Is Enterprise Products Partners Attractively Priced After the Latest Permian Pipeline Expansion News?

When it comes to deciding what to do with Enterprise Products Partners stock, there’s always a lively debate. Maybe you’re wary after catching a glance at its modest dip recently, with the price softening by 2.9% over the past week and down 3.0% for the year to date. Or perhaps you’re encouraged by its powerful long-term run, up 13.1% in the past year and an impressive 162.0% over five years, which says something about its staying power. The current price of $30.79 might look deceptively quiet, but beneath the surface, a lot has been happening. Shifting market attitudes toward energy infrastructure and midstream assets have nudged risk perceptions, and that can mean both opportunity and uncertainty for investors like you.

But here’s where it gets even more interesting. When you run Enterprise Products Partners through six standard valuation checks, it comes out as undervalued in five of them, giving it a solid value score of 5. That kind of result doesn’t come around often. So, is the market missing something, or is this company really as attractively valued as it appears?

Let’s break down exactly how analysts assess a stock’s worth and why those traditional checks might not tell the whole story. There’s a smarter way to look at valuation, and we’ll get to that soon enough.

Enterprise Products Partners delivered 13.1% 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 estimates the intrinsic value of a company by forecasting its future cash flows and discounting them back to present-day dollars. This approach gives investors a sense of what the business might actually be worth, based on its expected ability to generate cash over time.

For Enterprise Products Partners, analysts look at its Free Cash Flow (FCF), which captures genuine cash profits after expenses and investments. The company’s latest reported FCF stands at approximately $4.95 billion. Looking ahead, analysts forecast FCF to grow, projecting $7.22 billion by 2029. Beyond analyst forecasts, further cash flow growth up to 2035 has been extrapolated based on historical trends and industry expectations. All cash flows are calculated in US dollars.

After projecting and adjusting for the time value of money, the DCF model suggests an intrinsic value of $63.34 for Enterprise Products Partners stock. With the current share price at $30.79, this implies the stock is trading at a 51.4% discount to its estimated fair value. According to this widely respected valuation model, Enterprise Products Partners appears significantly undervalued by the market right now.

Result: UNDERVALUED

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

Our Discounted Cash Flow (DCF) analysis suggests Enterprise Products Partners is undervalued by 51.4%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Enterprise Products Partners Price vs Earnings

The Price-to-Earnings (PE) ratio is a classic yardstick for valuing a consistently profitable company like Enterprise Products Partners. It essentially tells investors how much they are paying for each dollar of current earnings, making it especially useful when a business has steady profit generation.

Of course, what counts as a "fair" or "normal" PE ratio is not set in stone. A higher PE can be justified if investors expect strong earnings growth, while a lower PE might reflect heightened company or industry risks. Benchmarks like the industry PE or the ratios of similar companies can provide context, but should not be the final word.

Enterprise Products Partners currently trades at a PE of 11.5x. For context, the average oil and gas stock sits at 13.1x, and the average for its peer group is significantly higher at 19.5x. This alone might make Enterprise appear attractively priced, but it is essential to factor in its specific growth outlook, risk profile and market position.

This is where Simply Wall St’s proprietary “Fair Ratio” comes in, calculated at 18.9x for Enterprise. Unlike basic comparisons, the Fair Ratio weighs factors such as earnings growth, profit margins, size, risk and how the business compares within its industry. This approach grounds the analysis in the company’s unique reality, not just broad market statistics.

Bottom line: with an actual PE clearly below the Fair Ratio, Enterprise Products Partners appears undervalued on this measure.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Enterprise Products Partners Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. Simply put, a Narrative is the story behind the numbers: your own perspective on Enterprise Products Partners, where you connect your outlook for the business (with your chosen forecasts for revenue, earnings, and margins) to a financial forecast, and from there to a fair value estimate for the stock.

Narratives bridge what you believe about the company’s future with what the market is currently pricing, making your investing decisions more personal and insightful. On Simply Wall St’s Community page, millions of investors are already using Narratives as a straightforward, accessible tool to capture their unique view and see how their fair value compares to the current price. This helps them decide when to buy or sell and revisit their thesis as things change.

Because Narratives update dynamically as new information like earnings, news, or major announcements comes in, you stay on top of the latest developments while holding onto the bigger picture. For example, some investors believe recent Permian infrastructure upgrades will support stronger exports and justify a fair value as high as $40. Others, more cautious about debt levels and market volatility, see a lower value close to $32.

Do you think there's more to the story for Enterprise Products Partners? Create your own Narrative to let the Community know!

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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