Enterprise Products Partners (EPD), mcap=$58bn, price $26.62 vs $24.15

Pitch:
– Today US pipeline industry is undergoing a renaissance in cash generation.
– EPD due to increasing FCF from $1/share in ’20 to $2.75 in ’24, driven announced a slash in CAPEX.
– Limited new pipeline supply and inflation make the existing assets more valuable and allow operators to charge higher prices.
– Over the last decade, the industry has been rationalized.
– US producers are expected to drive incremental volumes due to the spike in hydrocarbon prices due to the Ukraine war.
– A third of EPD units are owned by the Duncan family, with significant buys recently.

Valuation:
– Due to generate $2.75 in FCF by 2024.
– At 15x FCF would trade at $40/share.
– Adding $8 of dividends over the next 4 years, resulting in total worth of $48/share.

Exp. gain: +100% to $40/share +$8 in dividends.

Full $EPD write-up (free guest account required):
https://www.valueinvestorsclub.com/idea/ENTERPRISE_PRODCT_PARTNRS_LP/3867535755

Published on: August 2, 2022  •  Published by:
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