How Do Recent Project Approvals Impact Enterprise Products Partners’ Current Valuation?

• Thinking about whether Enterprise Products Partners is a real bargain right now? You are not alone, as its reputation for sturdy dividends and steady pipeline operations always draws attention from value-focused investors.
• Over the last month, Enterprise’s stock price has climbed 5.2%, part of a wider pattern of gradual gains that have continued year-to-date and over the long term.
• Momentum has picked up around Enterprise as the energy sector responds to shifting demand forecasts and infrastructure developments, with recent headlines highlighting new project approvals and strategic partnerships that underpin growth outlook.
• On our valuation checks, Enterprise Products Partners scores 5 out of 6, suggesting ample signs of undervaluation to warrant a closer look. We will compare a few valuation methods before revealing an even deeper approach that makes sense of the full story.

Enterprise Products Partners delivered 1.8% returns over the last year. See how this stacks up to the rest of the Oil and Gas industry.

Approach 1: Enterprise Products Partners Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model calculates a company’s value by projecting its future cash flows and discounting them to today’s dollars. This method helps estimate what the business is worth based on its ability to generate cash over time.

For Enterprise Products Partners, current Free Cash Flow stands at approximately $4.16 billion. Analysts project continued growth, with Free Cash Flow expected to reach about $6.9 billion by 2029. In addition to analyst-provided estimates, Simply Wall St extends projections for another five years, suggesting reasonably steady cash generation into the future.

All projections in this valuation are expressed in US dollars. The DCF model here uses a 2 Stage Free Cash Flow to Equity approach, incorporating both near-term analyst data and long-term extrapolations.

This DCF analysis results in an intrinsic value of $66.32 per share for Enterprise Products Partners, implying the stock is currently trading at a 50.6% discount to its estimated fair value. In other words, the shares appear substantially undervalued on this basis.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Enterprise Products Partners is undervalued by 50.6%. Track this in your watchlist or portfolio, or discover 920 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Enterprise Products Partners.

Approach 2: Enterprise Products Partners Price vs Earnings

The Price-to-Earnings (PE) ratio is a widely used metric for valuing profitable companies, because it connects the current share price with the company's earnings power. For enterprises like Enterprise Products Partners, which consistently generate profit, the PE ratio offers a simple way to gauge how much investors are paying for each dollar of earnings.

Growth expectations and risk are major factors that shape what a "normal" or "fair" PE ratio should be for a company. Businesses with higher growth prospects and lower risk tend to command higher PE ratios, because investors are willing to pay more for anticipated future earnings. Conversely, companies with slower earnings growth or higher perceived risk usually trade at lower multiples.

Currently, Enterprise Products Partners trades at a PE ratio of 12.36x. This is below the Oil and Gas industry average of 13.30x, and well under the average for peers at 19.46x. Simply Wall St’s proprietary Fair Ratio for the company, which incorporates nuanced factors such as specific growth forecasts, profit margins, industry trends, and company size, is 19.86x.

Unlike simple peer or industry comparisons, the Fair Ratio takes a holistic view of Enterprise Products Partners’ unique strengths and risks. By including these company-specific dynamics, it provides a more tailored view of what the "right" multiple should be for this stock at this moment.

With the actual PE ratio significantly below the Fair Ratio, Enterprise Products Partners appears to be undervalued according to this method.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Enterprise Products Partners Narrative

Earlier we mentioned that there's an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is your story or perspective on a company and the unique way you think about Enterprise Products Partners, supported by your own financial expectations for things like revenue, earnings, and profit margins over time. Narratives connect this story to a financial forecast, which then leads to your view of the stock’s fair value, making your entire investment thesis clear and actionable.

On Simply Wall St’s Community page, Narratives make this process truly accessible, enabling millions of investors to quickly capture their insights, update forecasts, and instantly see how these changes impact estimated value versus the current share price. Narratives are dynamic and stay current by automatically adjusting when new news or earnings are announced, so your outlook evolves with every development.

For example, someone optimistic about Enterprise Products Partners might build a Narrative expecting higher buybacks and revenue growth, leading to a $40 price target, while a more cautious investor may focus on debt levels and commodity risks, settling on a $32 target. Narratives empower you to compare these perspectives, sense-check your assumptions, and decide for yourself when it is the right time to buy or sell.

Do you think there's more to the story for Enterprise Products Partners? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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