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Why Hold Strategy is Apt for Enterprise Products (EPD) Now
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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 has witnessed upward revisions in the past seven 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 has storage assets that can hold more than 260 million barrels of NGL, petrochemical, refined products and crude oil. These assets can store 14 billion cubic feet of natural gas. Enterprise Products has $6.1 billion of major capital projects under construction, which 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. Notably, 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 of $4 billion, which incorporates unrestricted cash and 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 capital in maintaining those infrastructures. Thus, in the future, Enterprise Products could witness an increase in 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.
Through its ownership interests in onshore oil and natural gas properties in the United States, Evolution Petroleum is touted as a key independent energy player.
Global Partners is a leading operator of gasoline stations and convenience stores, having roughly 1,700 locations majorly in the Northeast. Over the past 60 days, Global Partners has witnessed upward earnings estimate revisions for 2023 and 2024, respectively.
The royalty interest production figures of PHX MINERALS, for the last four reported figures, depict significant improvement. With new wells coming online in the prolific Haynesville Shale and Bakken plays, PHX MINERALS is witnessing a production increase in royalty volumes.
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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 has witnessed upward revisions in the past seven 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 has storage assets that can hold more than 260 million barrels of NGL, petrochemical, refined products and crude oil. These assets can store 14 billion cubic feet of natural gas. Enterprise Products has $6.1 billion of major capital projects under construction, which 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. Notably, 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 of $4 billion, which incorporates unrestricted cash and 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 capital in maintaining those infrastructures. Thus, in the future, Enterprise Products could witness an increase in 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 Evolution Petroleum Corporation (EPM - Free Report) , Global PartnersLP (GLP - Free Report) and PHX MINERALS INC. (PHX - Free Report) . While Evolution Petroleum and Global Partners sport a Zacks Rank #1 (Strong Buy), PHX MINERALS carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Through its ownership interests in onshore oil and natural gas properties in the United States, Evolution Petroleum is touted as a key independent energy player.
Global Partners is a leading operator of gasoline stations and convenience stores, having roughly 1,700 locations majorly in the Northeast. Over the past 60 days, Global Partners has witnessed upward earnings estimate revisions for 2023 and 2024, respectively.
The royalty interest production figures of PHX MINERALS, for the last four reported figures, depict significant improvement. With new wells coming online in the prolific Haynesville Shale and Bakken plays, PHX MINERALS is witnessing a production increase in royalty volumes.