Enbridge Energy Partners: A Buy ahead of 1Q16 Earnings?
EBITDA expected to grow year-over-year
Enbridge Energy Partners (EEP) is scheduled to report its 1Q16 results on May 2, 2016. Analysts expect its 1Q16 EBITDA (earnings before interest, tax, depreciation, and amortization) to be $446 million. This is 3.3% higher than its analyst-adjusted 1Q15 EBITDA of $432 million.
EEP beat EBITDA estimates in six out of the last ten quarters. Enbridge Energy Partners forms ~1% of the Guggenheim Multi-Asset Income ETF (CVY).
The above graph compares Enbridge Energy Partners’ adjusted EBITDA with estimates over ten quarters. Increased contributions from growth projects placed into service in 2015 may drive the EBITDA growth.
These gains may partly offset due to a decrease in natural gas system volumes attributable to the continued low commodity price environment. The low energy price environment has resulted in reductions in drilling activity from producers in EEP’s areas of operations.
EEP’s 1Q16 distributions
Enbridge Energy Partners (EEP) is expected to declare distributions for 1Q16 on April 29, 2016. The company’s 4Q15 distribution per unit was unchanged from its 3Q15 per unit distribution.
The company had not increased distribution in 3Q15 as well. The company’s 4Q15 distribution coverage ratio was 0.83x, and its ratio for 2015 was 0.92x.
Among EEP’s peers, Enterprise Products Partners (EPD) increased its 1Q16 distributions by 1.3%. Plains All American Pipeline (PAA) announced flat 1Q16 distributions. Tallgrass Energy Partners (TEP) announced a 10.2% increase in its 1Q16 per unit distribution.
In this series, we’ll look at Enbridge Energy Partners’ expected segmental performance in 1Q16, its recent stock performance, the company’s future outlook, and the analysts’ price targets for the stock.
Let’s start with Enbridge Energy Partners’ expected segmental performance.
Browse this series on Market Realist: