Enterprise Products Partners: Still A Great Prospect In A Great Industry

seekingalpha11-21

Enterprise Products Partners is a solid midstream/pipeline company with a vast network and consistent financial performance, making it an attractive 'buy' despite recent underperformance.The company ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2485128613?lang=en_US&edition=fundamental","thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/515809755/image_515809755.jpg","is_english":true,"pubTime":"2024-11-21 00:39","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2485128613","market":"sh","top_or_hot":-1,"title":"Enterprise Products Partners: Still A Great Prospect In A Great Industry","media":"seekingalpha","content":"<div>\n<p>Enterprise Products Partners is a solid midstream/pipeline company with a vast network and consistent financial performance, making it an attractive 'buy' despite recent underperformance.The company ...</p>\n\n<a href=\"https://seekingalpha.com/article/4739037-enterprise-products-partners-still-a-great-prospect-in-a-great-industry\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Enterprise Products Partners: Still A Great Prospect In A Great Industry</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nEnterprise Products Partners: Still A Great Prospect In A Great Industry\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-21 00:39 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4739037-enterprise-products-partners-still-a-great-prospect-in-a-great-industry><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Enterprise Products Partners is a solid midstream/pipeline company with a vast network and consistent financial performance, making it an attractive 'buy' despite recent underperformance.The company ...</p>\n\n<a href=\"https://seekingalpha.com/article/4739037-enterprise-products-partners-still-a-great-prospect-in-a-great-industry\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4144","symbol_name":"石油与天然气的储存和运输","start_time":0,"source_url":"https://seekingalpha.com/article/4739037-enterprise-products-partners-still-a-great-prospect-in-a-great-industry","article_id":"2485128613","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/515809755/image_515809755.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2485128613","pubTimestamp":1732120782,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Enterprise Products Partners is a solid midstream/pipeline company with a vast network and consistent financial performance, making it an attractive 'buy' despite recent underperformance.The company b","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4144":"石油与天然气的储存和运输","EPD":"Enterprise Products Partners L.P","LU1150488135.SGD":"First Eagle Amundi Income Builder AHS-MD SGD-H","BK4561":"索罗斯持仓","BK4585":"ETF&股票定投概念","LU1150488218.USD":"First Eagle Amundi Income Builder AU2-MD USD","BK4590":"PTP","BK4588":"碎股"},"translate_title":"企业产品合作伙伴：在伟大的行业中仍然是伟大的前景","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"EPD":0.9},"content_text":"Enterprise Products Partners is a solid midstream/pipeline company with a vast network and consistent financial performance, making it an attractive 'buy' despite recent underperformance.The company boasts impressive revenue growth, particularly in its NGL Pipelines & Services and Petrochemical & Refined Products Services segments, with significant increases in volumes and cash flows.Enterprise Products Partners is undervalued compared to peers, with low leverage and high yield, making it appealing for yield-oriented investors.The firm has a strong history of returning capital to shareholders and plans substantial future growth investments, ensuring continued cash flow growth.   spooh  Those who follow my work closely know that I am a big fan of the midstream/pipeline industry. My favorite player in the space, and the only one that I currently own shares of, is Energy Transfer LP (ET). However, one of the companies that I really do like in the industry as a second-tier pick would be Enterprise Products Partners L.P. (NYSE:EPD). Operationally speaking, it is a fantastic business. It also has a massive network that consists of over 50,000 miles of pipeline, over 300 million barrels of liquids storage capacity, 42 natural gas processing trains, 26 fractionators, 20 deep water docks, and more. The company traffics in NGLs, crude oil, natural gas, petrochemicals, and various refined products. Enterprise Products Partners Over the years, the business has done well to grow its operations. In addition to this, shares remain attractively priced. Unfortunately, performance recently has been a bit disappointing. Since I last reaffirmed the company as a ‘buy’ candidate back in August of this year, shares have generated a return for investors of only 5.8%. By comparison, the S&P 500 is up 7.7% over the same window of time. Despite this return disparity, the firm remains an appealing opportunity in my view. So because of this, I have no problem keeping it rated a ‘buy’ for now, even though I don't think it's the best player in the space. Performance continues to impress One of the wonderful things about the midstream/pipeline industry is that financial results tend to be consistent and steadily growing. Based on my own observations regarding Enterprise Products Partners, it is not an exception to this. As an example, we need only take results from the most recent quarter, which would be the third quarter of the 2024 fiscal year. Revenue for the company managed to rise from just under $12 billion to $13.78 billion. This was driven by strength across two of the companies for operating segments. Author - SEC EDGAR Data The first of these, the NGL Pipelines & Services segment, reported a jump in revenue from $3.76 billion to $4.83 billion. The unit benefited from a rise in total volume. For instance, the amount of NGLs transported through its pipelines during the third quarter of 2024 was 4.22 million barrels per day. That's 6.3% higher than what the company experienced one year earlier. Marine terminal volumes for the company increased by 15% from 771,000 barrels per day to 887,000 barrels per day. The company saw other increases as well, such as NGL fractionation volumes, which popped 6.1% from 1.52 million barrels per day to 1.61 million barrels per day. One of the really exciting things about the company is that it gets a lot of its natural gas under fee-based agreements. Year over year, volumes for it grew by 14.8%. Revenue growth was even more impressive when it came to the company’s Petrochemical & Refined Products Services segment. Sales skyrocketed 52.8% from $1.99 billion to $3.04 billion. During this window of time, pipeline transportation volumes came 18.5% above where they were the previous year. Marine terminal volumes did actually drop during this time, but there were increases, admittedly small ones