Enterprise Product Partners (EPD) recently made it to Zacks.com’s Most Wanted Stock list. Therefore, you may want to consider some of the key factors that may influence the stock’s performance in the near future.
Over the past month, shares of this midstream energy services provider have returned +9%, compared to the +4.6% change in the Zacks S&P 500 composite. Gas – Production Pipeline – MLB, of which Enterprise Products is a part, gained 8%. The key question now is: what could be the future direction of the title?
Although press releases or rumors about a substantial change in a company’s trading outlook will usually “trend” its stock and cause an immediate price change, there are always fundamental facts that ultimately dominate the take. purchase and retention decision.
Revisions to earnings estimates
At Zacks, we prioritize evaluating change in a company’s future earnings projection over anything else. This is because we believe that the present value of its future income stream is what determines the fair value of its stock.
We basically look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest trading trends. And if earnings estimates increase for a company, the fair value of its shares increases. A higher fair value than the current market price stimulates investors’ interest in buying the stock, causing its price to rise. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and short-term stock price movements.
For the current quarter, Enterprise Products is expected to post earnings of $0.60 per share, indicating a change of +15.4% from the prior year quarter. The Zacks consensus estimate has changed -0.3% over the past 30 days.
The current year earnings consensus estimate of $2.48 indicates a year-over-year change of +18.1%. This estimate has changed by +0.5% over the last 30 days.
For the next fiscal year, the consensus earnings estimate of $2.52 indicates a change of +1.6% from what Enterprise Products is expected to report a year ago. Over the past month, the estimate has evolved by +0.5%.
With an impressive externally audited track record, our proprietary stock rating tool – the Zacks Ranking – is a more conclusive indicator of a stock’s short-term price performance, as it effectively harnesses the power of earnings estimate revisions. . The magnitude of the recent consensus estimate change, along with three other factors related to earnings estimates, resulted in a Zacks No. 3 (holding) ranking for enterprise products.
The chart below shows the evolution of the company’s consensus 12-month EPS estimate:
12 month EPS
Revenue Growth Forecasts
Although earnings growth is arguably the most superior indicator of a company’s financial health, nothing as such happens if a company is unable to increase its revenue. After all, it is almost impossible for a company to increase its profits for an extended period of time without increasing its revenue. It is therefore important to know the potential revenue growth of a business.
For enterprise products, the current quarter sales consensus estimate of $14.49 billion indicates a year-over-year change of +27.5%. For the current and future fiscal years, the estimates of $59.03 billion and $60.07 billion indicate variations of +44.7% and +1.8%, respectively.
Latest reported results and history of surprises
Enterprise Products reported revenue of $15.47 billion last quarter, representing a year-over-year change of +42.8%. EPS of $0.63 for the same period versus $0.52 a year ago.
Compared to the Zacks consensus estimate of $13.85 billion, reported revenue is a surprise +11.71%. Surprise EPS was +3.28%.
In the past four quarters, Enterprise Products has exceeded consensus EPS estimates three times. The company has exceeded consensus earnings estimates every time during this period.
No investment decision can be effective without considering the valuation of a stock. Whether a stock’s current price accurately reflects the intrinsic value of the underlying business and the company’s growth prospects is a key determinant of its future price performance.
Compare the present value of a company’s valuation multiples, such as its price/earnings (P/E), price/sales (P/S), and price/cash flow (P/CF), to its own historical values help determine whether its stock is fairly priced, overvalued or undervalued, while comparing the company against its peers on these metrics gives a good idea of the reasonableness of its price.
The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to traditional and unconventional valuation metrics to rank stocks from A to F (an A is better than a B; a B is better than a C; and so on), is quite useful in determining whether a stock is overvalued, correctly priced, or temporarily undervalued.
Enterprise Products is rated A on this front, indicating that it is trading at a discount to its peers. Click here to see values for some of the rating metrics that led to this rating.
The facts discussed here and plenty of other information about Zacks.com might help determine whether or not it’s worth paying attention to the market buzz about company products. However, its No. 3 Zacks ranking suggests it could perform in line with the broader market in the near term.
Zacks names ‘only one best choice for doubling up’
From thousands of stocks, 5 Zacks experts have each picked their favorite to skyrocket by +100% or more in the coming months. Of these 5, Research Director Sheraz Mian selects one to have the most explosive advantage of all.
It’s a little-known chemical company that’s up 65% year-on-year, but still very cheap. With relentless demand, rising earnings estimates for 2022 and $1.5 billion for stock buybacks, retail investors could step in at any time.
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Enterprise Products Partners LP (EPD): Free Inventory Analysis Report
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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.