A month has gone by since the last earnings report for Enterprise Products Partners (EPD). Shares have added about 0.2% 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’ fourth-quarter 2024 adjusted earnings per limited partner unit of 74 cents beat the Zacks Consensus Estimate of 69 cents. The bottom line also increased from the year-ago level of 72 cents.
However, total quarterly revenues of $14.2 billion missed the Zacks Consensus Estimate of $14.3 billion. The top line declined from $14.6 billion reported in the prior-year quarter.
The strong quarterly earnings can be primarily attributed to record natural gas and NGL volumes, driven by Permian Basin production and rising demand.
Pipeline volumes in NGL, crude oil, refined products and petrochemicals totaled 8.3 million barrels per day (bpd), higher than the year-ago quarter’s 7.8 million bpd. Natural gas pipeline volumes amounted to 19.9 trillion British thermal units per day (TBtus/d), higher than 18.9 TBtus/d recorded in the year-ago quarter. Also, NGL, crude oil, refined products and petrochemical marine terminal volumes totaled 2.1 million bpd, lower than 2.3 million bpd in the year-ago period.
The gross operating margin at NGL Pipelines & Services increased from $1.38 billion in the year-ago quarter to $1.55 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 $323 million from $286 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, partially offset by higher operating costs.
Crude Oil Pipelines & Services recorded a gross operating margin of $417 million, down from $456 million in the prior-year quarter. The decrease can be attributed to lower sales volumes, lower non-cash MTM earnings and higher operating costs.
The gross operating margin at Petrochemical & Refined Products Services was $348 million, down from $439 million in the fourth quarter of 2023. The segment was affected by lower average sales margins.
The distributable cash flow totaled $2.16 billion compared with $2.06 billion in the year-ago period and the same provided a coverage of 1.7X. Enterprise retained $3.2 billion of distributable cash flow in the fourth quarter. It generated an adjusted free cash flow of $0.3 billion compared with $1.2 billion in the year-ago quarter.
In the reported quarter, Enterprise’s total capital investment was $2 billion.
As of Dec. 31, 2024, the outstanding total debt principal was $32.2 billion, and consolidated liquidity amounted to approximately $4.8 billion.
For 2025, EPD expects its growth capital expenditure to be in the range of $4.0-$4.5 billion.
The company expects sustaining capital expenditure to be approximately $525 million in 2025.
In the past month, investors have witnessed an upward trend in estimates revision.
At this time, Enterprise Products has a subpar Growth Score of D, though it is lagging a bit 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 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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This article originally published on Zacks Investment Research (zacks.com).
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