Enterprise Products Partners saw profits jump in the second quarter as its energy pipelines remain in demand. The company has surprised on estimates 2 out of the last 4 quarters by 21.01%. Enterprise Products has a forward P/E of 13.07.

Company Description

Enterprise Products Partners L. P. (EPD) transports natural gas, NGLs, crude oil and petrochemicals for energy producers through 35,000 miles of onshore and offshore pipelines in the United States.

The company, a Zacks #1 Rank (Strong Buy), also gathers, processes and stores natural gas, crude and petrochemicals.

On Aug 6, EPD announced it was acquiring the remaining 25.8% of Dixie Pipeline Company and Dixie Terminals and Storage Company from BP. The acquisition would give Enterprise complete control of a 1,300-mile pipeline system through 7 southern gulf coast states. The company has owned a share of Dixie since 1999.

Enterprise Reports a Record Second Quarter

On July 24, Enterprise reported a record second quarter that beat Wall Street estimates by 44.44%.

Net income rose 85% to $263 million, or 52 cents, compared to net income of $142 million or 26 cents for the second quarter of 2007. Analysts expected EPS of just 36 cents.

Revenue jumped 51% to a record $6.34 billion from $4.21 billion in the second quarter of 2007. Each business segment reported growth, driven by the natural gas processing and pipeline assets and the NGL pipeline assets.

The company said the second quarter gross operating margin exceeded that of the first quarter by $12 million, despite the downtime and expenses involved in repairing the Independence Hub pipeline, which had a leak, and downtime with the Pioneer natural gas processing plant.

Estimates Rise for the Third Quarter and the Year

Responding to the record second quarter, analysts raised estimates for the third quarter and the full year. For the third quarter, 11 out of 12 covering analysts raised estimates by an average of 12 cents to 54 cents from 42 cents per share.

For the full year, consensus estimates jumped 21% to $2.10 from $1.74 per share. All 13 covering analysts raised estimates in the last month, however 2 have lowered in the last week.

Value Fundamentals

Enterprise Products has a forward P/E of 13.07. Its price-to-book is 2.01. The company has a solid one year return on equity (ROE) of 13.35%. EPD also pays a generous dividend. Its current yield is 7.10%.

Content Courtesy: Zacks Investment Research

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