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Enterprise Products (EPD) Hikes Quarterly Distribution

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Midstream energy player Enterprise Products Partners LP (EPD - Free Report) announced that it has been permitted by its board of directors to increase quarterly cash distributions.  

The new distribution of 41 cents per common unit represents an increase of 1.2% from the previous amount of 40.5 cents. Based on closing price of $27.41 per unit on Jan 5, 2017, the stock is reflecting distribution yield of almost 6%.

The increased distribution is expected to be paid on Feb 7, 2017, to unitholders of record as of Jan 31, 2017. Investors should know that since the partnership’s initial public offering in 1998, the latest hike represents 59th distribution increase. The distribution also represents 50th consecutive quarterly increase.

Houston, Texas-based Enterprise Products is engaged in providing a wide range of midstream energy services to producers and consumers of natural gas, natural gas liquids (NGL), and crude oil. The company is expected to report fourth quarter 2016 earnings on Jan 30, 2017 before the market opens.

The business scenario for the leading master limited partnership (MLP) seems encouraging as natural gas and oil prices have started to shine again. The improvement is likely to drive U.S. shale producers to boost output of both the commodities. With the increased production of commodities, greater will be the requirement for midstream services like transportation and storage. The development in this front could help the partnership to earn significant cash flows in the coming days.

However, over the prior six months, Enterprise Products underperformed the Zacks categorized Oil/Gas Production Pipeline MLP industry. During the aforesaid period, the partnership fell 5% as compared to almost 4% improvement for the broader industry.

As a result, Enterprise Products carries a Zacks Rank #3 (Hold).

Meanwhile better-ranked players in the energy sector are Imperial Oil Limited (IMO - Free Report) , Suncor Energy Inc. (SU - Free Report) and Newfield Exploration Company . Imperial Oil and Suncor sport a Zacks Rank #1 (Strong Buy) while Newfield carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Imperial Oil is undervalued, as revealed by its forward PE ratio of 18.21 as compared to 143.7 for the broader industry.

McDermott beat the Zacks Consensus Estimate in each of the last four quarters with an average earnings surprise of 474.04%.  

Suncor posted an average earnings surprise of 40.55% for the last four quarters.

Newfield surpassed the Zacks Consensus Estimate in three of the last four quarters with an average earnings surprise of 754.83%.  

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