On Feb 5, 2016, we issued an updated research report on Enterprise Products Partners, L.P.EPD , a leading master limited partnership (MLP).
Enterprise Products Partners is viewed as a core holding in an MLP portfolio, given its string of organic growth projects, potential acquisitions, strong balance sheet and solid liquidity position. The partnership is one of the largest fully integrated midstream service providers with a positive long-term outlook and significant geographic and business diversity.
Enterprise Products Partners increased its fourth-quarter cash distribution rate by 5.4% to $0.39 per common unit or $1.56 per unit on an annualized basis. This marks the partnership's 46th consecutive quarterly increase. With its diverse set of NGL, natural gas, crude oil and refined products midstream infrastructure assets, the partnership possesses fundamental strength that will continue to support distribution growth.
Enterprise Products Partners made a capital investment of around $1.2 billion in the fourth quarter, and expects to bring other major assets online through 2016. During 2015, the partnership commissioned two expansions of its LPG export facility on the Houston Ship Channel, the last two segments of its Aegis ethane pipeline, the Rancho II crude oil pipeline, and crude oil storage tanks at its ECHO facility. The partnership also developed new projects that are currently under construction.
Though we believe that Enterprise Products Partners possesses solid cash flow stability from quality pipeline and storage assets and geographic diversity, volume risk and commodity price exposure can negatively impact near-term results. We remain apprehensive about a volatile NGL pricing environment.
Moreover, the Gulf Coast and GoM regions are prone to storms and hurricanes. The partnership's significant presence in these regions will continue to expose its results to such weather-related uncertainties.
A decline in natural gas processing margins, fall in domestic oil and gas drilling and end-market demand would lower growth rate and negatively impact distributable cash flow of the partnership.
Zacks Rank and Stocks to Consider
Enterprise Products Partners carries a Zacks Rank #3 (Hold). Some better-ranked players from the energy sector are Cheniere Energy Partners LP. CQP , Braskem S.A. BAK and Enviva Partners, LP EVA . Each of these stocks sports a Zacks Rank #1 (Strong Buy).
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ENTERPRISE PROD (EPD): Free Stock Analysis Report
BRASKEM SA (BAK): Free Stock Analysis Report
CHENIERE ENERGY (CQP): Free Stock Analysis Report
ENVIVA PARTNERS (EVA): 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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
