Enterprise (EPD) Gears Up for Q3 Earnings: What's in Store?

Enterprise Products Partners LP EPD is set to report third-quarter 2019 results on Oct 28, before the opening bell.

Let’s see how things are shaping up prior to the announcement.

Which Way are Estimates Headed?

Let’s take a look at the estimate revision trend to get a clear picture of what analysts feel about the partnership prior to the upcoming earnings release.

The Zacks Consensus Estimate for third-quarter earnings of 53 cents per unit has seen two upward revisions and two downward movements in the past 30 days. The figure suggests a year-over-year improvement of roughly 4%.

Further, the Zacks Consensus Estimate for revenues is pegged at $8.8 billion for the quarter, indicating a decline of 8.2% from the year-ago reported figure.

Factors to Consider

Lower drilling and fracking activities as well as conservative capital spending by explorers slowed down onshore North American crude production in third-quarter 2019. This has likely affected volumes of the commodity that was transported through pipelines. Being a leading provider of midstream services in the continent, the partnership is expected to have generated lower earnings from its Crude Oil Pipelines & Services segment in the third quarter.

The Zacks Consensus Estimate for gross operating margin from the Crude Oil Pipelines & Services segment for the third quarter is pegged at $496 million, suggesting a drop of 16.5% from $594 million reported in the year-ago quarter.

However, the partnership is likely to have generated steady fee-based revenues from its refined products pipeline networks, spreading across roughly 4,100 miles. The Zacks Consensus Estimate for third-quarter gross operating margin from the Petrochemical & Refined Products Services unit is $272 million, indicating a rise of 9.2% from $249 million a year ago.

Earnings Whispers

Our proven model does not indicate an earnings beat for Enterprise. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases chances of an earnings beat. That is not the case here as you will see below.

Earnings ESP: The partnership’s Earnings ESP is 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 53 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Enterprise currently carries a Zacks Rank #3.

Highlights of Q2 Earnings & Earnings History

In the last reported quarter, Enterprise delivered earnings of 55 cents per unit that surpassed the Zacks Consensus Estimate of 52 cents. Moreover, quarterly earnings increased from the year-ago figure of 46 cents per unit.

Notably, the leading provider of midstream energy services has surpassed the Zacks Consensus Estimate in each of the last four quarters, the average positive earnings surprise being roughly 14%, as shown in the chart below.

Enterprise Products Partners L.P. Price and EPS Surprise

Enterprise Products Partners L.P. Price and EPS Surprise

Enterprise Products Partners L.P. price-eps-surprise | Enterprise Products Partners L.P. Quote

Stocks That Warrant a Look

Though an earnings beat looks uncertain for Enterprise, here are some firms that you may want to consider on the basis of our model. These have the right combination of elements to post an earnings beat in the upcoming quarterly reports:

Phillips 66 PSX has an Earnings ESP of +4.50% and a Zacks Rank of 3. The leading refiner is scheduled to release earnings on Oct 25. You can see the complete list of today’s Zacks #1 Rank stocks here.  

Pioneer Natural Resources Company PXD has an Earnings ESP of +1.47% and is Zacks #3 Ranked. The upstream energy firm is set to release earnings on Nov 4.

Precision Drilling Corporation PDS has an Earnings ESP of + 22.22% and is a #3 Ranked stock. The contract drilling service provider is scheduled to release earnings on Oct 24.

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Enterprise Products Partners L.P. (EPD): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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