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Why Is Enterprise Products (EPD) Up 0.5% Since Last Earnings Report?
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It has been about a month since the last earnings report for Enterprise Products Partners (EPD - Free Report) . Shares have added about 0.5% 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 drivers.
Enterprise Q2 Earnings Miss on Low Average Sales Margins
Enterprise Products Partners LP’s second-quarter 2023 adjusted earnings per limited partner unit of 57 cents missed the Zacks Consensus Estimate of 59 cents. The bottom line declined from the year-ago quarter’s 64 cents.
Total quarterly revenues of $10,651 million missed the Zacks Consensus Estimate of $12,689 million. The top line also declined from $16,060 million in the prior-year quarter.
Weak quarterly earnings were owing to lower average sales margins and declining sales volumes from the NGL Pipelines & Services business unit.
Segmental Performance
Pipeline volumes in NGL, crude oil, refined products and petrochemicals were 7.1 million barrels per day (bpd), higher than the year-ago quarter’s 6.6 million bpd. Natural gas pipeline volumes were 18.3 trillion British thermal units per day (TBtus/d), up from 16.8 TBtus/d a year ago. Also, NGL, crude oil, refined products and petrochemical marine terminal volumes increased to 1.9 million bpd from 1.7 million bpd.
Gross operating margin at NGL Pipelines & Services declined from $1,327 million in the year-ago quarter to $1,110 billion. Our estimate of $1,142.1 reflects a year-over-year decline of 13.9%, primarily due to lower average sales margins and declining sales volumes.
Natural Gas Pipelines and Services’ gross operating margin increased to $238 million from $229 million in the year-ago quarter. Our estimate also reflects a year-over-year increase. The upside was due to a rise in natural gas pipeline transportation volumes.
Crude Oil Pipelines & Services recorded a gross operating margin of $422 million, which increased from $407 million in the prior-year quarter, thanks to improved transportation volumes.
Gross operating margin at Petrochemical & Refined Products Services amounted to $383 million compared with $421 million a year ago. Our estimate suggests a year-over-year fall of 20.8%, owing to decline in margin from the partnership’s propylene production.
Cash Flow
The distributable cash flow was $1,735 million, down from $2,018 million a year ago. The same provided coverage of 1.6X. The partnership retained $639 million of distributable cash flow in the June-ended quarter. It generated an adjusted free cash flow of $1,073 million, down from $1,718 million in the year-ago quarter.
Financials
In second-quarter 2023, Enterprise’s total capital investment was $784 million.
As of Jun 30, 2023, its outstanding total debt principal was $28.9 billion. Enterprise’s consolidated liquidity amounted to $4 billion.
Outlook
For 2023, Enterprise expects growth capital investments of $2.4-$2.8 billion. Sustaining capital expenditure is projected to be $400 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, Enterprise Products has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Enterprise Products has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Enterprise Products (EPD) Up 0.5% Since Last Earnings Report?
It has been about a month since the last earnings report for Enterprise Products Partners (EPD - Free Report) . Shares have added about 0.5% 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 drivers.
Enterprise Q2 Earnings Miss on Low Average Sales Margins
Enterprise Products Partners LP’s second-quarter 2023 adjusted earnings per limited partner unit of 57 cents missed the Zacks Consensus Estimate of 59 cents. The bottom line declined from the year-ago quarter’s 64 cents.
Total quarterly revenues of $10,651 million missed the Zacks Consensus Estimate of $12,689 million. The top line also declined from $16,060 million in the prior-year quarter.
Weak quarterly earnings were owing to lower average sales margins and declining sales volumes from the NGL Pipelines & Services business unit.
Segmental Performance
Pipeline volumes in NGL, crude oil, refined products and petrochemicals were 7.1 million barrels per day (bpd), higher than the year-ago quarter’s 6.6 million bpd. Natural gas pipeline volumes were 18.3 trillion British thermal units per day (TBtus/d), up from 16.8 TBtus/d a year ago. Also, NGL, crude oil, refined products and petrochemical marine terminal volumes increased to 1.9 million bpd from 1.7 million bpd.
Gross operating margin at NGL Pipelines & Services declined from $1,327 million in the year-ago quarter to $1,110 billion. Our estimate of $1,142.1 reflects a year-over-year decline of 13.9%, primarily due to lower average sales margins and declining sales volumes.
Natural Gas Pipelines and Services’ gross operating margin increased to $238 million from $229 million in the year-ago quarter. Our estimate also reflects a year-over-year increase. The upside was due to a rise in natural gas pipeline transportation volumes.
Crude Oil Pipelines & Services recorded a gross operating margin of $422 million, which increased from $407 million in the prior-year quarter, thanks to improved transportation volumes.
Gross operating margin at Petrochemical & Refined Products Services amounted to $383 million compared with $421 million a year ago. Our estimate suggests a year-over-year fall of 20.8%, owing to decline in margin from the partnership’s propylene production.
Cash Flow
The distributable cash flow was $1,735 million, down from $2,018 million a year ago. The same provided coverage of 1.6X. The partnership retained $639 million of distributable cash flow in the June-ended quarter. It generated an adjusted free cash flow of $1,073 million, down from $1,718 million in the year-ago quarter.
Financials
In second-quarter 2023, Enterprise’s total capital investment was $784 million.
As of Jun 30, 2023, its outstanding total debt principal was $28.9 billion. Enterprise’s consolidated liquidity amounted to $4 billion.
Outlook
For 2023, Enterprise expects growth capital investments of $2.4-$2.8 billion. Sustaining capital expenditure is projected to be $400 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, Enterprise Products has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Enterprise Products has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.