A month has gone by since the last earnings report for Enterprise Products Partners (EPD). Shares have lost about 1.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Enterprise Products due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Enterprise Q1 Earnings Beat Estimates, Revenues Miss
Enterprisereported first-quarter 2023 adjusted earnings per limited partner unit of 64 cents, beating the Zacks Consensus Estimate of 62 cents. The bottom line improved from the year-ago quarter’s 60 cents.
Total quarterly revenues of $12,444 million missed the Zacks Consensus Estimate of $14,063 million. The top line also declined from the $13,008 million reported in the prior-year quarter.
Strong quarterly earnings were primarily driven by higher contributions from the Natural Gas Pipelines & Services businesses.
Pipeline volumes in NGL, crude oil, refined products and petrochemicals were 7.1 million barrels per day (bpd), higher than the year-ago quarter’s 6.5 million bpd. Natural gas pipeline volumes were 18 trillion British thermal units per day (TBtus/d), up from 16.4 TBtus/d a year ago. Also, marine terminal volumes increased to 2 million bpd from 1.6 million bpd.
Gross operating income at NGL Pipelines & Services declined from $1,225 million in the year-ago quarter to $1,212 million primarily due to lower average sales margins and declining sales volumes.
Natural Gas Pipelines and Services’ gross operating income increased to $314 million from $220 million in the year-ago quarter. The upside was due to an increase in natural gas pipeline transportation volumes.
Crude Oil Pipelines & Services recorded a gross operating income of $397 million, which decreased from $415 million in the prior-year quarter.
Gross operating income at Petrochemical & Refined Products Services amounted to $419 million compared with $404 million a year ago primarily due to higher pipeline transportation volumes and marine terminal volumes.
The adjusted distributable cash flow was $1,938 million, up from $1,837 million a year ago. The same provided coverage of 1.8X. The partnership retained $863 million of distributable cash flow in the March-end quarter. It generated an adjusted free cash flow of $1,347 million against a negative $1,618 million in the year-ago quarter.
For first-quarter 2023, Enterprise’s total capital investment was $654 million.
As of Mar 31, 2023, its outstanding total debt principal was $28.9 billion. Enterprise’s consolidated liquidity amounted to $4 billion. The total liquidity amount included unrestricted cash on hand and available borrowing capacity under its revolving credit facility.
For 2023, Enterprise expects growth capital investments of $2.4-$2.8 billion, indicating an increase from the prior mentioned $2.3-$2.5 billion. Sustaining capital expenditure is projected to be $400 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
Currently, Enterprise Products has a nice Growth Score of B, 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Enterprise Products has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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