Should Investors Worry About Enterprise Products' 3.1 Leverage Ratio?
Enterprise Products Partners LP EPD reported a consolidated leverage ratio of 3.1 as of March 31, 2025. This means the master limited partnership's net debt (after removing the equity-like portion of hybrid debt and subtracting available cash) is 3.1 times larger than its adjusted EBITDA – a measure of its core earnings from operations.
EPD's leverage ratio is thus slightly above the midpoint of its target range of 2.75 to 3.25. This generally signals a strong balance sheet as the partnership has the highest credit rating in the midstream energy space. Thus, Enterprise Products is in a strong position with more flexibility to raise capital in the future at favorable rates.
That said, the midstream energy giant is carefully managing its balance sheet. On its first-quarter earnings call, EPD stated that as of the March quarter of this year, 96% of its $31.9 billion in total debt carried a fixed interest rate, which means the interest payments will not increase even if market interest rates rise. The partnership added that its debt portfolio has an average maturity of 18 years, and hence has plenty of time to pay off its debt principal. Although the overall outlook appears strong, investors should continue to monitor whether the partnership can maintain healthy profits to keep its leverage ratio within the target range it has committed to.
Do KMI & WMB Have a Strong Balance Sheet?
Kinder Morgan KMI and Williams WMB are also leading midstream energy players. Thus, both KMI and WMB require significant capital to invest in and to maintain their midstream assets.
Considering the total debt-to-capitalization ratio, WMB has significantly more exposure to debt capital than the composite players belonging to the industry. WMB has a debt-to-capitalization of 64.8%, considerably higher than the industry's 56.8%.
Kinder Morgan's story is, however, favorable. This is because KMI, responsible for transporting roughly 40% of the natural gas consumed in the domestic market, has a debt-to-capitalization of 50.8%.
EPD's Price Performance, Valuation & Estimates
Units of EPD gained 18% over the past year, outpacing the 17.5% rise of the composite stocks belonging to the industry.
One-Year Price Chart
From a valuation standpoint, EPD trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 10.08x. This is below the broader industry average of 11.48x.
The Zacks Consensus Estimate for EPD's 2025 earnings hasn't been revised over the past seven days. EPD currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Only $1 to See All Zacks' Buys and Sells
We're not kidding.
Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.
Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators, and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.
See Stocks Now >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Williams Companies, Inc. (The) (WMB): Free Stock Analysis Report
Enterprise Products Partners L.P. (EPD): Free Stock Analysis Report
Kinder Morgan, Inc. (KMI): Free Stock Analysis Report
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Globe and Mail
an hour ago
- Globe and Mail
'He'll Do a Great Job': Trump Endorses Ellison, Paramount Stock (NASDAQ:PARA) Ticks Up
In what might be some kind of cosmic irony, President Donald Trump—who is currently suing entertainment giant Paramount (PARA) over an interview staged on 60 Minutes—came out in support of Skydance boss David Ellison. Ellison might be taking over Paramount before much longer, assuming the merger of the two actually goes through. But Trump's endorsement proved good enough for investors, who sent shares up fractionally in the closing minutes of Wednesday's trading. Confident Investing Starts Here: Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions Receive undervalued, market resilient stocks right to your inbox with TipRanks' Smart Value Newsletter Trump made it clear, declaring David Ellison 'great,' and further noting that 'he'll do a great job.' Given that the merger that would allow Ellison even a chance to do that great job has not yet materialized, currently held up by not only Trump's own lawsuit but also a Federal Communications Commission (FCC) review, it comes across as at least a bit ironic. Interestingly, while being interviewed earlier today and coming out with the notion that Ellison would do well, Trump did not comment on what was actually holding up the works on the merger, whether with his own lawsuit or the FCC's probes. Another Corner Heard From And the opposition to a settlement with the president proved to be a little stronger as of today, as the Committee to Protect Journalists (CPJ) recently came out with its own letter to Shari Redstone, offering up what one report called '…serious concerns about the potential implications of a settlement…' in the lawsuit in question. The Committee's letter, signed by committee chair Jacob Weisberg, noted that the '…lawsuit is without merit,' a point that at least some legal experts agree on. Not all of them do, of course, but when has there ever been a court case that had absolute agreement from every lawyer who looked at it? The letter went on to declare utter innocence for 'the journalists and editors at CBS…' and that there was '…nothing inherently unethical or duplicitous' about their behavior in the matter. The letter also carried stark warnings about presidential administrations allowed to '…interfere with or influence editorial decisions' should the settlement go through, as it looks like it will. Is Paramount Stock a Good Buy Right Now? Turning to Wall Street, analysts have a Hold consensus rating on PARA stock based on two Buys, eight Holds and five Sells assigned in the past three months, as indicated by the graphic below. After a 18.99% rally in its share price over the past year, the average PARA price target of $12.08 per share implies 0.25% upside potential. See more PARA analyst ratings Disclosure
