Here's Why You Should Retain Enterprise (EPD) Stock For Now

Enterprise Products Partners LP EPD witnessed upward estimate revisions for 2021 and 2022 earnings in the past 60 days. In fact, four out of five analysts have revised earnings estimates upward for 2021, while five of seven analysts have upwardly revised the same for 2022.

Factors Working in Favor

The partnership, currently carrying a Zacks Rank #3 (Hold), has a stable business model and is not significantly exposed to the volatility in oil and gas prices. Enterprise generates stable fee-based revenues from the extensive pipeline network that spreads across nearly 50,000 miles, transporting natural gas, natural gas liquids (NGLs), crude oil petrochemicals and refined products. Importantly, the pipelines are connected to the key shale plays in the United States and nearly 90% of the refineries in the east of the Rockies.

The midstream infrastructure provider also has storage assets that have the capacity to store roughly 260 million barrels of NGL, petrochemical, refined products and crude oil. The assets can also store 14 billion cubic feet of natural gas. Moreover, Enterprise Products has $3.4 billion of major capital projects under construction that are likely to provide incremental fee-based revenues.

Also, the partnership’s balance sheet has lower debt exposure than the composite stocks belonging to the industry. Its debt-to-capitalization ratio of 0.52 is lower than the industry’s 0.56. In fact, the ratio has persistently been lower than the stocks in the industry in the past few years. Moreover, the partnership’s long-term midstream contracts — which depict a stable business model — reflect on its strong capability to pay off $28.9 billion of total debt principal outstanding as of Mar 31, 2021.

Enterprise Products Partners L.P. Price


Enterprise Products Partners L.P. Price

Enterprise Products Partners L.P. price | Enterprise Products Partners L.P. Quote



The consumption of natural gas will decline in 2021 from last year, since rising price of the commodity has convinced electric power generators to switch to coal, according to the U.S. Energy Information Administration. Thus, lower demand for gas will probably hurt short-term demand for the partnership’s midstream assets transporting the commodity. 

The partnership’s natural gas pipeline transportation volumes declined year over year in the March quarter of this year. Thus, considering the lower demand for midstream assets, it can also be stated that the partnership is likely to continue witnessing declines in gas transportation volumes this year.

Stocks to Consider

Some better-ranked players in the energy space include Whiting Petroleum Corporation WLL, Extraction Oil & Gas, Inc. XOG and Oasis Petroleum Inc. OAS. All the stocks sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Whiting Petroleum witnessed upward earnings estimate revisions for 2021 in the past 30 days.

Extraction is expected to register earnings growth of 450.8% in 2021.

Oasis Petroleum witnessed upward earnings estimate revisions for 2021 in the past 30 days.

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