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Growth & Income

Enterprise Products Partners LP (EPD - Analyst Report) recently delivered its 10th consecutive positive earnings surprise after announcing its 31st consecutive quarterly distribution increase.

It is a Zacks #2 Rank (Buy) and yields a stellar 5.2%.

Company Description

Enterprise Products Partners is a Master Limited Partnership (MLP) operating in the natural gas and crude oil pipeline industry. With over 50,000 miles of pipelines and a market cap of $42.1 billion, it is the largest publicly traded energy partnership.

Because of its fee-based business model, Enterprise Products has been able to increase its distribution to shareholders at a steady pace - even during the Great Recession.

It is headquartered in Houston, Texas.

First Quarter Results

Enterprise Products Partners delivered another solid quarter on May 2. Earnings per unit came in at 62 cents, beating the Zacks Consensus Estimate by 3 cents. It was a 27% increase over the same quarter in 2011.

The gross operating margin rose 20% year-over-year to $1.053 billion. Operating income also increased 20% over the same period, to $749 million.

Distributable cash flow was strong once again, more than doubling to $1.629 billion. This provided an ample 3.0 times coverage of its cash distribution to unitholders.

Estimates Rising

As you can see in its Price & Consensus chart, consensus estimates have been soaring over the last several months:

EPD: Enterprise Products Partners LP

It is a #2 Rank (Buy) stock.

The Zacks Consensus Estimate for 2012 is now $2.59, representing 17% growth over 2011 EPU. The 2013 consensus estimate is currently $2.71, corresponding with 5% growth.

Distribution Rising

Enterprise Products raised its distribution yet again in late April, marking its 31st consecutive quarterly increase.

It currently yields an attractive 5.2%.

Valuation

Valuation looks reasonable for EPD with shares trading at 18x 12-month forward earnings, in-line with the industry and a discount to its 10-year median of 21x.

The Bottom Line

With strong earnings momentum, a steadily rising distribution with a 5.3% yield and reasonable valuation, Enterprise Products Partners continues to offer attractive total return potential.

Read the February 10 article here.

This Week's Growth & Income Zacks Rank Buy Stocks:

ViewPoint Financial Group, Inc. (VPFG) recently delivered its 7th consecutive positive earnings surprise, driven by strong loan growth and an expanding net interest margin. Analysts revised their estimates higher, sending the stock to a Zacks #2 Rank (Buy). On top of solid earnings growth, the company pays a dividend that yields a 1.6%. Valuation is attractive too, with shares trading at just 1.2x book value. Read the full article.

The Hershey Company (HSY) recently reported better-than-expected first quarter results as higher selling prices and expanding profit margins drove double-digit EPS growth. Management raised its guidance for the remainder of the year, prompting analysts to revise their estimates higher. The company also pays a dividend that yields a stellar 2.3%. Read the full article.

Estimates have been rising for Mead Johnson Nutrition Company (MJN) after the company delivered its 6th consecutive positive earnings surprise. It is a Zacks #2 Rank (Buy) stock. Based on consensus estimates, analysts project strong double-digit earnings growth over the next couple years as the company continues to grow in the emerging markets. On top of this growth, it pays a dividend that yields a solid 1.5%. Read the full article.

Latin America has been a hot spot for investors. Coca-Cola FEMSA S.A.B. (KOF) is expected to post double digit earnings growth in both 2012 and 2013. Since the financial crisis, this company has also rewarded its shareholders with dividend increases. Most investors probably don't realize there is more than one Coke. Read the full article.

Todd Bunton is the Growth & Income Stock Strategist for Zacks Investment Research and Editor of the Income Plus Investor service.

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