{"id":4286,"date":"2023-10-22T13:58:14","date_gmt":"2023-10-22T13:58:14","guid":{"rendered":"https:\/\/infundpros.com\/news\/enterprise-products-partners-a-strong-second-half-expected-fcf-gains-ahead-nyseepd\/"},"modified":"2023-10-22T13:58:15","modified_gmt":"2023-10-22T13:58:15","slug":"enterprise-products-partners-a-strong-second-half-expected-fcf-gains-ahead-nyseepd","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=4286","title":{"rendered":"Enterprise Products Partners: A Strong Second Half Expected, FCF Gains Ahead (NYSE:EPD)"},"content":{"rendered":"
\n

<\/picture>
<\/figcaption><\/figure>\n<\/p>\n

High-dividend stocks have been battered on a relative basis in 2023 as rising interest rates have made big-yielders less attractive. Rebounding oil prices and continued development among key shale regions, along with a hot summer, have benefitted midstream energy companies, though.<\/p>\n

2023 Factor Performances<\/h2>\n

\n

\"2023 <\/picture>
\n

Koyfin Charts<\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n

Energy Sector Leads Outside of TMT in 2023<\/h2>\n

\n

\"Energy<\/span> <\/picture>
\n

Daily Chartbook<\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n

According to Bank of America Global Research, EPD, one of the largest publicly traded MLPs, provides a wide variety of midstream energy services, including gathering, processing, transportation, and storage of natural gas, natural gas liquids (NGL) fractionation, import and export terminalling and offshore production platform services. EPD has four reportable business segments: Natural Gas Pipelines and Services, NGL Pipelines and Services, Petrochemical (petchem) Services, and Crude Oil Pipelines and Services. <\/span><\/p>\n

The Houston-based Oil and Gas Storage and Transportation industry company within the Energy sector trades at a low 10.9 trailing 12-month GAAP price-to-earnings ratio and pays a high 7.3% forward yield, according to Seeking Alpha. Ahead of earnings due out on Halloween morning, the stock has a low 15% implied volatility percentage and short interest is modest at just 1.4%.<\/span><\/span><\/p>\n

Back in August, EPD <\/span>reported<\/span> a soft quarter, missing on both the top and bottom lines. Q2 GAAP earnings verified at $0.57, missing estimates by a penny, while revenue of $10.65 billion was a significant 1.67 billion miss. With a 33.7% year-on-year decline in net sales, distributable cash flow likewise dropped compared to the same period in 2022. <\/span><\/p>\n

Second-quarter adjusted EBITDA was $2.2 billion, compared to $2.4 billion in Q2 last year. The management team reaffirmed its outlook and mentioned <\/span>on the call<\/span> that the company had established six operational records during the quarter, including record natural gas pipeline volumes and NGL fractionation volumes. BofA notes that in Q3, EPD will have benefitted from a one-off gain by selling stored ethane in the spot market to downstream customers at favorable prices.<\/span><\/p>\n

Growth Capital Updates<\/span><\/h2>\n

\n

\"Growth<\/span> <\/picture>
\n

EPD IR<\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n

With 25 straight years of distribution growth, the yield remains strong, and operational performance is steady as she goes \u2013 the reduced sales and earnings were largely due to seasonality and weak commodity prices in the midstream segment. <\/span><\/p>\n

A second-half rebound may be in full flight \u2013 the team expects a more favorable outlook for the second half of the year in terms of processing margins and outsized spreads with positive demand for petrochemical products with healthy exports and robust performance on the non-durables side. Still, key risks include supply chain disruptions, lower energy prices, as well as macroeconomic factors. <\/span><\/p>\n

On <\/span>valuation<\/span>, analysts at BofA see earnings <\/span>falling modestly<\/span> this year before resuming higher in 2024. Later-year estimates show modest growth both from BofA and among the consensus analyst opinion. Dividends, meanwhile, are seen as climbing at a steady pace over the coming quarters. <\/span><\/p>\n

With current forward operating P\/E ratios under 11, shares are decently priced considering the reliable yield. What\u2019s particularly attractive is EPD\u2019s low 11x free cash flow multiple using out-year estimates. On a trailing basis, the company has generated $2.11 of per-share FCF.<\/span><\/p>\n

