Enterprise Products Partners' Next Earnings Report on July 30 Could Send the Stock Soaring. Here's Why.

Enterprise Products Partners (NYSE:EPD) plans to announce its second-quarter financial results before the market opens on Thursday, July 30. That report could be a major catalyst for the master limited partnership (MLP).

Here’s a look at what to expect in the report and why it could send the pipeline stock soaring.

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A look back at the last quarter

Enterprise Products Partners reported strong first-quarter earnings on April 28. The MLP's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) jumped 10% to $2.7 billion, while its adjusted cash flow from operations also surged 10% to $2.3 billion. The company produced enough operational distributable cash flow ($2.1 billion, up 5%) to cover its high-yielding distribution (currently 5.9%) by a comfortable 1.8 times, enabling it to retain $1.5 billion of cash. It’s using that cash to invest in expansion projects ($2.3 billion-$2.6 billion in 2026) and return additional money to investors through its unit repurchase program ($275 million year-to-date).

That robust cash flow enabled the MLP, which sends a Schedule K-1 Federal tax form each year, to increase its second-quarter distribution by 2.8% compared to the year-ago level. It will make this payment to unitholders of record by the close of business on July 31.

The MLP had a strong operational quarter, setting 12 records, including marine terminal volumes. It also benefited from recently completed expansion projects, including $6 billion that it brought online in the second half of last year.

Dual second-quarter catalysts

The second quarter should have been another strong period for the MLP. It should continue to benefit from recently completed expansion projects. Enterprise Products Partners placed its Mentone West 2 gas processing plant into commercial service in February. Additionally, it finished the phase 2 flex project of its recently completed Neches River Terminal in the second quarter.

Meanwhile, the energy markets were strong during the second quarter due to the war with Iran. It caused a major disruption to global energy supplies, which benefited the U.S. energy sector. Enterprise Products Partners likely saw a significant increase in volumes amid strong market conditions. That’s because its infrastructure plays a key role in supporting the U.S. Strategic Petroleum Reserve (SPR). Three pipeline systems and four marine terminals support the country’s emergency oil stockpile, including the Seaway Pipeline and related Seaway Terminals (Freeport and Texas City). Enterprise Products Partners owns a 50% interest in the Seaway Crude Pipeline Company. The U.S. is in the process of releasing 172 million barrels from the SPR, which it has drawn down to the lowest level since 1983. In addition to handling SPR volumes, Enterprise’s pipelines and export terminals are supporting the flow of additional crude oil, refined petroleum products, and natural gas liquids to global markets.

As a result of these duals catalysts, the MLP will likely report strong volume and earnings growth in the second quarter.

Barely budged despite a major accelerator

Units of Enterprise Products Partners have bounced around quite a bit since it reported its financial results in late April, and are currently down about 1%. That’s a bit of a surprise, considering that it reported robust results and the oil market was strong during the period. Investors seem to be underappreciating the impact the global supply disruption will have on its financial results. If they come in strong, its unit price could spike. That’s one reason why investors might want to consider buying the energy stock before it reports. Another is to lock in its upcoming distribution payment ahead of the record date. Even if it doesn’t soar after earnings, Enterprise Products Partners looks like a compelling long-term investment right now, given its combination of growth and income.

Matt DiLallo has positions in Enterprise Products Partners. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.