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What Awaits Enterprise Products (EPD) This Earnings Season?

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Enterprise Products Partners LP (EPD - Free Report) is set to report third-quarter 2020 results on Oct 28, before the opening bell.

In the last reported quarter, the partnership reported earnings of 47 cents per unit, which beat the Zacks Consensus Estimate by a penny, thanks to higher marine terminal volumes of NGL and increased margins from uncontracted storage capacity. The positives were partially offset by lower natural gas pipeline transportation volumes and decreased propylene production volumes.

The midstream infrastructure provider beat the Zacks Consensus Estimate in two of the prior four quarters, met the same once and missed on another occasion. The average earnings surprise during this time period was recorded at 3.5%. This is depicted in the graph below:

Let’s see how things have shaped up prior to the announcement.

Trend in Estimate Revision

The Zacks Consensus Estimate for third-quarter earnings of 48 cents per unit has seen four upward revisions and no downward movement in the past 30 days. The figure suggests a year-over-year decline of 4%.

Further, the Zacks Consensus Estimate for revenues is pegged at $6.5 billion for the quarter, indicating a decline of 18% from the year-ago reported figure.

Factors to Consider

Being a fully-integrated midstream energy company, the business model of the partnership — having the highest credit rating in the midstream energy space — is likely to have been relatively less exposed to coronavirus-induced oil and gas price volatility in the third quarter.

The Zacks Consensus Estimate for third-quarter net NGL fractionation volumes is pegged at 1,173 thousand barrels per day (MBPD), indicating a rise from the year-ago figure of 1,003 MBPD. The consensus estimate for NGL pipeline transportation volumes is pegged at 3,569 MBPD, signaling an increase from the year-ago quarter’s 3,557 MBPD. The same for NGL marine terminal volumes is pegged at 693 MBPD, up from 602 MBPD in the year-ago quarter.

However, the Zacks Consensus Estimate for third-quarter crude oil pipeline transportation volumes is pegged at 2,010 MBPD, signaling a decline from 2,321 a year ago. Moreover, the same for net petrochemical transportation volumes for the third quarter is pegged at 710 MBPD, indicating a decrease from the year-ago level of 747 MBPD. Hence, lower crude and petrochemical transportation volumes might have offset the positives from rising NGL fractionation and NGL marine terminal volumes in third-quarter 2020.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Enterprise Products this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here as you will see below.

Earnings ESP: Earnings ESP for the company is -0.23%. This is because the Most Accurate Estimate is pegged lower than the Zacks Consensus Estimate of 48 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.  

Zacks Rank: Enterprise Products currently carries a Zacks Rank #3.

Energy Stocks With Favorable Combination

Here are some companies from the Energy space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in the upcoming quarterly reports:

EOG Resources, Inc. (EOG - Free Report) has an Earnings ESP of +100.70% and is a Zacks #3 Ranked player. The company is scheduled to release third-quarter results on Nov 5. You can see the complete list of today’s Zacks #1 Rank stocks here.

Range Resources Corporation (RRC - Free Report) has an Earnings ESP of +35.96% and a Zacks Rank of #3. It is scheduled to report third-quarter results on Oct 29.

Southwestern Energy Company (SWN - Free Report) has an Earnings ESP of +17.69% and holds a Zacks Rank #3. It is set to report third-quarter results on Oct 29.

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