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Is a Beat in Store for Enterprise Products (EPD) Q4 Earnings?

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Enterprise Products Partners LP (EPD - Free Report) is set to beat earnings estimates when it reports fourth-quarter 2020 results on Feb 3, before the opening bell.

In the last reported quarter, the partnership reported earnings of 48 cents per unit, in line with the Zacks Consensus Estimate. Increased transportation volumes in Petrochemical & Refined Products Services, as well as higher fee-based volumes from the Permian Basin at the midstream infrastructure provider’s gas processing plants aided the bottom line. However, the positives were partially offset by lower natural gas pipeline transportation volumes, and crude oil transportation and marine terminal volumes.

The partnership beat the Zacks Consensus Estimate in two of the prior four quarters and met the same on other occasions, delivering an average earnings surprise of 4.9%. 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 fourth-quarter earnings of 51 cents per unit has seen one upward and downward revision each in the past 30 days. The figure suggests a year-over-year decline of 5.6%.

Further, the Zacks Consensus Estimate for revenues is pegged at $6.7 billion for the quarter, indicating a decline of 16.4% from the year-ago reported figure.

What the Quantitative Model Suggests

Our proven model predicts 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 chances of an earnings beat.

Earnings ESP: Earnings ESP for the partnership is +0.74%. This is because the Most Accurate Estimate is pegged higher than the Zacks Consensus Estimate of 51 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.

Factors Driving the Better-Than-Expected Earnings

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 fourth quarter.

The Zacks Consensus Estimate for fourth-quarter net NGL fractionation volumes is pegged at 1,356 thousand barrels per day (Mbpd), indicating a rise from the year-ago figure of 1,097 MBPD. Moreover, the consensus estimate for butane isomerization volumes in Petrochemical & Refined Products Services is pegged at 111 Mbpd, signaling a rise from 109 Mbpd in the year-ago period.

Additionally, the Zacks Consensus Estimate for fourth-quarter net petrochemical transportation volumes is pegged at 752 Mbpd, indicating a significant rise from the year-ago level of 729 Mbpd. This is expected to have boosted the partnership’s fourth-quarter profits.

However, the consensus estimate for NGL pipeline transportation volumes is pegged at 3,502 MBPD, signaling a decrease from the year-ago quarter’s 3,870 MBPD. This might have partially offset the positives from the above-mentioned factors.

Other Stocks That Warrant a Look

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

Diamondback Energy, Inc. (FANG - Free Report) has an Earnings ESP of +9.91% and a Zacks Rank #2, currently. The company is scheduled to release quarterly earnings on Feb 22. You can see the complete list of today’s Zacks #1 Rank stocks here.

Callon Petroleum Company has an Earnings ESP of +5.64% and is a Zacks #3 Ranked player. The company is scheduled to release fourth-quarter results on Feb 24. 

Continental Resources, Inc. has an Earnings ESP of +17.97% and a Zacks Rank of 3. It is scheduled to report fourth-quarter results on Feb 16.

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