We've been on a
hunt for yield
within the within the natural gas pipeline master limited
partnerships (MLPs), and the hunt has now led us to Enterprise
Products Partners (
Enterprise Products Partners is a North American midstream
energy company providing a range of services to producers and
consumers of natural gas, natural gas liquids (NGLs), crude oil,
refined products and certain petrochemicals.
EPD operates in five main business segments:
- NGL Pipelines & Services
- Onshore Natural Gas Pipelines & Services
- Onshore Crude Oil Pipelines & Services
- Offshore Pipelines & Services
- Petrochemical & Refined Products Services.
EPD conducts all of its business through its subsidiary,
Enterprise Products Operating LLC. EPD is managed and
controlled by Enterprise GP, which has a general partner interest
: EPD is in the Natural Gas Utilities industry and has positive
earning. The PEG, PE, and Price to Book ratios are the most
appropriate valuation measures. EPD appears to be fairly
valued with a PEG of 3.3764 which is in line with the Natural Gas
Utilities industry median of 2.62. However, their PE is 25.5257,
above the industry median of 15.66.
Although profitable on a gross basis, EPD has poor
profitability characteristics compared to its industry peers.
While the operating and net margins are below the medians, gross
margin is among the lowest in the industry.
EPD's dividend is currently yielding 5.16%, which appears on the
surface to be unstable. However, MLP's are required to return
profits through dividends.
At 56.67%, EPD's debt to total capital ratio is line with
Natural Gas Utilities industry norms, despite its increase over
the last year. Given that the company's operating profits are
greater than the interest payments, there should be little
difficulty in repaying debt.
Quick rundown on technicals:
Looking at EPD's daily chart, traders will find the price has
been in a bull market uptrend for over 3 years since hitting a 5
year low of $16 on October 8, 2008. Since then the price
has been making higher lows and higher highs until recently. It
consolidated with about 3 months of sideways trading, then
continued higher to hit a 52 week / 5 year high of $49.86.
As with most stock that hit a 52 week high, EPD is pulling
back before continuing the trend. Traders can
consider looking for entry points on the pull back towards the
trendline. The trendline is in convergence with the 50%
Fibonacci retracement level at $41.50 which is also confirmed by
the 150 day moving average, which has acted a strong support with
a few exceptions.
Note that with traders around the world looking for yield in
these troubled times, it will not be long before others realize
this multiyear bull run in the MLPs.