Why are enterprise products (EPD) up 1.1% since the last earnings report?

A month has passed since the last Enterprise Products Partner (EPD) earnings report. Shares rose about 1.1% in that time, underperforming the S&P 500.

Will the recent positive trend continue leading up to the next earnings release, or will enterprise products slow down? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the company’s most recent earnings report in order to better understand the important catalysts.

The best estimates for the company’s first-quarter earnings and revenue

Enterprise Products Partners LP’s first-quarter 2024 adjusted earnings per limited partnership unit of 66 cents beat the Zacks Consensus Estimate of 64 cents. The bottom line also increased from the previous quarter’s level of 64 cents.

Total quarterly revenues of $14.8 billion surpassed the Zacks Consensus Estimate of $13.4 billion. The bottom line also improved from the $12.4 billion reported in the year-ago quarter.

The strong quarterly results can be attributed to the increased operating margin of the EPD fee-based business.

Segment efficiency

NGL, crude oil, refined products and petrochemicals pipeline volumes were 7.4 million barrels per day (bpd), up from 7.1 million bpd in the year-ago quarter. Natural gas pipeline volumes were 18.6 trillion British thermal units per day (TBtus/d), compared with 18 TBtus/d in the same quarter last year. NGL, crude oil, refined products and petrochemicals marine terminal volumes rose to 2.3 million barrels per day from 2 million in the year-ago period.

Gross operating margin at NGL Pipelines & Services increased from $1.2 billion in the year-ago quarter to $1.3 billion. This was primarily due to higher average transportation fees and an increase in transportation volume.

Natural Gas Pipelines and Services’ gross operating margin fell to $312 million from $314 million in the year-ago quarter. The decline was primarily due to lower total natural gas transmission volumes.

Crude Oil Pipelines & Services reported gross operating margin of $411 million, up from $397 million in the prior-year quarter. This was mainly due to an increase in transport volume and higher average transport fees.

Petrochemical & Refined Products Services gross operating margin was $444 million, up from $419 million reported a year earlier. The year-over-year increase was due to higher total pipeline transportation volumes in this segment. The positive results were partially offset by lower propylene sales and higher operating costs.

The story continues

Cash flow

Total distributable cash flow was $1.92 billion, compared to $1.94 billion in the year-ago period. The same provided 1.7X coverage. During the first quarter, Enterprise retained $786 million of distributable cash flow. It generated adjusted free cash flow of $2.1 billion, up from $2 billion in the year-ago quarter.

Financial

During the reported quarter, Enterprise’s total capital investments were $1.1 billion.

As of March 31, 2024, total principal debt outstanding was $29.7 billion and consolidated liquidity was $4.5 billion.

Perspectives

For 2024, Enterprise maintained its growth capital spending forecast in the range of $3.25 billion to $3.75 billion. The company also expects capital expenditure for 2024 to be $550 million, which includes planned petrochemical outages. For 2025, EPD raised its development capital spending forecast from $3 billion to a range of $3.25-3.75 billion.

How have estimates changed since then?

It turns out that estimate revisions have been trending upwards over the past month.

VGM results

Right now, Enterprise Products has an average growth score of C, a rating with the same momentum score. However, the stock is rated A for Value, putting it in the top 20% of investors for this investment strategy.

Overall, the stock has a Total VGM Score of B. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for the stock are trending upwards, and the scale of these revisions looks promising. It’s no surprise that Enterprise Products has a Zacks Rank of #2 (Buy). We expect an above-average rate of return on shares in the coming months.

Want the latest recommendations from Zacks Investment Research? Today you can download the top 7 stocks for the next 30 days. Click to get this free report

Enterprise Products Partners LP (EPD): Free Inventory Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research