Back to top

Enterprise Products (EPD) Soars to 52-Week High, Time to Cash Out?

Read MoreHide Full Article

Have you been paying attention to shares of Enterprise Products Partners L.P. (EPD - Free Report) ? Shares have been on the move with the stock up 4.6% over the past month. The stock hit a new 52-week high of $30.31 in the previous session. Enterprise Products Partners L.P. has gained 23.2% since the start of the year compared to the 10.9% move for the Zacks Oils-Energy sector and the 23.1% return for the Zacks Oil and Gas - Production Pipeline - MLB industry.

What's Driving the Outperformance?

The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on May 1, 2019, Enterprise Products reported EPS of $0.57 versus consensus estimate of $0.47 while it missed the consensus revenue estimate by 3.53%.

For the current fiscal year, Enterprise Products is expected to post earnings of $2.11 per share on $36.09 billion in revenues. This represents a 10.47% change in EPS on a -1.22% change in revenues. For the next fiscal year, the company is expected to earn $2.17 per share on $37.52 billion in revenues. This represents a year-over-year change of 2.99% and 3.96%, respectively.

Valuation Metrics

Enterprise Products may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.

On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

Enterprise Products has a Value Score of C. The stock's Growth and Momentum Scores are A and A, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 14.4X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 11X versus its peer group's average of 7.7X. Additionally, the stock has a PEG ratio of 3.59. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Enterprise Products currently has a Zacks Rank of #1 (Strong Buy) thanks to favorable earnings estimate revisions from covering analysts.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Enterprise Products passes the test. Thus, it seems as though Enterprise Products shares could still be poised for more gains ahead.

How Does Enterprise Products Stack Up to the Competition?

Shares of Enterprise Products have been moving higher, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also impressive, including Oasis Midstream Partners (OMP - Free Report) , Shell Midstream Partners, L.P. (SHLX - Free Report) , and TC PipeLines, (TCP - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.

The Zacks Industry Rank is in the top 28% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Enterprise Products, even beyond its own solid fundamental situation.

Published in