currently carries a Zacks Rank #3 (Hold), 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 spread across more than 50,000 miles, transporting natural gas, natural gas liquids (NGLs), crude oil petrochemicals and refined products.
The midstream infrastructure provider has storage assets that can hold more than 260 million barrels of NGL, petrochemicals, refined products and crude oil. These assets can store 14 billion cubic feet of natural gas. Enterprise Products has $6.8 billion of key approved 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. The liquidity profile of Enterprise Products is impressive, as it reported consolidated liquidity of $3.8 billion, which includes unrestricted cash and available borrowing capacity.
Risks
Enterprise Products has several assets that have been providing midstream services for many years. This has raised the possibility of investing massive capital in maintaining those infrastructures. Thus, EPD could witness an increase in maintenance or repair expenses.
A slowdown in drilling activities, as upstream players mainly focus on stockholder returns rather than boosting output, is hurting production. This is affecting the demand for transportation and storage to some extent.
Stocks to Consider
Better-ranked energy companies include Sunoco LP SUN, Enbridge Inc. ENB and Western Midstream Partners, LP WES. While Sunoco sports a Zacks Rank #1 (Strong Buy), Enbridge and Western Midstream Partners carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Sunoco, the leading independent fuel distributor in the United States, has a stable business model and has relatively lower exposure to commodity price volatility. This is because the partnership distributes fuel to branded distributors under long-term contracts.
Enbridge generates stable fee-based revenues from its natural gas transmission network. Thus, the midstream energy player connects key markets with the prolific supply basins.
Western Midstream Partners has a stable business model, banking on its midstream assets. With new productions coming online and activities in the Delaware Basin intensifying, there is a notable uptick in total throughput for natural gas, crude oil and natural gas liquids.
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Enterprise Products Partners L.P. (EPD) : Free Stock Analysis Report
Sunoco LP (SUN) : Free Stock Analysis Report
Enbridge Inc (ENB) : Free Stock Analysis Report
Western Midstream Partners, LP (WES) : Free Stock Analysis Report
