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Is a Beat in Store for Enterprise Products (EPD) Q2 Earnings?

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Enterprise Products Partners LP (EPD - Free Report) is set to beat earnings estimates when it reports second-quarter 2021 results on Jul 28, before the opening bell.

In the last reported quarter, the partnership’s adjusted earnings per limited partner unit of 64 cents beat the Zacks Consensus Estimate of 50 cents, thanks to higher contribution from the natural gas processing business and Permian Basin natural gas gathering system.

Enterprise Products beat the Zacks Consensus Estimate in three of the prior four quarters and met the same once, delivering an average earnings surprise of 8%. 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 second-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 increase of 6.4%.

Further, the Zacks Consensus Estimate for revenues is pegged at $7.7 billion for the quarter, indicating a rise of 33.8% 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 +0.58%. This is because the Most Accurate Estimate is pegged 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

The business model of the partnership — having one of the highest credit ratings in the midstream energy space — is likely to have been relatively less exposed to short-term volatility in the second quarter. Energy demand recovery in the quarter is expected to have resulted in higher midstream asset utilization, positioning Enterprise Products — a fully-integrated midstream energy firm — for an earnings beat.

The Zacks Consensus Estimate for second-quarter net NGL fractionation volumes is pegged at 1,263 thousand barrels per day (Mbpd), indicating a rise from the year-ago figure of 1,154 Mbpd. Also, the consensus estimate for butane isomerization volumes in Petrochemical & Refined Products Services is pegged at 98 Mbpd, signaling a rise from 68 Mbpd in the year-ago period.

Additionally, the Zacks Consensus Estimate for second-quarter net petrochemical transportation volumes is pegged at 794 Mbpd, indicating a rise from the year-ago level of 786 Mbpd. The consensus estimate for NGL marine terminal volumes is pegged at 758 Mbpd, signaling a rise from 701 Mbpd in the year-ago period. These potential increases are expected to have boosted the partnership’s second-quarter profits.

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:

EOG Resources, Inc. (EOG - Free Report) has an Earnings ESP of +6.93% and a Zacks Rank of 1. It is scheduled to report second-quarter results on Aug 4. You can see the complete list of today’s Zacks #1 Rank stocks here.

ConocoPhillips (COP - Free Report) has an Earnings ESP of +3.82% and is a Zacks #1 Ranked player. The company is scheduled to release second-quarter results on Aug 3.

Continental Resources, Inc. (CLR - Free Report) has an Earnings ESP of +14.23% and a Zacks Rank #1. The firm is scheduled to release quarterly earnings on Aug 2.