EPD: Earnings, Valuation, Dividend, Free Cash Flow Forecasts<\/h2>\n

\n

\"EPD:<\/span> <\/picture>
\n

BofA Global Research<\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n

If we assume normalized operating earnings of $2.65 over the next 12 months and apply a 12 multiple \u2013 slightly above the stock\u2019s 5-year average and around where the sector median P\/E rests \u2013 then shares should be near $32. Historically, EPD has traded at a high-teens P\/E (looking back to 2010), but today\u2019s higher rates would discount that premium significantly.<\/span><\/p>\n

EPD: Low Teens P\/E, High FCF Yield<\/h2>\n

\n

\"EPD: <\/picture>
\n

Seeking Alpha<\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n

Compared to its peers<\/span>, EPD features a lukewarm valuation, though I assert it\u2019s to the cheap side, while its growth rate is not all that impressive either. Where the firm shines, though, is with its steady <\/span>profitability<\/span> and free cash flow generation. With significant capex spending, it is key to focus on how impressive FCF is with EPD. <\/span><\/p>\n

Stock-price <\/span>momentum<\/span> is much better than the C- rating, in my view, and I will detail that later. Concerning, following the double-miss, is the weak trend in <\/span>EPS revisions<\/span>, so this upcoming quarterly report will be one to watch despite muted implied volatility per the options market.<\/span><\/p>\n

Competitor Analysis<\/h2>\n

\n

\"Competitor<\/span> <\/picture>
\n

Seeking Alpha<\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n

Looking ahead, corporate event data provided by Wall Street Horizon shows a confirmed Q3 2023 earnings date of Tuesday, October 31 BMO with a conference call later that morning. You can listen live here. Shares trade ex a $0.50 <\/span>quarterly dividend<\/span> on the preceding Monday.<\/span><\/p>\n

Corporate Event Risk Calendar<\/h2>\n

\n

\"Corporate<\/span> <\/picture>
\n

Wall Street Horizon<\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n

The Technical Take<\/span><\/h2>\n

EPD has performed well on a total return basis since I <\/span>first analyzed<\/span> the stock in July. Notice in the chart below that shares remain in an uptrend, but there are a pair of resistance levels investors should take note of. While long-term value and income-focused holders may dismiss momentum and price action, the near-term price appreciation trend we have seen could stall out around the $28 to $29 zone as well as just above $30. <\/span><\/p>\n

What\u2019s more, there remains a high amount of volume by price in the $22 to $29 range, which the bulls have yet to get EPD through. That also means, however, that any pullback should be met with natural buyers into the mid and low $20s. While the long-term 200-day moving average is upwardly sloped, indicating the bulls are in charge, the uptrend support line should hold to keep the momentum going \u2013 a break under $25 could put that in jeopardy.<\/span><\/p>\n

Overall, the chart remains modestly constructive and EPD features robust relative strength to the broader market this year.<\/span><\/p>\n

EPD: Uptrend Continues, Resistance Above<\/h2>\n

\n

\"EPD:<\/span> <\/picture>
\n

Stockcharts.com<\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n

The Bottom Line<\/span><\/h2>\n

I reiterate my buy rating on EPD. Shares have outperformed the S&P 500 this year, despite weakness among high-dividend equities. With improving profits and higher free cash flow over the quarters ahead, EPD should offer some ballast amid a volatile equity market.<\/span><\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

