Today we're going to take a closer look at large-cap Utilities company Enterprise Products Partners, whose shares are currently trading at $26.64. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!
A Very Low P/E Ratio but Trades Above Its Graham Number:
Enterprise Products Partners L.P. provides midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, petrochemicals, and refined products. The company belongs to the Utilities sector, which has an average price to earnings (P/E) ratio of 22.89 and an average price to book (P/B) ratio of 1.03. In contrast, Enterprise Products Partners has a trailing 12 month P/E ratio of 10.5 and a P/B ratio of 2.16.
Enterprise Products Partners's PEG ratio is 1.95, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
Exceptional Profitability Overshadowed by Excessive Leverage:
| 2020-02-28 | 2021-03-01 | 2022-02-28 | 2023-02-28 | |
|---|---|---|---|---|
| Revenue (MM) | $32,789 | $27,200 | $40,807 | $58,186 |
| Gross Margins | 95.7% | n/a | n/a | n/a |
| Operating Margins | 17.2% | 19.0% | 15.3% | 12.1% |
| Net Margins | 14.0% | 13.88% | 11.37% | 9.44% |
| Net Income (MM) | $4,591 | $3,776 | $4,638 | $5,490 |
| Net Interest Expense (MM) | -$1,231 | -$1,274 | -$1,278 | -$1,233 |
| Depreciation & Amort. (MM) | -$1,745 | -$1,840 | -$1,874 | -$1,974 |
| Earnings Per Share | $2.09 | $1.71 | $2.11 | $2.54 |
| EPS Growth | n/a | -18.18% | 23.39% | 20.38% |
| Diluted Shares (MM) | 2,202 | 2,202 | 2,200 | 2,175 |
| Free Cash Flow (MM) | $11,032 | $9,166 | $10,672 | $9,881 |
| Capital Expenditures (MM) | -$4,511 | -$3,275 | -$2,159 | -$1,842 |
| Net Current Assets (MM) | -$28,043 | -$28,771 | -$27,768 | -$29,759 |
| Current Ratio | 0.86 | 1.1 | 1.14 | 0.86 |
| Long Term Debt (MM) | $25,643 | $28,541 | $28,135 | $26,551 |
| Net Debt / EBITDA | 3.63 | 4.11 | 3.46 | 3.28 |
Enterprise Products Partners benefits from strong margins with a negative growth trend, a steady stream of strong cash flows, and growing revenues and decreasing reinvestment in the business. The company's financial statements show wider gross margins than its peer group and positive EPS growth. However, the firm has a highly leveraged balance sheet.
