After reading Enterprise Products Partners LP.’s (NYSE:EPD) latest earnings update (31 December 2017), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether EPD has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways. See our latest analysis for Enterprise Products Partners
How EPD fared against its long-term earnings performance and its industry
I like to use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This enables me to examine various companies on a similar basis, using the latest information. For Enterprise Products Partners, its latest earnings (trailing twelve month) is US$2.78B, which, against last year’s level, has jumped up by 11.33%. Given that these figures are fairly myopic, I’ve computed an annualized five-year figure for Enterprise Products Partners’s net income, which stands at US$2.39B This means generally, Enterprise Products Partners has been able to steadily raise its profits over the past few years as well.
How has it been able to do this? Well, let’s take a look at if it is solely because of industry tailwinds, or if Enterprise Products Partners has seen some company-specific growth. In the past few years, Enterprise Products Partners grew bottom-line, while its top-line fell, by effectively managing its costs. This brought about to a margin expansion and profitability over time. Inspecting growth from a sector-level, the US oil and gas industry has been growing its average earnings by double-digit 21.26% in the prior year, . This is a turnaround from a volatile drop of -8.05% in the previous couple of years. This means that, in the recent industry expansion, Enterprise Products Partners has not been able to realize the gains unlike its industry peers.
What does this mean?
Enterprise Products Partners’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research Enterprise Products Partners to get a more holistic view of the stock by looking at the areas below. Just a heads up – to access some parts of the Simply Wall St research tool you might be asked to create a free account, but it takes just one click and the information they provide is definitely worth it in my opinion.
- 1. Future Outlook: What are well-informed industry analysts predicting for EPD’s future growth? Take a look at this free research report of analyst consensus for EPD’s outlook.
- 2. Financial Health: Is EPD’s operations financially sustainable? Balance sheets can be hard to analyze, which is why Simply Wall St does it for you. Check out important financial health checks here.
- 3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore a free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.