Enterprise Products Partners L.P. (EPD): A Bull Case Theory

Core Thesis - Enterprise Products Partners L.P. (EPD) is viewed positively due to its strong market position, governance, and financial metrics, with a current share price of $31.65 and P/E ratios of 11.85 trailing and 10.68 forward [1][4] Company Overview - EPD operates a comprehensive, vertically integrated system of pipelines, processing plants, storage, and export terminals across various energy sectors, providing significant market access and reliability to major oil companies [2] - The company has a strong presence in the U.S. petrochemical industry, serving all domestic ethylene crackers and 90% of refining capacity east of the Rockies, with a focus on the low-cost Permian Basin [3] Financial Performance - EPD offers a 7% yield, supported by a distributable cash flow (DCF) coverage of 1.7x, allowing for reinvestment at attractive returns [4] - The company has achieved a 12% pre-tax return on invested capital (ROIC) since 2005, with 26 consecutive years of distribution growth [4] - EPD's balance sheet is conservative, with a leverage ratio of 3.1x and long-term fixed debt averaging 17.7 years at a 4.7% coupon [4] Future Prospects - Upcoming projects worth $6 billion are expected to come online in 2025, potentially adding $700 million in EBITDA [4] - EPD is projected to deliver annual returns exceeding 10.5%, driven by its durable assets, disciplined capital allocation, and strong governance [4][5]