Should Investors Retain ExxonMobil & Sell Enterprise Products Now?

In the energy space, Exxon Mobil Corporation XOM and Enterprise ProductsPartners LP EPD are two giants. Over the past year, XOM has gained a marginal 0.6%, underperforming EPD’s 14% jump.  Therefore, is Enterprise Products a better stock?

One-Year Price Chart

Notably, price is not the only parameter to underline the attractiveness of any stock, although it reflects investors’ preferences in every business phase. Hence, before coming to investment conclusions, we need to analyze the fundamentals and overall business environment of both stocks.

ExxonMobil’s Broader Business Exposure

ExxonMobil is an integrated energy giant, having exposure to upstream, downstream, chemicals and low-carbon solutions. The energy major’s exploration and production activities span across the Permian, the most prolific resource in the United States, and offshore Guyana. With huge oil and natural gas resources in these two premium regions, ExxonMobil’s production outlook seems bright.

Also, from its downstream and chemicals businesses, XOM produces premium-quality products and lower-emission fuels, thereby adapting to the evolving demand.

Enterprise Products, however, is not an integrated energy company like XOM. EPD primarily focuses on midstream operations, with a pipeline network spanning more than 50,000 miles that transports oil, gas, refined petroleum products, and petrochemicals. Although EPD generates stable fee-based revenues, the partnership is lagging in broader business exposure.

Stronger Balance Sheet of XOM

ExxonMobil has a significantly lower exposure to debt capital, which is reflected in its debt-to-capitalization of 12.6%. Thus, when the business environment turns unfavorable, the integrated energy major can rely on its robust balance sheet to sail through the market uncertainty.

On the contrary, Enterprise Products’ debt-to-capitalization of 52.3% reflects considerably more debt exposure than XOM, although in the midstream space, EPD’s credit rating is the highest. ExxonMobil, by comparison, operates on a much larger scale, with extensive global operations spanning six continents, underscoring its superior financial strength and flexibility.

XOM vs. EPD: Which is a Better Stock?

XOM is also highly focused on returning capital to shareholders. Notably, for more than four decades, ExxonMobil has been rewarding shareholders with consecutive annual dividend hikes.

On the flip side, EPD’s significant Permian dependence poses a concern. To feed its pipelines and processing plants, Enterprise Products has a considerable reliance on the Permian, the most prolific oil and gas shale play in the United States. On its second-quarter 2025 earnings call, EPD revealed that most of the core oil-producing regions in the Permian have already been used up, and the exploration and production companies are now increasingly focusing on those areas that are rich in natural gas.

Thus, the composition of commodities that EPD will be transporting in the coming days will probably be weighted more toward natural gas. This will likely create pressure on EPD’s profit margin as natural gas and NGL are less profitable than oil at the wellhead, considering energy density and transport costs.

Thus, considering the overall business environment of both stocks, ExxonMobil seems to be a better player in the energy space with more upside potential, and hence, investors who own the stock can hold onto it. XOM currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

On the contrary, with EPD’s overall outlook remaining bleak, it would be a wiser decision to stay away from the overvalued stock, carrying a Zacks Rank #4 (Sell). The overvaluation is reflected in the fact that Enterprise Products trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 10.04X, above XOM’s 7.40X.

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This article originally published on Zacks Investment Research (zacks.com).

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