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Here's Why Enterprise (EPD) is an Attractive Investment Bet
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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 $2.63, indicating a year-over-year increase of almost 4%.
Factors Working in Favor
Enterprise Products, which currently carries a Zacks Rank #2 (Buy), 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. Along with the fourth-quarter 2023 results, the company reported consolidated liquidity of $3.9 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.
Sunoco, the leading independent fuel distributor in the United States, has a stable business model and relatively lower exposure to commodity price volatility. This is because the partnership distributes fuel to branded distributors under long-term contracts.
With its operating interests in oil and gas pipeline networks spread across 83,000 miles, Kinder Morgan is a leading energy infrastructure company in North America. It derives most of its earnings from take-or-pay contracts, generating stable fee-based revenues.
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.
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Here's Why Enterprise (EPD) is an Attractive Investment Bet
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 $2.63, indicating a year-over-year increase of almost 4%.
Factors Working in Favor
Enterprise Products, which currently carries a Zacks Rank #2 (Buy), 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. Along with the fourth-quarter 2023 results, the company reported consolidated liquidity of $3.9 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.
Other Stocks to Consider
Other top-ranked energy companies include Sunoco LP (SUN - Free Report) , Kinder Morgan, Inc. (KMI - Free Report) and Murphy USA Inc. (MUSA - Free Report) . While Sunoco and Murphy USA sport a Zacks Rank #1 (Strong Buy), Kinder Morgan carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Sunoco, the leading independent fuel distributor in the United States, has a stable business model and relatively lower exposure to commodity price volatility. This is because the partnership distributes fuel to branded distributors under long-term contracts.
With its operating interests in oil and gas pipeline networks spread across 83,000 miles, Kinder Morgan is a leading energy infrastructure company in North America. It derives most of its earnings from take-or-pay contracts, generating stable fee-based revenues.
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.