We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Hold Strategy is Apt for Enterprise Products (EPD) Now
Read MoreHide Full Article
Enterprise Products Partners LP (EPD - Free Report) is a leading midstream energy player with lower exposure to volume and price risks. The Zacks Consensus Estimate for the partnership’s 2023 earnings per share of $2.50 has witnessed two upward revisions in the past 60 days.
Factors Working in Favor
Enterprise Products, currently carrying a Zacks Rank #3 (Hold), has a stable business model and is not significantly exposed to the volatility in oil and gas prices. It generates stable fee-based revenues from its extensive pipeline network that spreads across more than 50,000 miles, transporting natural gas, natural gas liquids (NGLs), crude oil petrochemicals and refined products.
The midstream infrastructure provider also has storage assets that can hold more than 260 million barrels of NGL, petrochemical, refined products and crude oil. These assets can also store 14 billion cubic feet of natural gas. Moreover, Enterprise Products has $5.8 billion of major capital projects under construction that are likely to provide incremental fee-based revenues.
The partnership’s balance sheet has lower debt exposure than the composite stocks belonging to the industry. Its debt-to-capitalization ratio of 0.51 is lower than the industry’s 0.53. In fact, the ratio has persistently been lower than the stocks in the industry in the past few years. The liquidity profile of Enterprise Products is impressive, as it reported consolidated liquidity at $4.1 billion, which incorporates unrestricted cash along with available borrowing capacity.
Risks
Enterprise Products has several assets that have been providing midstream services for many years. This has raised the possibility of investing massive maintenance capital in maintaining those infrastructures. Thus, in the future, Enterprise Products could increase maintenance or repair expenses.
A slowdown in drilling activities, as upstream players mainly focus on stockholder returns rather than boosting output, is hurting production. This is affecting the demand for transportation and storage demand to some extent.
Murphy USA is a well-known name as a prime retailer of gasoline and convenience merchandise. The firm, having more than 1,700 stores, has witnessed upward earnings estimate revisions in the past 60 days for 2023 earnings.
Sunoco has a stable business model while transporting motor fuel to roughly 10,000 convenience stores. In the past 30 days, it has witnessed upward earnings estimate revisions for 2023.
Valero Energy is well poised to gain from constraint capacity in global refining activities and favorable demand for refined products. This, in turn will possibly drive utilization in refining capacity and hence will boost cashflows.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Why Hold Strategy is Apt for Enterprise Products (EPD) Now
Enterprise Products Partners LP (EPD - Free Report) is a leading midstream energy player with lower exposure to volume and price risks. The Zacks Consensus Estimate for the partnership’s 2023 earnings per share of $2.50 has witnessed two upward revisions in the past 60 days.
Factors Working in Favor
Enterprise Products, currently carrying a Zacks Rank #3 (Hold), has a stable business model and is not significantly exposed to the volatility in oil and gas prices. It generates stable fee-based revenues from its extensive pipeline network that spreads across more than 50,000 miles, transporting natural gas, natural gas liquids (NGLs), crude oil petrochemicals and refined products.
The midstream infrastructure provider also has storage assets that can hold more than 260 million barrels of NGL, petrochemical, refined products and crude oil. These assets can also store 14 billion cubic feet of natural gas. Moreover, Enterprise Products has $5.8 billion of major capital projects under construction that are likely to provide incremental fee-based revenues.
The partnership’s balance sheet has lower debt exposure than the composite stocks belonging to the industry. Its debt-to-capitalization ratio of 0.51 is lower than the industry’s 0.53. In fact, the ratio has persistently been lower than the stocks in the industry in the past few years. The liquidity profile of Enterprise Products is impressive, as it reported consolidated liquidity at $4.1 billion, which incorporates unrestricted cash along with available borrowing capacity.
Risks
Enterprise Products has several assets that have been providing midstream services for many years. This has raised the possibility of investing massive maintenance capital in maintaining those infrastructures. Thus, in the future, Enterprise Products could increase maintenance or repair expenses.
A slowdown in drilling activities, as upstream players mainly focus on stockholder returns rather than boosting output, is hurting production. This is affecting the demand for transportation and storage demand to some extent.
Stocks to Consider
Better-ranked players in the energy space include Murphy USA Inc. (MUSA - Free Report) , Sunoco LP (SUN - Free Report) and Valero Energy Corporation (VLO - Free Report) . While Murphy USA and Valero Energy carry a Zacks Rank #2 (Buy), Sunoco sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Murphy USA is a well-known name as a prime retailer of gasoline and convenience merchandise. The firm, having more than 1,700 stores, has witnessed upward earnings estimate revisions in the past 60 days for 2023 earnings.
Sunoco has a stable business model while transporting motor fuel to roughly 10,000 convenience stores. In the past 30 days, it has witnessed upward earnings estimate revisions for 2023.
Valero Energy is well poised to gain from constraint capacity in global refining activities and favorable demand for refined products. This, in turn will possibly drive utilization in refining capacity and hence will boost cashflows.