Can Enterprise Products Withstand the Pressure of Soft Crude Prices?

With West Texas Intermediate (WTI) oil prices currently trading below $60 per barrel, according to data from Oilprice.com, which is significantly lower than a year ago, the overall energy business is now highly uncertain. However, Enterprise Products Partners LP EPD, a midstream energy major, is not highly vulnerable to the volatility in commodity prices.

This is because midstream assets are usually backed by stable fee-based revenues since the pipeline and storage assets are booked by shippers for a long term. Notably, EPD’s midstream properties comprise pipeline assets spanning more than 50,000 miles, liquids storage properties with a capacity of more than 300 thousand barrels and other assets.

Enterprise Products Partners noted that fee-based earnings have consistently been the largest contributor to its gross operating margin each year. The partnership noted that fee-based earnings contributed 82% in 2021, 74% in 2022, 77% in 2023, 78% in 2024 and 82% in the first nine months of this year. Thus, it can be concluded that Enterprise Products’ business model is highly predictable and hence stable.

KMI & ENB Also Have Stable Business Models

Kinder Morgan Inc. KMI and Enbridge Inc. ENB are two other midstream energy majors. By the very nature of their businesses, both KMI and ENB also have predictable cash flows. This is because KMI and ENB also generate stable fee-based earnings from their respective midstream assets.

As of the September quarter of 2025, KMI’s project backlog was $9.3 billion. ENB, on the other hand, mentioned that it has secured a capital program of C$35 billion. Thus, both Kinder Morgan and Enbridge have gained additional cash flows.

EPD’s Price Performance, Valuation & Estimates

Units of EPD have gained 4.7% over the past year against the 8.2% decline of the composite stocks belonging to the industry.

From a valuation standpoint, EPD trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 10.59X. This is below the broader industry average of 10.60X.

The Zacks Consensus Estimate for EPD’s 2025 earnings has seen downward revisions over the past seven days.

Enterprise Products currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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