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Is a Beat in Store for Enterprise Products (EPD) Q1 Earnings?

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Enterprise Products Partners LP (EPD - Free Report) is set to beat earnings estimates when it reports first-quarter 2021 results on May 3, before the opening bell.

In the last reported quarter, the partnership’s adjusted earnings per limited partner unit of 51 cents beat the Zacks Consensus Estimate by a penny, thanks to increased transportation volumes in Petrochemical & Refined Products Services along with higher margin from the Midland-to-ECHO Pipeline System. The positives were partially offset by lower natural gas pipeline transportation volumes.

The partnership beat the Zacks Consensus Estimate in three of the prior four quarters and met the same once, delivering an average earnings surprise of 5.4%. 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 first-quarter earnings of 50 cents per unit has seen one upward estimate revision and two downward movements in the past 30 days. The figure suggests a year-over-year decline of 18%.

Further, the Zacks Consensus Estimate for revenues is pegged at $7 billion for the quarter, indicating a decline of 7.1% 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 currently at +6.00%. This is because the Most Accurate Estimate is pegged at 53 cents per unit, higher than the Zacks Consensus Estimate of 50 cents. 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 firm, 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 short-term volatility in the first quarter.

The Zacks Consensus Estimate for first-quarter net NGL fractionation volumes is pegged at 1,316 thousand barrels per day (Mbpd), indicating a rise from the year-ago figure of 1,133 Mbpd. Moreover, the consensus estimate for butane isomerization volumes in Petrochemical & Refined Products Services is pegged at 107 Mbpd, signaling a rise from 105 Mbpd in the year-ago period.

Additionally, the Zacks Consensus Estimate for first-quarter net petrochemical transportation volumes is pegged at 828 Mbpd, indicating a significant rise from the year-ago level of 712 Mbpd. This potential increase is expected to have boosted the partnership’s first-quarter profits.

However, the consensus estimate for NGL pipeline transportation volumes is pegged at 3,617 Mbpd, signaling a decrease from the year-ago quarter’s 3,762 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:

NOW Inc. (DNOW - Free Report) has an Earnings ESP of +31.37% and a Zacks Rank #2. It is scheduled to report first-quarter results on May 5. You can see the complete list of today’s Zacks #1 Rank stocks here.

EQT Corporation (EQT - Free Report) has an Earnings ESP of +4.40% and is a Zacks #3 Ranked player. The company is scheduled to release first-quarter results on May 5. 

Cimarex Energy Co. has an Earnings ESP of +18.41% and a Zacks Rank #3. It is scheduled to report first-quarter results on May 5.

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