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 $2.63, indicating a year-over-year increase of 5.7%.
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 that spreads 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.
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
Some better-ranked stocks for investors interested in the energy space are Southwest Gas Holdings Inc. SWX, Weatherford International plc WFRD and Transportadora de Gas del Sur SA TGS. While Southwest Gas Holdings sports a Zacks Rank #1 (Strong Buy) at present, Weatherford International and Transportadora de Gas carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Southwest Gas Holdings is making progress in its transition to a pure-play natural gas leader. The company's affordable energy solutions are witnessing heightened demand from its growing customer base.
Weatherfordis a key energy player and engaged in offering exclusive drilling technologies that will maximize clients’ reservoir exposure. It is also involved in efficient well construction and completion activities.
Transportadora’s midstream asset portfolio has the most extensive natural gas pipeline network in Latin America. It generates stable fee-based revenues since its pipeline assets transport more than 60% of the gas consumed in Argentina. Also, TGS has lower debt exposure than the composite stocks belonging to the industry.
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