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Why Is Enterprise Products (EPD) Up 3.9% Since Last Earnings Report?

·3 min read

It has been about a month since the last earnings report for Enterprise Products Partners (EPD). Shares have added about 3.9% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Enterprise Products due for a pullback? 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 Q1 Earnings & Revenues Top Estimates

Enterprise Products reported first-quarter 2021 adjusted earnings per limited partner unit of 64 cents, beating the Zacks Consensus Estimate of 50 cents and improving from the year-ago quarter profit of 61 cents.

Revenues increased to $9,155 million from $7,483 million in the prior-year quarter. Moreover, the top line beat the consensus estimate of $6,951 million.

The strong quarterly results were supported by higher contributions from natural gas processing business and the partnership’s Permian Basin natural gas gathering system.

Segmental Performance

Gross operating income at NGL Pipelines & Services increased from $1,042 million in the year-ago quarter to $1,086.4 million. Higher contributions from natural gas processing business and associated NGL marketing activities primarily aided the segment.

Natural Gas Pipelines and Services’ gross operating income increased to $535.2 million from $283.8 million in the year-ago quarter. The upside was owing to higher contributions from the partnership’s Permian Basin natural gas gathering system.

Crude Oil Pipelines & Services recorded gross operating income of $400.2 million, which decreased from $452.9 million in the prior-year quarter owing to a drop in fees and transportation volumes from the South Texas crude oil pipeline system.

Gross operating income at Petrochemical & Refined Products Services amounted to $281.5 million compared with $278.5 million a year ago, thanks to higher pipeline transportation volumes.

DCF

Quarterly distribution improved 1.1% year over year to 45 cents per common unit or $1.80 per unit on an annualized basis.

Adjusted distributable cash flow was $1,737.3 million, up from $1,553.6 million a year ago, and provided coverage of 1.7x. Notably, the partnership retained $746 million of distributable cash flow in the March quarter.

Financials

For the quarter, Enterprise Products’ total capital expenditure was $682 million.

As of Mar 31, 2021, its outstanding total debt principal was $28.9 billion. Enterprise Products’ consolidated liquidity amounted to $5.1 billion, which included unrestricted cash on hand and available borrowing capacity under revolving credit facility.

Outlook

The partnership reaffirmed expectations for growth capital spending for 2021 and 2022 at $1.6 billion and $800 million, respectively. Notably, the partnership projects sustaining capital spending for this year at $440 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

VGM Scores

At this time, Enterprise Products has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. 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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