Enterprise Products Partners: Is the Stock a Buy as Growth Is Set to Ramp Up in 2026?

Core Viewpoint - Enterprise Products Partners is expected to have a better year ahead as new projects ramp up, despite facing some current headwinds in its business [1][10]. Business Performance - The company has experienced some challenges, including the expiration of attractive long-term contracts in its LPG business and normalization of high spreads in propylene and octane enhancement [2]. - In Q3, total gross operating profit decreased by 3% to $2.39 billion, while adjusted EBITDA fell by 1.5% to $2.41 billion [6]. - Distributable cash flow (DCF) declined by 7% to $1.83 billion, and adjusted free cash flow was reported at $96 million [6]. Financial Health - Despite the weak quarter, the company's distribution remains well covered with a coverage ratio of 1.5x based on DCF, and it ended Q3 with a leverage ratio of 3.3x [7]. - The quarterly distribution was $0.545 per unit, reflecting a year-over-year increase of 3.8% [7]. - The company has increased its stock buyback authorization from $2 billion to $5 billion, indicating a focus on capital allocation flexibility [3]. Growth Prospects - Enterprise has several large projects set to come online soon, including the Frac 14 NGL fractionator and two returning PDH plants [8]. - The company has $5.1 billion in projects under construction and has ramped up capital expenditure to $4.5 billion this year, with plans to reduce capex to between $2.2 billion and $2.5 billion in 2026 [9]. Valuation - The stock trades at a forward EV/EBITDA multiple of 9.5x based on 2026 estimates, which is below its historical valuation multiple, presenting an attractive entry point for investors [11].