Investors seeking stable earnings often turn to midstream energy players since the companies generate stable fee-based revenues. This is because pipeline and storage assets are typically booked by shippers on a long-term basis, making them less vulnerable to commodity price volatility. But that doesn’t mean that all midstream companies are investment-worthy. To gain a detailed insight, let’s do a comparative analysis of Enterprise Products Partners LP EPD and Enbridge Inc. ENB.

EPD’s Organic Growth vs. ENB’s Externally Funded Buyouts

In 2024, Enterprise Products invested $3.9 billion in organic growth midstream capital projects, which were funded internally without diluting equity. In 2024, EPD had $3.2 billion of retained distributable cash flow, which could almost fully fund its $3.9 billion in organic growth capital projects. It’s clear from the fourth-quarter 2024 earnings call that the company managed to finance the difference without needing to issue equity.

Coming to the Enbridge story, the midstream player acquired three U.S. gas utilities in Ohio, Utah and North Carolina. As a result, ENB has doubled the size of its utility franchise. However, the company relied on debt capital to finance the acquisitions and noted that the increased average rate and debt balances raised its financing costs.

EPD Rules Over ENB in Terms of Balance Sheet Strength

In the midstream energy space, Enterprise Products has the highest credit rating, with a debt-to-capitalization of 51.9%. With a consolidated liquidity of $4.8 billion, EPD is well-positioned to combat the ongoing business uncertainty owing to the escalating trade war.

In comparison, Enbridge has a much higher exposure to debt capital, with a debt-to-capitalization of 59.6%. Thus, increased debt capital exposure will not likely help ENB to get more capital in favorable terms for more acquisitions and business expansions.

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EPD’s Robust Capital Return Strategy

Enterprise Products is strongly focused on returning capital to unit holders. To the unit holders, EPD distributed a total of $4.8 billion through a combination of distributions and unit repurchases last year, reflecting a healthy 55% payout ratio. This level of capital return indicates robust cash flow generation and confidence in financial stability. In contrast, Enbridge, while celebrating its 30th consecutive annual dividend increase, focused primarily on repairing its balance sheet following major U.S. utility acquisitions. Rather than emphasizing buybacks or enhanced distributions, ENB stressed capital discipline and leverage management, signaling a more conservative and debt-conscious approach to shareholder value for the near term.

Earnings Estimates Revised Higher for EPD

In the meantime, the Zacks Consensus Estimate for EPD’s 2025 and 2026 earnings have been revised upward over the past 60 days. On the contrary, the Zacks Consensus Estimate for ENB’s 2025 earnings has been revised downward over the same period.

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Image Source: Zacks Investment Research

Which Stock Has the Edge?

Comparing the one-year price chart, EPD gained 11.2%, underperforming the 35.9% improvement of ENB. However, from a valuation perspective, EPD appears undervalued and offers greater upside potential, supported by several positive developments that could fuel future growth.   

One-Year Price Chart

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Specifically, EPD is trading at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) ratio of 9.82, significantly lower than ENB’s 15.53.

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Considering all the factors, it has been a clear fact that, unlike Enbridge, EPD has consistently focused on organic growth projects—pipelines, storage and processing facilities—that are self-funded through retained cash flow rather than issuing equity or piling on debt.

Hence, EPD, which is an undervalued stock, appears to be a stronger investment option than ENB. Enterprise Products, with a Zacks Rank #2 (Buy), stands on firmer ground than Enbridge, which has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Enterprise Products Partners L.P. (EPD) : Free Stock Analysis Report

Enbridge Inc (ENB) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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