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Enterprise Products Partners L.P. EPD

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Enterprise's revenue rose 61% last quarter and its operating income rose 25%, because most of that revenue is commodity it buys and resells at almost no margin.

The number that matters, gross operating margin, went from $2.46B to $3.00B over six quarters.

EPD · price with moving averages

Daily · 6MWeekly · 3Y
$25$29$33$37$41 Sep '23Apr '24Nov '24Jun '25Jan '26Aug '26 BID
EMAs82140

Source: market data.

The business

Enterprise owns the pipes. Natural gas liquids come out of the Permian and the Eagle Ford, travel on Enterprise pipe to Mont Belvieu, get separated into ethane, propane and butane in Enterprise fractionators, and leave on ships from Enterprise docks on the Houston Ship Channel. Crude, natural gas and refined products move through a parallel network. The partnership charges a fee at each step.

It also buys and sells the commodity itself, which is the marketing business, and that is why the revenue line is close to meaningless. When propane prices rise, revenue rises and the partnership earns nothing extra. Gross operating margin is the number the company itself leads with, and it is the one to read.

Inside the complete Back of Napkin

  1. 01The business
  2. 02The numbers
  3. 03Management
  4. 04How it fails or surprises you
  5. 05The shape of the payoff
  6. 06Closing thoughts
  7. 07Methodology

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