Enterprise Products is Undervalued Now: Should You Bet on the Stock Now?

Enterprise Products Partners LP EPD is currently considered undervalued, trading at a 10.55x trailing 12-month enterprise value to earnings before interest, taxes, depreciation and amortization (EV/EBITDA), which is below the broader industry average of 10.56x. EPD’s valuation also lags behind that of other midstream majors such as Kinder Morgan, Inc. KMI and Williams WMB, which are currently trading at 13.47x and 15.87x, respectively. Image Source: Zacks Investment ResearchWith the stock currently undervalued, is it the right time to invest? However, before reaching an investment decision, a thorough analysis is necessary to determine if the valuation is justified by its business fundamentals and current market conditions.EPD’s $5B Key Projects & Inflation-Protected ContractsEnterprise Products, a top-tier North American midstream service provider, boasts a vast and diversified asset portfolio. The partnership’s pipeline network spans more than 50,000 miles, transporting oil, natural gas and other commodities. The partnership also has more than 300 million barrels of liquid storage capacity, thereby generating stable cash flows like Kinder Morgan and Williams.Importantly, the business model of Enterprise Products is inflation-protected because almost 90% of its long-term contracts include a provision for increasing fees when the business environment becomes inflationary. This is how the midstream energy player is able to safeguard its cash flow generation in all business scenarios.EPD also expects incremental cash flows from its $5.1 billion worth of key capital projects, comprising the Bahia pipeline, fractionator 14 and others, which are either in service or set to come online. Thus, with the partnership’s business model mainly being inflation-protected and likely to generate incremental cash flows from project backlogs, the stock could be attractive for income seekers.Enterprise Products to Benefit From Rising LPG ExportIn the world, the United States is among the leading exporters of Liquefied Petroleum Gas (LPG), which is a relatively cleaner fuel. When it comes to waterborne LPG exports, the United States is responsible for 47% of the total exports. Most of the growth is coming from uses like cooking, heating, and others in the residential market.With EPD being responsible for more than 33% of U.S. LPG exports and roughly 15% of total exports in the world, the partnership is well-positioned to generate handsome cash flows for unitholders. The partnership is already committed to returning capital to unit holders in the form of both repurchases and distributions.What Investors Should Do Now?Considering the price chart, over the past six months, Enterprise Products gained 7.1%, outpacing the 0.8% decline of the industry’s composite stocks, reflecting the partnership’s positive developments. KMI and WMB also precede EPD. While KMI stock lost 0.6%, WMB stock has risen 3.4% in the same time frame.  Image Source: Zacks Investment ResearchHowever, investors should note that despite EPD's strong focus on returning capital, the partnership’s current distribution yield of 6.75% is lower than the industry’s 6.96% yield. Also, EPD has a significant exposure to debt capital. As compared to the energy sector’s debt to capitalization of 37.66%, the partnership’s debt to capitalization is much higher at 52.77%. Image Source: Zacks Investment ResearchHence, despite being undervalued, investors should not rush to bet on the stock now; those who have already invested may remain invested.EPD currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks Naming Top 10 Stocks for 2026Want to be tipped off early to our 10 top picks for the entirety of 2026? History suggests their performance could be sensational.From 2012 (when our Director of Research Sheraz Mian assumed responsibility for the portfolio) through November, 2025, the Zacks Top 10 Stocks gained +2,530.8%, more than QUADRUPLING the S&P 500’s +570.3%.Now Sheraz is combing through 4,400 companies to handpick the best 10 tickers to buy and hold in 2026. Don’t miss your chance to get in on these stocks when they’re released on January 5. Be First to New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Williams Companies, Inc. (The) (WMB): Free Stock Analysis Report Enterprise Products Partners L.P. (EPD): Free Stock Analysis Report Kinder Morgan, Inc. (KMI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks