One of the standouts of today's afternoon trading session was Enterprise Products, which logged a 1.1% performance and outperformed the S&P 500 by 1.0%. The Oil & Gas Transportation and Processing stock is now trading at $32.11 per share and may still have upside potential because it is still -10.53% under its average target price of $35.89. Analysts have set target prices ranging from $32.0 to $40.0 dollars per share, and have given the stock an average rating of buy.
The market seems to share this optimistic view, since Enterprise Products has a short interest of only 4.2% (this is the percentage of the share float that is being shorted). Each short position represents an investor's expectation that the price of the stock will decrease in the future.
When a stock is sold short, it means an investor has borrowed shares of the stock from their broker, and then sold them at the going market price. The investor hopes for the price to decline, so that they might buy those shares back at a lower price in the future. Once they do, they can return the borrowed shares to their broker, and keep the profit they made on the transaction.
We can make inferences about the market sentiment surrounding Enterprise Products by analyzing its rate of institutional ownership. If institutions such as hedge funds and pension funds are the primary shareholders of a corporation, it most likely means that its shares are a good investment according to those institutions' analysts.
At 25.9%, the rate of institutional ownership is average, indicating that a sufficient number of institutions have concluded that it is a stable investment. Beware, however, that the rate of institutional ownership could also indicate an ongoing proxy battle or takeover attempt -- so you should also periodically check the news about a stock whose institutional ownership you are tracking.
Overall, there is positive market sentiment on Enterprise Products because its an analyst consensus of some upside potential, a buy rating, an average amount of shares sold short, and only a small number of institutional investors. Warren Buffett famously said that in the short term, markets are voting mechanisms, but in the long term, they are weighing mechanisms. This means that long term investors should be aware of a stock's fundamentals before committing.
Buffett was one of the fist investors to focus on free cash flow as a yardstick for a company's health. Here are EPD's recent cash flows:
| Date Reported | Cash Flow from Operations ($ k) | Capital expenditures ($ k) | Free Cash Flow ($ k) | YoY Growth (%) |
|---|---|---|---|---|
| 2024 | 8,115,000 | 4,544,000 | 3,571,000 | -17.01 |
| 2023 | 7,569,000 | 3,266,000 | 4,303,000 | -29.17 |
| 2022 | 8,039,000 | 1,964,000 | 6,075,000 | -3.42 |
| 2021 | 8,513,000 | 2,223,000 | 6,290,000 | 141.64 |
| 2020 | 5,891,000 | 3,288,000 | 2,603,000 | 30.88 |
| 2019 | 6,520,500 | 4,531,700 | 1,988,800 |
