Enterprise Products Partners LP (NYSE: EPD) is currently considered undervalued, trading at a 9.81x trailing 12-month enterprise value to earnings before interest, taxes, depreciation and amortization (EV/EBITDA), which is below the broader industry average of 11.89x.
Image Source: Zacks Investment Research
While a discount valuation often presents a potentially profitable opportunity for investors, it is essential to investigate whether the partnership is facing any internal challenges. A more comprehensive analysis is required to determine if EPD's discounted valuation is justified based on its fundamentals, growth prospects and prevailing market conditions.
EPD's $7B Key Projects & Handsome Distribution Yield
Enterprise Products, a top-tier North American midstream service provider, boasts a vast and diversified asset portfolio. This includes more than 50,000 miles of pipelines and a storage capacity of 300 million barrels. These assets are utilized by shippers on long-term contracts to transport and store natural gas liquids, crude oil, refined products and petrochemicals. The partnership also has 14 billion cubic feet of natural gas storage capacity, securing stable fee-based revenues.
Additionally, EPD is set to generate additional fee-based earnings with $6.7 billion worth of major capital projects either currently in service or under construction. These project backlogs will not only secure stable cashflows but will also generate handsome unit-holder returns.
