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Enterprise Products (EPD) Up 4.9% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Enterprise Products Partners (EPD - Free Report) . Shares have added about 4.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Enterprise Products due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Enterprise Q1 Earnings Beat Estimates
The company reported first-quarter 2022 adjusted earnings per limited partner unit of 60 cents, beating the Zacks Consensus Estimate of 52 cents. However, the bottom line declined from the year-ago quarter’s 64 cents per share.
Total quarterly revenues of $13,008 million surpassed the Zacks Consensus Estimate of $11,053 million. The top line significantly increased from $9,155 million in the prior-year quarter.
The better-than-expected earnings were driven by higher contributions from the NGL Pipelines & Services business. The positives were partially offset by a decline in gathering volumes in the Natural Gas Pipelines and Services segment.
Segmental Performance
Pipeline volumes in NGL, crude oil, refined products and petrochemicals were recorded at 6.5 million barrels per day (bpd), higher than the year-ago quarter’s 6 million bpd. Natural gas pipeline volumes were 16.4 trillion British thermal units per day (TBtus/d), up from 13.7 TBtus/d a year ago. Also, marine terminal volumes increased to 1.6 million bpd from the year-ago quarter’s 1.5 million bpd.
Gross operating income at NGL Pipelines & Services increased from $1,086 million in the year-ago quarter to $1,225 million primarily due to higher average sales margins and an increase in pipeline transportation volumes.
Natural Gas Pipelines and Services’ gross operating income decreased to $220 million from $535 million in the year-ago quarter. The downside was due to a decline in gathering volumes.
Crude Oil Pipelines & Services recorded a gross operating income of $415 million, which increased from $400 million in the prior-year quarter due to a rise in pipeline transportation volumes from the Midland-to-ECHO Pipeline System. Lower operating expenses and higher ancillary service revenues from its Midland and ECHO crude oil terminals also aided the segment.
Gross operating income at Petrochemical & Refined Products Services amounted to $404 million compared with $282 million a year ago primarily due to higher average sales margins from the partnership’s propylene production and related activities. Improved sales volumes from the octane enhancement business aided the segment.
Cash Flow
Adjusted distributable cash flow was $1,837 million, up from $1,737 million a year ago, and provided coverage of 1.8X. The partnership retained $814 million of distributable cash flow in the March-end quarter. The partnership generated a negative free cash flow of $1,427 million against a free cash flow of $1,349 million in the year-ago quarter.
Financials
For first-quarter 2022, Enterprise’s total capital expenditure was $3.6 billion.
As of Mar 31, 2022, its outstanding total debt principal was $29.8 billion. Enterprise’s consolidated liquidity amounted to $3.9 billion, down sequentially from $7.3 billion. The total liquidity amount included unrestricted cash on hand and available borrowing capacity under its revolving credit facility.
Outlook
For 2022, Enterprise reiterated its growth capital spending guidance at $1.5 billion. The partnership continues to expect sustaining capital expenditure of $350 million. It currently has $4.6 billion worth of major capital projects under construction.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted 6.13% due to these changes.
VGM Scores
At this time, Enterprise Products has a great Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Enterprise Products has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Enterprise Products (EPD) Up 4.9% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Enterprise Products Partners (EPD - Free Report) . Shares have added about 4.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Enterprise Products due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Enterprise Q1 Earnings Beat Estimates
The company reported first-quarter 2022 adjusted earnings per limited partner unit of 60 cents, beating the Zacks Consensus Estimate of 52 cents. However, the bottom line declined from the year-ago quarter’s 64 cents per share.
Total quarterly revenues of $13,008 million surpassed the Zacks Consensus Estimate of $11,053 million. The top line significantly increased from $9,155 million in the prior-year quarter.
The better-than-expected earnings were driven by higher contributions from the NGL Pipelines & Services business. The positives were partially offset by a decline in gathering volumes in the Natural Gas Pipelines and Services segment.
Segmental Performance
Pipeline volumes in NGL, crude oil, refined products and petrochemicals were recorded at 6.5 million barrels per day (bpd), higher than the year-ago quarter’s 6 million bpd. Natural gas pipeline volumes were 16.4 trillion British thermal units per day (TBtus/d), up from 13.7 TBtus/d a year ago. Also, marine terminal volumes increased to 1.6 million bpd from the year-ago quarter’s 1.5 million bpd.
Gross operating income at NGL Pipelines & Services increased from $1,086 million in the year-ago quarter to $1,225 million primarily due to higher average sales margins and an increase in pipeline transportation volumes.
Natural Gas Pipelines and Services’ gross operating income decreased to $220 million from $535 million in the year-ago quarter. The downside was due to a decline in gathering volumes.
Crude Oil Pipelines & Services recorded a gross operating income of $415 million, which increased from $400 million in the prior-year quarter due to a rise in pipeline transportation volumes from the Midland-to-ECHO Pipeline System. Lower operating expenses and higher ancillary service revenues from its Midland and ECHO crude oil terminals also aided the segment.
Gross operating income at Petrochemical & Refined Products Services amounted to $404 million compared with $282 million a year ago primarily due to higher average sales margins from the partnership’s propylene production and related activities. Improved sales volumes from the octane enhancement business aided the segment.
Cash Flow
Adjusted distributable cash flow was $1,837 million, up from $1,737 million a year ago, and provided coverage of 1.8X. The partnership retained $814 million of distributable cash flow in the March-end quarter. The partnership generated a negative free cash flow of $1,427 million against a free cash flow of $1,349 million in the year-ago quarter.
Financials
For first-quarter 2022, Enterprise’s total capital expenditure was $3.6 billion.
As of Mar 31, 2022, its outstanding total debt principal was $29.8 billion. Enterprise’s consolidated liquidity amounted to $3.9 billion, down sequentially from $7.3 billion. The total liquidity amount included unrestricted cash on hand and available borrowing capacity under its revolving credit facility.
Outlook
For 2022, Enterprise reiterated its growth capital spending guidance at $1.5 billion. The partnership continues to expect sustaining capital expenditure of $350 million. It currently has $4.6 billion worth of major capital projects under construction.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted 6.13% due to these changes.
VGM Scores
At this time, Enterprise Products has a great Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Enterprise Products has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.