High-dividend stocks have been battered on a relative basis in 2023 as rising interest rates have made big-yielders less attractive. Rebounding oil…<\/p>\n","protected":false},"author":1,"featured_media":4287,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[],"class_list":{"0":"post-4286","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-news"},"yoast_head":"\nEnterprise Products Partners: A Strong Second Half Expected, FCF Gains Ahead (NYSE:EPD) | inFundPros<\/title>\n<meta name=\"description\" content=\"High-dividend stocks have been battered on a relative basis in 2023 as rising interest rates have made big-yielders less attractive. Rebounding oil prices\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/infundpros.com\/?p=4286\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Enterprise Products Partners: A Strong Second Half Expected, FCF Gains Ahead (NYSE:EPD) | inFundPros\" \/>\n<meta property=\"og:description\" content=\"High-dividend stocks have been battered on a relative basis in 2023 as rising interest rates have made big-yielders less attractive. Rebounding oil prices\" \/>\n<meta property=\"og:url\" content=\"https:\/\/infundpros.com\/?p=4286\" \/>\n<meta property=\"og:site_name\" content=\"inFundPros\" \/>\n<meta property=\"article:published_time\" content=\"2023-10-22T13:58:14+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-10-22T13:58:15+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/infundpros.com\/wp-content\/uploads\/2023\/10\/1697983094_image_1381376333.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1536\" \/>\n\t<meta property=\"og:image:height\" content=\"1024\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Press Room\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Press Room\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/infundpros.com\/?p=4286#article\",\"isPartOf\":{\"@id\":\"https:\/\/infundpros.com\/?p=4286\"},\"author\":{\"name\":\"Press Room\",\"@id\":\"https:\/\/infundpros.com\/#\/schema\/person\/87f7e632b195ea95c91503d9281f5eff\"},\"headline\":\"Enterprise Products Partners: A Strong Second Half Expected, FCF Gains Ahead (NYSE:EPD)\",\"datePublished\":\"2023-10-22T13:58:14+00:00\",\"dateModified\":\"2023-10-22T13:58:15+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/infundpros.com\/?p=4286\"},\"wordCount\":972,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/infundpros.com\/#organization\"},\"articleSection\":[\"News\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/infundpros.com\/?p=4286#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/infundpros.com\/?p=4286\",\"url\":\"https:\/\/infundpros.com\/?p=4286\",\"name\":\"Enterprise Products Partners: A Strong Second Half Expected, FCF Gains Ahead (NYSE:EPD) | inFundPros\",\"isPartOf\":{\"@id\":\"https:\/\/infundpros.com\/#website\"},\"datePublished\":\"2023-10-22T13:58:14+00:00\",\"dateModified\":\"2023-10-22T13:58:15+00:00\",\"description\":\"High-dividend stocks have been battered on a relative basis in 2023 as rising interest rates have made big-yielders less attractive. Rebounding oil prices\",\"breadcrumb\":{\"@id\":\"https:\/\/infundpros.com\/?p=4286#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/infundpros.com\/?p=4286\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/infundpros.com\/?p=4286#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/infundpros.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Enterprise Products Partners: A Strong Second Half Expected, FCF Gains Ahead (NYSE:EPD)\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/infundpros.com\/#website\",\"url\":\"https:\/\/infundpros.com\/\",\"name\":\"Fintech Advance\",\"description\":\"Latest Finance and Tech News and Updates\",\"publisher\":{\"@id\":\"https:\/\/infundpros.com\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/infundpros.com\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/infundpros.com\/#organization\",\"name\":\"Fintech Advance\",\"url\":\"https:\/\/infundpros.com\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/infundpros.com\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/infundpros.com\/wp-content\/uploads\/2023\/10\/tech-logo.png\",\"contentUrl\":\"https:\/\/infundpros.com\/wp-content\/uploads\/2023\/10\/tech-logo.png\",\"width\":409,\"height\":70,\"caption\":\"Fintech Advance\"},\"image\":{\"@id\":\"https:\/\/infundpros.com\/#\/schema\/logo\/image\/\"}},{\"@type\":\"Person\",\"@id\":\"https:\/\/infundpros.com\/#\/schema\/person\/87f7e632b195ea95c91503d9281f5eff\",\"name\":\"Press Room\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/infundpros.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/infundpros.com\/wp-content\/uploads\/2023\/10\/avatar_user_1_1697230663-96x96.png\",\"contentUrl\":\"https:\/\/infundpros.com\/wp-content\/uploads\/2023\/10\/avatar_user_1_1697230663-96x96.png\",\"caption\":\"Press Room\"},\"sameAs\":[\"https:\/\/infundpros.com\"],\"url\":\"https:\/\/infundpros.com\/?author=1\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Enterprise Products Partners: A Strong Second Half Expected, FCF Gains Ahead (NYSE:EPD) | inFundPros","description":"High-dividend stocks have been battered on a relative basis in 2023 as rising interest rates have made big-yielders less attractive. Rebounding oil prices","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/infundpros.com\/?p=4286","og_locale":"en_US","og_type":"article","og_title":"Enterprise Products Partners: A Strong Second Half Expected, FCF Gains Ahead (NYSE:EPD) | inFundPros","og_description":"High-dividend stocks have been battered on a relative basis in 2023 as rising interest rates have made big-yielders less attractive. Rebounding oil prices","og_url":"https:\/\/infundpros.com\/?p=4286","og_site_name":"inFundPros","article_published_time":"2023-10-22T13:58:14+00:00","article_modified_time":"2023-10-22T13:58:15+00:00","og_image":[{"width":1536,"height":1024,"url":"https:\/\/infundpros.com\/wp-content\/uploads\/2023\/10\/1697983094_image_1381376333.jpg","type":"image\/jpeg"}],"author":"Press Room","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Press Room","Est. reading time":"5 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/infundpros.com\/?p=4286#article","isPartOf":{"@id":"https:\/\/infundpros.com\/?p=4286"},"author":{"name":"Press Room","@id":"https:\/\/infundpros.com\/#\/schema\/person\/87f7e632b195ea95c91503d9281f5eff"},"headline":"Enterprise Products Partners: A Strong Second Half Expected, FCF Gains Ahead (NYSE:EPD)","datePublished":"2023-10-22T13:58:14+00:00","dateModified":"2023-10-22T13:58:15+00:00","mainEntityOfPage":{"@id":"https:\/\/infundpros.com\/?p=4286"},"wordCount":972,"commentCount":0,"publisher":{"@id":"https:\/\/infundpros.com\/#organization"},"articleSection":["News"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/infundpros.com\/?p=4286#respond"]}]},{"@type":"WebPage","@id":"https:\/\/infundpros.com\/?p=4286","url":"https:\/\/infundpros.com\/?p=4286","name":"Enterprise Products Partners: A Strong Second Half Expected, FCF Gains Ahead (NYSE:EPD) | inFundPros","isPartOf":{"@id":"https:\/\/infundpros.com\/#website"},"datePublished":"2023-10-22T13:58:14+00:00","dateModified":"2023-10-22T13:58:15+00:00","description":"High-dividend stocks have been battered on a relative basis in 2023 as rising interest rates have made big-yielders less attractive. Rebounding oil prices","breadcrumb":{"@id":"https:\/\/infundpros.com\/?p=4286#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/infundpros.com\/?p=4286"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/infundpros.com\/?p=4286#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/infundpros.com\/"},{"@type":"ListItem","position":2,"name":"Enterprise Products Partners: A Strong Second Half Expected, FCF Gains Ahead (NYSE:EPD)"}]},{"@type":"WebSite","@id":"https:\/\/infundpros.com\/#website","url":"https:\/\/infundpros.com\/","name":"Fintech Advance","description":"Latest Finance and Tech News and Updates","publisher":{"@id":"https:\/\/infundpros.com\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/infundpros.com\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/infundpros.com\/#organization","name":"Fintech Advance","url":"https:\/\/infundpros.com\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/infundpros.com\/#\/schema\/logo\/image\/","url":"https:\/\/infundpros.com\/wp-content\/uploads\/2023\/10\/tech-logo.png","contentUrl":"https:\/\/infundpros.com\/wp-content\/uploads\/2023\/10\/tech-logo.png","width":409,"height":70,"caption":"Fintech Advance"},"image":{"@id":"https:\/\/infundpros.com\/#\/schema\/logo\/image\/"}},{"@type":"Person","@id":"https:\/\/infundpros.com\/#\/schema\/person\/87f7e632b195ea95c91503d9281f5eff","name":"Press Room","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/infundpros.com\/#\/schema\/person\/image\/","url":"https:\/\/infundpros.com\/wp-content\/uploads\/2023\/10\/avatar_user_1_1697230663-96x96.png","contentUrl":"https:\/\/infundpros.com\/wp-content\/uploads\/2023\/10\/avatar_user_1_1697230663-96x96.png","caption":"Press Room"},"sameAs":["https:\/\/infundpros.com"],"url":"https:\/\/infundpros.com\/?author=1"}]}},"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/infundpros.com\/index.php?rest_route=\/wp\/v2\/posts\/4286","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/infundpros.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/infundpros.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/infundpros.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/infundpros.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=4286"}],"version-history":[{"count":1,"href":"https:\/\/infundpros.com\/index.php?rest_route=\/wp\/v2\/posts\/4286\/revisions"}],"predecessor-version":[{"id":4288,"href":"https:\/\/infundpros.com\/index.php?rest_route=\/wp\/v2\/posts\/4286\/revisions\/4288"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/infundpros.com\/index.php?rest_route=\/wp\/v2\/media\/4287"}],"wp:attachment":[{"href":"https:\/\/infundpros.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4286"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/infundpros.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4286"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/infundpros.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4286"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}