A month has gone by since the last earnings report for Enterprise Products Partners (EPD). Shares have added about 15% 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 Products Partners LP’s third-quarter 2024 adjusted earnings per limited partner unit of 65 cents missed the Zacks Consensus Estimate by a penny. However, the bottom line increased from the year-ago level of 60 cents.
Total quarterly revenues of $13.8 billion beat the Zacks Consensus Estimate of $13.7 billion. The top line improved from $12 billion reported in the prior-year quarter.
The weak quarterly earnings can be attributed to lower contributions from the Crude Oil Pipelines & Services and Petrochemical & Refined Products Services segments. The negatives were partially offset by higher natural gas processing volumes and increased transportation revenues from its Natural Gas Pipelines and Services segment.
Pipeline volumes in NGL, crude oil, refined products and petrochemicals totaled 7.7 million barrels per day (bpd), higher than the year-ago quarter’s 7.4 million bpd. Natural gas pipeline volumes amounted to 19.1 trillion British thermal units per day (TBtus/d), higher than 18.4 TBtus/d recorded in the year-ago quarter. Also, NGL, crude oil, refined products and petrochemical marine terminal volumes came in at 2.1 million bpd, which remained flat year over year.
The gross operating margin at NGL Pipelines & Services increased from $1.2 billion in the year-ago quarter to $1.3 billion. This can be primarily attributed to higher inlet volumes at its natural gas processing plant and increased total fee-based natural gas processing volumes.
Natural Gas Pipelines and Services’ gross operating margin increased to $349 million from $239 million in the year-ago quarter. The upside was primarily due to increased transportation revenues and higher average sales margins from its natural gas marketing business.
Crude Oil Pipelines & Services recorded a gross operating margin of $401 million, down from $432 million in the prior-year quarter. The decrease can be attributed to lower average sales margins, a decline in sales volume and increased operating costs.
The gross operating margin at Petrochemical & Refined Products Services was $363 million, down from $453 million in the third quarter of 2023. The segment was affected by a decline in total segment pipeline transportation volumes and lower sales volumes.
The distributable cash flow totaled $1.95 billion compared with $1.87 billion in the year-ago period. The same provided a coverage of 1.7X. Enterprise retained $808 million of distributable cash flow in the third quarter. It generated an adjusted free cash flow of $0.9 billion compared with $1.2 billion in the year-ago quarter.
In the reported quarter, Enterprise’s total capital investment was $1.2 billion.
As of Sept. 30, 2024, the outstanding total debt principal was $32.2 billion, and consolidated liquidity amounted to approximately $5.6 billion.
For 2024, EPD expects its growth capital expenditure to be in the range of $3.5-$3.75 billion.
The company expects sustaining capital expenditure to be approximately $640 million for 2024, including planned petrochemical turnarounds.
For 2025, EPD has updated its guidance for growth capital expenditure to $3.5-$4 billion.
It turns out, estimates revision have trended upward during the past month.
Currently, Enterprise Products has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of this revision has been net zero. 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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