Back to top
Zacks' 7 Best Strong Buy Stocks (New Research Report)
Valued at $99, click below to receive our just-released report
predicting the 7 stocks that will soar highest in the coming month.
We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Valued at $99, click below to receive our just-released report
predicting the 7 stocks that will soar highest in the coming month.
Image: Bigstock
Here's Why Hold Strategy is Apt for Enterprise Products Stock Now
Enterprise Products Partners LP (EPD - Free Report) is a leading midstream energy player with low exposure to volume and price risks. The Zacks Consensus Estimate for the partnership’s 2024 earnings per unit is pegged at $2.69, indicating a year-over-year increase of 6.3%.
Factors Working in Favor
Enterprise Products, which currently carries a Zacks Rank #3 (Hold), has a stable business model and is not significantly exposed to the volatility in oil and gas prices. The partnership generates stable fee-based revenues from its extensive pipeline network spread across more than 50,000 miles, transporting natural gas, natural gas liquids (NGLs), crude oil petrochemicals and refined products.
You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The midstream infrastructure provider has storage assets that can hold more than 260 million barrels of NGL, petrochemicals, refined products and crude oil. These assets can store 14 billion cubic feet of natural gas. Enterprise Products has $6.9 billion of key approved projects under construction that are likely to provide incremental fee-based revenues.
The partnership’s balance sheet has lower debt exposure than the composite stocks belonging to the industry. The liquidity profile of EPD is impressive. Along with the third-quarter 2024 results, the partnership reported consolidated liquidity of $5.6 billion, which includes unrestricted cash and available borrowing capacity.
Risks
Enterprise Products has several assets providing midstream services for many years. This has raised the possibility of investing massive capital in maintaining those infrastructures. Thus, EPD could witness an increase in maintenance or repair expenses.
A slowdown in drilling activities, as upstream players mainly focus on stockholder returns rather than boosting output, is hurting production. This is affecting the demand for transportation and storage of EPD to some extent. Other midstream players that are also getting impacted by slowing production growth are Kinder Morgan Inc. (KMI - Free Report) , Enbridge Inc. (ENB - Free Report) and MPLX LP (MPLX - Free Report) .
The three midstream players mentioned above recently reported quarterly results. Like EPD, Kinder Morgan and MPLX missed the Zacks Consensus Estimate for earnings in the third quarter of 2024, while Enbridge met the same.