Enterprise Products Partners (EPD) Could Be 6% Undervalued Following Its Permian Growth Narrative

Enterprise Products Partners (EPD) has drawn fresh attention after recent trading left the units near US$38.83, prompting investors to reassess how its midstream footprint and income profile line up with current energy-market expectations.

Recent trading tells a mixed story. Enterprise Products Partners has slipped slightly over the past week, even as the 30 day share price return is positive and the year to date share price return sits at 20.74%. At the same time, long term total shareholder returns above 30% over one year and well into triple digits over five years point to momentum that has been building rather than fading.

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After a 20.74% year-to-date climb and one-year total returns above 30%, the issue now is whether Enterprise Products Partners still offers meaningful upside or whether most of the easy gains have already been taken.

Most Popular Narrative: 5.9% Undervalued

Enterprise Products Partners is trading at $38.83 against a narrative fair value estimate of $41.25, which implies modest upside still on the table.

The completion of two gas processing plants in the Permian, along with several key pipeline and export terminal projects, is expected to enhance Enterprise Products Partners’ infrastructure, potentially driving revenue growth from increased volume handling and exports.

With no major planned downtimes for the PDH plants after recent maintenance, Enterprise is poised to capture additional EBITDA that was previously lost to unplanned outages, suggesting potential earnings improvement.

Read the complete narrative.

Want to see what kind of revenue climb and margin profile that build out is backing in this fair value? The narrative leans on mid single digit top line growth, fatter profitability and a richer earnings multiple than the broader US Oil and Gas group. Curious how those moving parts combine into that $41.25 figure instead of a much lower number? The full narrative breaks down the exact earnings path and discount rate behind it.

Result: Fair Value of $41.25 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

Still, the Enterprise Products Partners story can break if tariff policy turns against U.S. LPG exports or if operational hiccups at key facilities resurface.

Find out about the key risks to this Enterprise Products Partners narrative.

Another View On Enterprise Products Partners' Valuation

The first narrative pins Enterprise Products Partners at a fair value of $41.25, only modestly above the current $38.83. Using earnings instead, the picture shifts. EPD trades on a P/E of 13.4x, slightly richer than the US Oil and Gas industry at 12.9x, but well below peers at 23.4x and an estimated fair ratio of 23.6x. This points to a wide valuation gap that could either represent a cushion or a value trap, depending on how you see future execution and risk.

To see what the numbers say about this pricing gap, have a look at the valuation breakdown and how it compares across earnings multiples See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

Plenty in this Enterprise Products Partners story points to both optimism and unease, so treat the numbers as a starting point and move quickly to form your own judgment using the 3 key rewards and 2 important warning signs

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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