Globe and Mail
an hour ago
- Globe and Mail
Dividend-paying conglomerates with break-up potential that may reward investors
Sustainable dividends from conglomerates well placed to unlock holding company discounts. Honeywell International Inc. HON-Q shares rose early this week after the industrial conglomerate reiterated plans to split into three independent companies. The move, spurred by activist investor Elliott Investment Management, should further lift Honeywell's share price and so shrink its 'holding company discount.' That's the tendency for multifaceted conglomerates to trade for less than the total value of their various parts. Holding companies often see their share prices rise after opting to break themselves up into their constituent businesses. Essentially, the market finds it easier to assess the value of 'pure-play' firms. We started with our extensive list of dividend-paying Canadian and U.S. companies, before singling out conglomerates offering steady growth prospects – as well as breakup potential. We then applied our TSI Dividend Sustainability Rating System to home in on top dividend payers. Our system awards points to a stock based on key factors: Companies with 10 to 12 points have the most secure dividends, or the highest sustainability. Those with seven to nine points have above average sustainability; average sustainability, four to six points; and below average sustainability, one to three points. TSI Network is the online home of The Successful Investor Inc. – the group of widely followed Canadian investment newsletters by editor and publisher Pat McKeough. They include our award-winning flagship newsletter, The Successful Investor, and the TSI Dividend Advisor. TSI Network is also affiliated with Successful Investor Wealth Management. Our TSI Dividend Sustainability Rating System generated five stocks: Montreal-based Power Corp. of Canada POW-T holds controlling interest in Great-West Lifeco Inc., IGM Financial Inc. and much more. Calgary-headquartered ATCO Ltd. ACO-X-T owns 52.5 per cent of Canadian Utilities Ltd. CU-T but also ATCO Structures & Logistics and 40 per cent of Neltume Ports; the latter operates 18 ports and related operations in South America. Honeywell International Inc., based in North Carolina, had already spun off two subsidiaries (Resideo Technologies Inc. and Garrett Motion Inc. GTX-Q) to shareholders in 2018 and now plans to break up even further. Global conglomerate 3M Co. MMM-N, with headquarters in Minnesota, sells a wide array of products with little overlap and so has a lot of breakup potential. In fact, it spun off its health care unit as Solventum Corp. SOLV-N last year. Washington-based Danaher Inc. DHR-N has made a number of breakup moves in the past but still has a varied range of businesses well-positioned for hiving off as standalone firms. We advise investors to do additional research on investments we identify here. Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.
Globe and Mail
2 hours ago
- Globe and Mail
New Hirings, Big Firings Give Intel Stock (NASDAQ:INTC) a Hefty Surge
Chip stock Intel (INTC) has had a fairly rough time with its employees of late, what with firing so many of them in rapid fashion. And the latest set of firings comes with some unexpected word about severance packages: there are none. Meanwhile, a few new hires are getting in on the action in a bid to turn things around at Intel. This was good enough for investors, though, who sent Intel shares on the rise nearly 3% in Wednesday afternoon's trading. Confident Investing Starts Here: Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions Receive undervalued, market resilient stocks right to your inbox with TipRanks' Smart Value Newsletter We remember that Intel plans to lay off about one person in every five from the manufacturing division, which adds up to somewhere around 10,000 employees in total, reports noted. But, in perhaps a rougher note still, reports noted that there will be neither 'voluntary buyouts' nor 'early retirement packages' offered. Rather, Intel will be firing employees '…based on performance evaluations and strategic priorities,' reports noted. This is the third major round of layoffs Intel has posted so far in the last 12 months, reports note, and has seen everyone from top-level brass to middle management tossed out in a bid to streamline operations. But now, with the factory floor about to take a layoff with nothing more than the shirts on their collective back, the blows will hit throughout the entire operation. Not Everybody is Fired And, as we also heard previously, Intel is looking to beef up its engineering ranks to try and develop the next big things in processor development. With Intel looking to get back market share lost to several different competitors, this is perhaps the most clearly urgent course of action for Intel. Intel recently picked up three 'chip industry executives,' reports noted, who would be tasked with engineering roles, as well as networking roles, within Intel. The new hires come from substantial engineering backgrounds, serving as part of a 'flattened' leadership team. One of them will be running a newly-minted 'customer engineering center,' while another will handle development of an artificial intelligence (AI)-focused system-on-a-chip (SoC) development. The third will handle development duties on new chip architectures, helping to keep Intel in the hunt for the t op slot in the market. Is Intel a Buy, Hold or Sell? Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on one Buy, 26 Holds and four Sells assigned in the past three months, as indicated by the graphic below. After a 32.07% loss in its share price over the past year, the average INTC price target of $21.30 per share implies 0.44% downside risk. See more INTC analyst ratings Disclosure
