Back to top

Image: Bigstock

What Awaits Enterprise Products (EPD) This Earnings Season?

Read MoreHide Full Article

Enterprise Products Partners LP (EPD - Free Report) is set to report third-quarter 2021 results on Nov 2, before the opening bell.

In the last reported quarter, the partnership reported adjusted earnings per limited partner unit of 51 cents, which beat the Zacks Consensus Estimate of 50 cents, thanks to higher contributions from the partnership’s natural gas processing business, and increased pipeline transportation volumes in Petrochemical & Refined Products Services.

The midstream infrastructure provider beat the Zacks Consensus Estimate in three of the prior four quarters and met the same once, with the average earnings surprise being 8%. This is depicted in the graph below:

Let’s see how things have shaped up prior to the third-quarter earnings announcement.

Trend in Estimate Revision

The Zacks Consensus Estimate for third-quarter earnings of 52 cents per unit has seen one upward revision and two downward movements in the past 30 days. The figure suggests a year-over-year increase of 8.3%.

Further, the Zacks Consensus Estimate for revenues is pegged at $9 billion for the quarter, indicating an increase of 29.3% from the year-ago reported figure.

Factors to Consider

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 third 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 a year-over-year increase in the bottom line.

The Zacks Consensus Estimate for third-quarter gross operating margin from NGL Pipelines & Services is pegged at $1,110 million, indicating a rise from the year-ago figure of $1,028 million. Also, the consensus estimate for gross operating margin from Onshore Natural Gas Pipelines & Services is pegged at $222 million, signaling an increase from $208 million a year ago.

The Zacks Consensus Estimate for third-quarter gross operating margin from Onshore Crude Oil Pipelines & Services is pegged at $413 million, pointing toward a decrease from $482 million a year ago. Even though improved performance from natural gas and NGL pipelines is expected to have well positioned the partnership to generate higher profits, weak crude oil pipeline performance makes an earnings beat uncertain. 

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 partnership is -0.73%. This is because the Most Accurate Estimate is pegged at 51 cents per unit, lower than the Zacks Consensus Estimate of 52 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.

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:

MPLX LP (MPLX - Free Report) has an Earnings ESP of +3.81% and a Zacks Rank of 2. It is scheduled to report third-quarter results on Nov 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

EOG Resources, Inc. (EOG - Free Report) has an Earnings ESP of +2.16% and is a Zacks #1 Ranked player. The company is scheduled to release third-quarter results on Nov 4.

Continental Resources, Inc. has an Earnings ESP of +3.81% and a Zacks Rank #1. The firm is scheduled to release quarterly earnings on Nov 3.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Enterprise Products Partners L.P. (EPD) - free report >>

EOG Resources, Inc. (EOG) - free report >>

MPLX LP (MPLX) - free report >>

Published in