Enterprise Products Partners LP (EPD Quick QuoteEPD - Free Report) is set to report fourth-quarter 2024 results on Feb. 4, before the opening bell.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 69 cents per share, implying a decline of 4.2% from the year-ago reported number. The estimate was revised downward by one analyst in the past seven days. The Zacks Consensus Estimate for fourth-quarter revenues is currently pegged at $14.3 billion, suggesting a 2.1% fall from the year-ago actuals.

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EPD beat the consensus estimate for earnings in two of the trailing four quarters and missed the same twice, with the average surprise being 2.3%. This is depicted in the graph below:  

EPD’s Q4 Earnings Whispers

Our proven model doesn’t predict an earnings beat for EPD this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an earnings beat. That is not the case here.

The partnership has an Earnings ESP of -1.32% and currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Factors to Note

Enterprise Products is among the leading providers of midstream services in North America. The partnership is likely to have generated stable fee-based revenues in the December quarter, with its pipeline network spread across 50,000 miles, transporting natural gas, NGLs, crude oil, refined products and petrochemicals. The partnership is also expected to have generated stable cashflows with a storage capacity of more than 300 million barrels for NGLs, crude oil, petrochemicals and refined products.

The Zacks Consensus Estimate for the gross operating margin from Enterprise Products' NGL Pipelines & Services business segment is pegged at $1,428.4 million, higher than the $1,380 million recorded a year ago. The rising demand for NGL, used in various applications such as home heating, plastic production and fuel, is likely to have driven increased activity in the NGL Pipelines & Services business unit.

EPD’s Price Performance & Valuation

EPD's stock has soared 33% over the past year compared with the 41.8% rise of the composite stocks belonging to the industry. Kinder Morgan, Inc. (KMI Quick QuoteKMI - Free Report) and Enbridge Inc. (ENB Quick QuoteENB - Free Report) , two other leading midstream energy players, have gained 71.7% and 34.2%, respectively.

One-Year Price Chart

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EPD appears relatively undervalued, suggesting the potential for price increases. The partnership's current trailing 12-month enterprise value/earnings before interest, tax, depreciation and amortization (EV/EBITDA) ratio is 10.47, which is trading at a discount compared to the industry average of 12.22.

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Investment Thesis of EPD

Enterprise Products has low exposure to volume and commodity price risks. This is due to the fact that its midstream assets are contracted by shippers for the transportation of natural gas, NGLs, crude oil, refined products and petrochemicals over extended periods. Thus, the partnership will continue generating stable fee-based revenues. EPD will secure additional cashflows since it has $6.9 billion of approved key projects under construction.

In addition to increasing its distribution for over two decades, the partnership boasts a strong credit rating. The partnership also returns capital to unitholders through a unit buyback program. As part of its $2 billion repurchase plan, the leading midstream energy player has already utilized nearly 57% of the authorized program.

Last Word

Considering the partnership’s stable business model and attractive valuation, it is now the right time for investors to bet on the stock.