Why the Hold Strategy is Appropriate for Corporate Product Stock (EPD) Now


Company Products Partners LP EPD has seen upward revisions to estimates for 2021 and 2022 earnings over the past 60 days. In fact, three in six analysts have revised upward EPD earnings estimates for 2021, while five in eight analysts have revised the same upward for 2022.

Company Products LP Partners Prices

Company Products Partners Price LP | Company Products LP Partners Quote

Factors in favor

Enterprise Products, currently ranked Zacks Rank # 3 (Hold), has a stable business model and is not significantly exposed to oil and gas price volatility. Enterprise Products generates stable royalty-based revenues through its extensive pipeline network that spans 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 approximately 260 million barrels of NGLs, petrochemicals, refined products and crude oil. These assets can also store 14 billion cubic feet of natural gas. Additionally, Enterprise Products has $ 2.9 billion in major capital projects under construction that are likely to generate additional expense-based revenue.

The partnership’s balance sheet has lower exposure to debt than industry-owned composite stocks. Its debt ratio of 0.53 is lower than the industry’s 0.55. In fact, the ratio has consistently been lower than that of industry stocks over the past few years. Enterprise Products’ liquidity profile is impressive as EPD reported its consolidated liquidity at $ 6.7 billion, which incorporates credit capacity and unrestricted liquidity.

Risks

Enterprise Products owns several assets which have been providing intermediary services for many years. This raised the possibility of investing massive maintenance capital in order to maintain this infrastructure. Thus, in the future, enterprise products may increase maintenance or repair expenses.

The rapidly spreading variant of the coronavirus, Omicron, is affecting global economies. Thus, the pandemic continues to negatively impact the business and overall operations of Enterprise Products.

Actions to consider

Top ranked players in the energy space include PDC Energy, Inc. PDCE, Sunoco LP SUN and Earthstone Energy, Inc. IS. All three stocks have a Zacks Rank 1 (strong buy). You can see The full list of today’s Zacks # 1 Rank stocks here.

PDC Energy focuses on creating significant value with a strong presence in the Delaware Basin a Permian sub-basin where the company’s operations are spread over approximately 25,000 net acres. PDC Energy has done pretty well this year despite the coronavirus pandemic and forecasts 2021 free cash flow to be over $ 900 million.

PDC Energy is also focusing on debt reduction. In order to further strengthen its balance sheet, PDC Energy plans to reduce its debt by more than 40% in 2021.

Sunoco LP generates stable cash flow as it is one of the leading independent fuel distributors in the United States. With a growing energy infrastructure platform, Sunoco LP secures approximately 2,500 business customers.

Over the past 60 days, Sunoco LP has witnessed upward revisions to profit estimates for 2021 and 2022. Overall, with demand for traditional fuels remaining in place, Sunoco LP is well positioned to continue to generate revenues. stable cash flow.

Earthstone Energy is a leading explorer and producer, with a strong footprint in prolific resources like the Midland Basin of West Texas and the Eagle Ford Trend of South Texas. Recently, Earthstone Energy entered into a deal to acquire the assets of the North Delaware Basin for approximately $ 604 million. With the deal, Earthstone Energy will likely expand its presence in the Permian Basin by more than 35% to approximately 138,000 net acres.

Over the past 30 days, Earthstone Energy has seen upward revisions to earnings estimates for 2021. So far this year, Earthstone Energy has gained 116.1%, beating the 105.4% increase in composite stocks. belonging to industry.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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