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Reasons to Retain Enterprise Products (EPD) in Your Portfolio
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Enterprise Products Partners LP (EPD - Free Report) is a leading midstream energy player with low exposure to volume and price risks. The Zacks Consensus Estimate for the partnership’s 2024 earnings per unit is pegged at $2.61, indicating a year-over-year increase of 5.2%.
Factors Working in Favor
Enterprise Products, which currently carries 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 spread 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, petrochemicals, refined products and crude oil. These assets can store 14 billion cubic feet of natural gas. Enterprise Products has $6.8 billion of key approved 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. The liquidity profile of Enterprise Products is impressive, as it reported consolidated liquidity of $3.8 billion, which includes 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, EPD 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 to some extent.
Stocks to Consider
Better-ranked players in the energy space include Murphy USA Inc. (MUSA - Free Report) , The Williams Companies, Inc. (WMB - Free Report) and Western Midstream Partners, LP (WES - Free Report) . While Murphy USA and The Williams Companies sport a Zacks Rank #1 (Strong Buy), Western Midstream carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Murphy USA is a renowned retailer of gasoline and convenience goods, distinguished by its adaptable business model that effectively enhances profitability during periods of economic expansion and recession.
The Williams Companies is well-poised to capitalize on the mounting demand for clean energy since it engages in transporting, storing, gathering and processing natural gas and natural gas liquids.
With its pipeline networks spread across more than 30,000 miles, the company connects premium basins in the United States to the key market. WMB’s assets can meet 30% of the nation’s consumption of natural gas, which is utilized for heating purposes and clean-energy generation. Thus, the company will be generating stable fee-based revenues and has witnessed upward earnings estimate revisions for 2024 over the past 30 days.
Western Midstream Partners has a stable business model, banking on its midstream assets. With new productions coming online and activities in the Delaware Basin intensifying, there is a notable uptick in total throughput for natural gas, crude oil and natural gas liquids. Moreover, the partnership has impressive free cash flow conversions and has witnessed upward earnings estimate revisions for 2024 over the past 30 days.
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Reasons to Retain Enterprise Products (EPD) in Your Portfolio
Enterprise Products Partners LP (EPD - Free Report) is a leading midstream energy player with low exposure to volume and price risks. The Zacks Consensus Estimate for the partnership’s 2024 earnings per unit is pegged at $2.61, indicating a year-over-year increase of 5.2%.
Factors Working in Favor
Enterprise Products, which currently carries 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 spread 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, petrochemicals, refined products and crude oil. These assets can store 14 billion cubic feet of natural gas. Enterprise Products has $6.8 billion of key approved 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. The liquidity profile of Enterprise Products is impressive, as it reported consolidated liquidity of $3.8 billion, which includes 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, EPD 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 to some extent.
Stocks to Consider
Better-ranked players in the energy space include Murphy USA Inc. (MUSA - Free Report) , The Williams Companies, Inc. (WMB - Free Report) and Western Midstream Partners, LP (WES - Free Report) . While Murphy USA and The Williams Companies sport a Zacks Rank #1 (Strong Buy), Western Midstream carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Murphy USA is a renowned retailer of gasoline and convenience goods, distinguished by its adaptable business model that effectively enhances profitability during periods of economic expansion and recession.
The Williams Companies is well-poised to capitalize on the mounting demand for clean energy since it engages in transporting, storing, gathering and processing natural gas and natural gas liquids.
With its pipeline networks spread across more than 30,000 miles, the company connects premium basins in the United States to the key market. WMB’s assets can meet 30% of the nation’s consumption of natural gas, which is utilized for heating purposes and clean-energy generation. Thus, the company will be generating stable fee-based revenues and has witnessed upward earnings estimate revisions for 2024 over the past 30 days.
Western Midstream Partners has a stable business model, banking on its midstream assets. With new productions coming online and activities in the Delaware Basin intensifying, there is a notable uptick in total throughput for natural gas, crude oil and natural gas liquids. Moreover, the partnership has impressive free cash flow conversions and has witnessed upward earnings estimate revisions for 2024 over the past 30 days.