when it came to other things like propylene production volumes, butane isomerization volumes, and more. The other two operating segments of the company reported revenue declines. But I would make the case that, with this particular type of business, revenue doesn't mean all that much. In the first chart in this article, I also provided data for net profits. But I would even go so far as to say that net income isn't terribly significant either. What really matters for a company like this would be cash flows. And those are often determined, at least in large part, by the spread in energy prices, namely the spread between the prices that the feedstock comes into the company's system as compared to the finished products or outgoing prices. For instance, even though revenue associated with the Petrochemical & Refined Products Services segment grew year over year, its gross operating margin contracted from $453 million to $363 million. This weakness was largely the result of lower average sales margins and lower sales volumes associated with its octane enhancement and other related facilities. Author - SEC EDGAR Data Despite some weak spots, the overall picture for the company has been solid from a cash flow perspective. Operating cash flow grew from $1.72 billion to $2.07 billion. In this industry, I also like to strip out changes in working capital to look at what I call adjusted operating cash flow. This expanded from $2.02 billion to $2.11 billion. Another thing that I like to do is to look at what I call the true free cash flow of the business. This deducts only maintenance capital expenditures from the equation. In essence, this avoids punishing the company for investing in growth. In this case, we get an increase from $1.92 billion to $1.95 billion. DCF, or distributable cash flow, jumped from $1.87 billion to $1.96 billion. And finally, EBITDA for the company grew from $2.33 billion to $2.44 billion. To put all of this in perspective, I also created the chart above. It shows results for the first nine months of this year compared to the same time last year. Once again, revenue, profits, and cash flows are all up year-over-year. Author - SEC EDGAR Data We don't know exactly what the rest of this year will look like. This is especially true after the company's latest acquisition of Pinon Midstream that cost the company $950 million and closed on October 28th. However, if we annualize the results that we have seen so far for the year, we would expect adjusted operating cash flow of $8.69 billion, true free cash flow of $7.83 billion, DCF of $7.80 billion, and EBITDA of $9.98 billion. Using these figures, we can see in the chart above how the stock is currently priced. This includes valuing the company with not only the estimates for 2024, but also the historical results for 2023.   Company Price/Operating Cash Flow EV/EBITDA   Enterprise Products Partners L.P. 7.6 9.8    TC Energy Corporation (TRP)  9.3 12.2    Kinder Morgan, Inc. (KMI)  9.2 14.0    Enbridge Inc. (ENB)  9.9 12.7    The Williams Companies, Inc. (WMB)  12.2 13.0   Energy Transfer LP 5.7 8.5   Click to enlarge In the table above, I then decided to compare Enterprise Products Partners, using two of the four valuation metrics, to five similar enterprises. Only one of the five firms is cheaper than our candidate on a price-to-operating cash flow basis. The same holds true when looking at the picture from an EV to EBITDA perspective. Author - SEC EDGAR Data Outside of valuation, there are other factors that we should be paying attention to. For starters, there is overall leverage. A company trading at a discount to its competition might deserve that discount if leverage is high. And if leverage is low, it might justify a premium. In the chart above, you can see the net leverage ratio not only for Enterprise Products Partners, but also for the five companies I compared it to. Fortunately, our candidate stands out as the best of the group by a pretty meaningful margin. If anything, this does justify a premium of sorts. Author - SEC EDGAR Data Another topic is yield and payout. In the chart above, you can see the current yield and the payout ratio of Enterprise Products Partners compared to the same five companies I am stacking it up against. Other than my personal favorite firm, Energy Transfer, Enterprise Products Partners has the highest yield. However, as the payout ratios show, these other companies are paying out different proportions of their operating cash flow toward their distributions. To see what this would look like if all the companies were to match the same yield that Enterprise Products Partners boasts, I created the chart below. Even in this case, only Energy Transfer is superior. This indicates to me that investors who are yield-oriented might prefer Enterprise Products Partners over four of these five businesses. Author - SEC EDGAR Data Speaking of capital returns to shareholders, I would like to point you to the first image below. In it, you can see distributions paid out to the company's investors and its overall DCF and coverage ratios over the past several years. The company has succeeded in paying out a good chunk of its cash even while growing its coverage. Over the last 26 years, the company has experienced consecutive distribution growth. During this window of time, it has allocated a whopping $55.6 billion to shareholders by means of distributions and share buybacks. In fact, as the subsequent image shows, in the trailing 12-month window ending in the most recent quarter, management has put $4.8 billion in capital toward shareholder returns. That's larger than the $4.5 billion allocated for all of 2023. Enterprise Products PartnersEnterprise Products Partners They achieved this at a time when they grew their growth-oriented spending to an astounding $3.8 billion. This is below the $4.2 billion reported back in 2019. But it is the highest on record since then. Management also intends to continue spending capital on growth initiatives in the years to come. For this year as a whole, they anticipate spending between $3.5 billion and $3.75 billion on growth projects. Next year, that number should be between $3.5 billion and $4 billion. And at the present moment, they are planning another $2 billion to $2.5 billion in 2026. This should result in even more cash flow growth as time goes on. Enterprise Products Partners Takeaway  All things considered, I believe that Enterprise Products Partners is a really great company. Even though it's not my top choice in this industry, it is a solid business with a great track record. Shares are attractively priced and leverage is low. Add on top of this its growth plans, its history of returning capital to shareholders, and more, and I have no reason to keep the firm rated anything other than a ‘buy’ right now.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2485128613"}