Enterprise GP Holdings L.P.EPE

Morningstar Rating

Stock Research and Analysis

by Jason Stevens

With two big acquisitions, Enterprise GP Holdings transformed itself from a simple general partner to something more akin to a pipeline investment company. The new investments will lead to more rapid distribution growth as the underlying companies build Read more

Bulls Say

Enterprise GP should experience above-average distribution growth for a pipeline MLP since its general partner interests entitle it to receive a greater share of its subsidiaries' cash over time.

Enterprise GP's hard assets--and their cash flows--are relatively stable. Even in the company's recent cyclical trough, they produced positive cash flow.

The MLP structure nearly eliminates corporate income tax exposure as long as the company pays out a minimum percentage of its cash flow to unitholders each year.

An expanded footprint will make Enterprise GP less susceptible to disruptions in any one area of the country.

The proposed merger of Enterprise Products and TEPPCO will result in slightly greater cash flow to Enterprise GP, thanks to incentive distributions and new unit issuance at EPD. Read more

Bears Say

Enterprise has commodity price risk. Its profits are sensitive to the relative price movements of natural gas and natural gas liquids.

Any disruptions in cash flows at one of the subsidiaries would hit Enterprise GP unitholders particularly hard.

Like all partnerships that pay out such a large percentage of their cash flow, Enterprise and its subsidiaries cannot accumulate significant amounts of cash in a war chest for growth or acquisitions. It depends on external funding sources for growth.

Investors in the partnership's common units are responsible for their share of the partnership's tax bill. This can increase tax-filing complexity. Read more

Strategy

What started as simply the parent company of Enterprise Products has become an MLP general partner investment vehicle. Enterprise GP looks to benefit from the leverage of the MLP structure by collecting Read more

Management

The Enterprise family of companies is essentially controlled by Dan Duncan. He owns a majority of EPCO, a private company that controls Enterprise GP, which in turn manages the operations of Enterprise Products. Enterprise GP is itself organized as Read more

Profile

Enterprise GP Holdings owns the general partner stake in Enterprise Products Partners, Duncan Energy Partners, and TEPPCO Partners. The company also owns a minority interest Read more

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