Enterprise Products (EPD) to Post Q2 Earnings: A Beat in Store?

Enterprise Products Partners LP EPD is set to report second-quarter 2020 results on Jul 29, before the opening bell.

In the last-reported quarter, the partnership reported earnings of 61 cents per unit, beating the Zacks Consensus Estimate of 52 cents, thanks to higher pipeline transportation volumes of NGL and contributions from the Permian Basin natural gas gathering system.

Notably, the midstream infrastructure provider beat the Zacks Consensus Estimate in two of the prior four quarters, the average earnings surprise being 4.4%. This is depicted in the graph 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

Let’s see how things have shaped up prior to the announcement.

Trend in Estimate Revision

The Zacks Consensus Estimate for second-quarter earnings of 46 cents per unit has seen three upward revisions and one downward movement in the past 30 days. The figure suggests a year-over-year decline of 16.4%.

Further, the Zacks Consensus Estimate for revenues is pegged at almost $7 billion for the quarter, indicating a decline of 15.9% from the year-ago reported figure.

What Does the Zacks Model Say?

Our proven model predicts an earnings beat for Enterprise Products this time around. The combination of a positive Earnings ESP  and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Earnings ESP represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Enterprise Products has an Earnings ESP of +1.09%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The partnership currently carries a Zacks Rank #3.

Factors to Consider

Being a fully-integrated midstream energy company, the business model of the partnership – having the highest credit rating in the midstream energy space – is likely to have been relatively less exposed to coronavirus-induced oil and gas price volatility.

Importantly, Enterprise Products is likely to have generated stable fee-based revenues from its midstream infrastructures that comprise natural gas liquid, crude oil, natural gas, petrochemicals and refined products pipelines, spreading across roughly 50,000 miles. The natural gas processing facilities and fractionators are also expected to have contributed to the partnership’s fee-based revenues in the June quarter.

Other Stocks to Consider

Investors can also consider the following players from the energy space that have the right combination of elements to post an earnings beat in the to-be-reported quarter:

Cabot Oil Gas Corporation COG has an Earnings ESP of +5.00% and is a Zacks #3 Ranked player. The company is scheduled to release second-quarter results, after the closing bell on Jul 30. You can see the complete list of today’s Zacks #1 Rank stocks here.

Antero Midstream Corporation AM has an Earnings ESP of +27.87% and a Zacks Rank of 3. It is scheduled to report second-quarter results on Jul 29.

Enbridge Inc ENB has an Earnings ESP of +0.98% and a Zacks Rank #3. The firm is scheduled to release earnings on Jul 29.

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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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