EPD: Buyback Potential And Distribution Growth Will Support Balanced Forward Returns

Analysts lifted their price target on Enterprise Products Partners slightly to $35.55 from $35.50, reflecting small tweaks to long term assumptions on the discount rate, revenue growth, profit margins, and future P/E, after a mix of recent research that includes a higher Scotiabank target, a Wolfe Research downgrade, and a Hold initiation with a US$33 target at Jefferies.

Analyst Commentary

Recent research on Enterprise Products Partners sends a mixed message, with some analysts more optimistic on the units and others taking a more cautious stance. Here is how the Street is framing the setup around valuation, execution, and growth.

Bullish Takeaways

Bullish analysts highlight Enterprise Products Partners as a high quality midstream operator, which they see as supportive of the current valuation and long term cash flow stability.
The raised price target in recent research signals some confidence that the partnership’s existing asset base and defensive attributes can support modest upside to prior valuation work.
Some bullish analysts point to the possibility of a unit repurchase inflection as a potential catalyst that could tighten the supply of units and support P/E and distribution based valuation multiples.
Defensive characteristics are viewed as a positive for investors who prioritize income visibility and relatively steady execution over higher growth but more volatile alternatives.

Bearish Takeaways

Bearish analysts argue that Enterprise Products Partners’ quality moat has shrunk in recent years, which they believe limits the premium they are willing to assign to the units.
The Underperform and Hold views reflect concern that, at current valuation levels, it may be difficult to see a clear path to unit outperformance without new growth drivers or capital allocation shifts.
Some cautious voices question the visibility of catalysts beyond a potential buyback inflection, which they see as not yet certain enough to underpin a stronger growth or re rating case.
Where analysts anchor on a US$33 price target, it signals a view that execution and growth prospects support a more measured valuation, rather than assuming material upside to current trading levels.

What's in the News

Enterprise Products Partners L.P. declared a quarterly cash distribution of $0.55 per common unit for the fourth quarter of 2025, or $2.20 per unit on an annualized basis. (Key Developments)
The quarterly distribution is scheduled to be paid on February 13, 2026, to common unitholders of record as of the close of business on January 30, 2026. (Key Developments)
The announced fourth quarter 2025 distribution represents a 2.8% increase compared with the distribution declared for the fourth quarter of 2024. (Key Developments)

Valuation Changes

Fair Value: The price target was adjusted slightly from US$35.50 to US$35.55, reflecting fine tuning of the model rather than a major shift in outlook.
Discount Rate: The discount rate moved from 7.08% to 7.09%, a very small change that modestly affects the present value of projected cash flows.
Revenue Growth: The long term revenue growth assumption edged from 3.11% to 3.12%, keeping expectations for top line expansion broadly stable.
Net Profit Margin: The net profit margin input remained at 11.60%, indicating essentially unchanged profitability assumptions.
Future P/E: The future P/E multiple in the model shifted from 13.94x to 13.97x, a minor adjustment to how earnings are being capitalized in the updated work.

Infrastructure enhancements, including new gas plants and expansions, could drive revenue growth via increased handling volumes and exports.
Strategic capital allocation in high-demand projects and efficient buybacks may boost EPS as projects become fully operational.
Operational risks, external tariffs, substantial debt, market volatility, and fluctuating oil prices pose challenges to revenue growth and profitability.

Catalysts

About Enterprise Products Partners

Provides midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, petrochemicals, and refined products.What are the underlying business or industry changes driving this perspective?

The completion of two gas processing plants in the Permian, along with several key pipeline and export terminal projects, is expected to enhance Enterprise Products Partners’ infrastructure, potentially driving revenue growth from increased volume handling and exports.
With no major planned downtimes for the PDH plants after recent maintenance, Enterprise is poised to capture additional EBITDA that was previously lost to unplanned outages, suggesting potential earnings improvement.
If tariffs on U.S. hydrocarbons are reduced or kept favorable, especially with China's exclusion of ethane and ethylene from tariffs, this could lead to increased international demand for Enterprise's exports, positively impacting revenue.
The investment in additional LPG export capacity, realized through expansion of brownfield projects, aims to maintain competitive terminal fees, potentially enhancing net margins as the company capitalizes on its efficient capital allocation.
Management’s focus on leveraging growth capital for high-demand projects in 2025 and 2026, aligned with strategic buybacks, could lead to a boost in earnings per share (EPS) as expansion projects become fully operational and capital is efficiently allocated.

Enterprise Products Partners Earnings and Revenue Growth

Enterprise Products Partners Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Enterprise Products Partners's revenue will decrease by 0.8% annually over the next 3 years.
Analysts assume that profit margins will increase from 10.6% today to 12.3% in 3 years time.
Analysts expect earnings to reach $6.6 billion (and earnings per share of $3.07) by about September 2028, up from $5.8 billion today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 14.6x on those 2028 earnings, up from 11.8x today. This future PE is greater than the current PE for the US Oil and Gas industry at 12.6x.
Analysts expect the number of shares outstanding to decline by 0.11% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.61%, as per the Simply Wall St company report.

Enterprise Products Partners Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The unplanned maintenance and downtime at the PDH 1 facility during the first quarter suggest potential operational risks that could affect production and revenues if similar issues occur in the future.
Although they anticipate significant capacity expansions, external factors such as the fluid situation with Chinese tariffs on LPG, which have yet to be excluded unlike ethane and ethylene, could impact export revenues if tariffs persist or change unfavorably.
The company's substantial debt load of approximately $31.9 billion and a leverage ratio target that may exceed certain thresholds could impact earnings, particularly if there are fluctuations in interest rates or credit conditions.
There is a noted risk in producer activities within the Permian Basin if oil prices were to average closer to $55 to $60, which could lead to maintenance mode for key production operations, potentially impacting future revenue growth and profitability.
The market volatility influenced by current global economic conditions and potential tariff adjustments could affect export demand and pricing, impacting revenue and profit margins, especially in the international market.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $35.889 for Enterprise Products Partners based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $40.0, and the most bearish reporting a price target of just $32.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $53.5 billion, earnings will come to $6.6 billion, and it would be trading on a PE ratio of 14.6x, assuming you use a discount rate of 7.6%.
Given the current share price of $31.55, the analyst price target of $35.89 is 12.1% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Permian Infrastructure Upgrades Will Expand Export Opportunities