Enterprise Products Partners LP (NYSE:EPD) has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 60 days. So far this year, the stock, carrying a Zacks Rank #2 (Buy), has gained 12.2%, outpacing the 9.2% rise of the composite stocks belonging to the industry. What's Favoring the Stock?
Enterprise Products has a stable business model and is not significantly exposed to the volatility in oil and gas prices. It generates stable fee-based revenues from its extensive pipeline network across nearly 50,000 miles, transporting natural gas, natural gas liquids (NGLs), crude oil petrochemicals and refined products.
The midstream infrastructure provider also has storage assets that can store roughly 260 million barrels of NGL, petrochemical, refined products and crude oil. These assets can also store 14 billion cubic feet of natural gas. Moreover, Enterprise Products has $4.6 billion of major capital projects under construction that are likely to provide incremental fee-based revenues.
The partnership's balance sheet has lower debt exposure than the composite stocks belonging to the industry. Its debt-to-capitalization ratio of 0.53 is lower than the industry's 0.55. In fact, the ratio has persistently been lower than the stocks in the industry in the past few years. The liquidity profile of Enterprise Products is impressive, as it reported consolidated liquidity at $3.9 billion, which incorporates available borrowing capacity under its revolving credit facilities and unrestricted cash.
Recently, Enterprise Products announced authorizations from the board of directors of its general partner to increase quarterly cash distribution. The quarterly cash distributions to be paid to common unitholders for the second quarter of 2022 is 47.5 cents per unit, representing an increase from 46.5 cents in the prior quarter. The distribution will be paid on Aug 12 to common unitholders on record as of the close of business on Jul 29. Per Enterprise Products, since the initial public offering in 1998, this will be the 74th distribution hike. Also, for a consecutive 24 years, the company has increased its distribution.
Other Stocks to Consider
Some other prospective players in the energy space are Antero Resources AR, BP plc BP and Continental Resources, Inc. CLR. While Antero and BP sport a Zacks Rank #1 (Strong Buy), Continental Resources carries a Zacks Rank #2.
Antero Resources is a leading upstream energy player with a strong presence in the gas-rich prolific Appalachian Basin in West Virginia and Ohio. In the past 60 days, Antero Resources has witnessed upward earnings estimate revisions for 2022 and 2023.
The substantial exposure to improving commodity price is a huge positive for Antero Resources.
High oil prices are aiding BP's upstream operations. The sizable refining and marketing operations of BP will protect it if the crude pricing scenario turns unfavorable again. In 2022, BP is likely to witness earnings growth of almost 77%. Over the past few quarters, BP has successfully been reducing long-term debt.
Continental Resources is also a leading upstream energy company with proven reserves in North Dakota and Oklahoma. The oil inventories of Continental Resources are among the best in the industry.
Headquartered in Oklahoma City, Continental Resources has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days. The stock has gained 78.8% in the past year, outpacing the 36.3% rise of the composite stocks belonging to the sector.
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