Is Enterprise Products Partners (EPD) a Compelling Buy Ahead of 2026 Growth?

Enterprise Products Partners (EPD) has long been a cornerstone of the energy infrastructure sector, offering a blend of stable cash flows and growth potential. As 2026 approaches, the question of whether EPD represents a compelling buy hinges on two critical factors: its valuation attractiveness and the anticipated surge in cash flow from newly completed projects. Drawing on recent financial disclosures and analyst projections, this analysis evaluates EPD's positioning ahead of its next phase of growth.

Valuation Attractiveness: A Discount to Historical Averages

EPD's current forward enterprise value-to-EBITDA (EV/EBITDA) ratio of 9.5x, based on 2026 EBITDA estimates of $10.53 billion, stands as a compelling discount to its historical averages. Over the past three years, the company's EV/EBITDA averaged 10.29, while the five-year and 10-year averages were 10.15 and 11.16, respectively according to finance charts. This suggests the market is pricing in a margin of safety, particularly given EPD's robust balance sheet and predictable fee-based business model, which generates 82% of its gross operating profits.

The discount is further amplified by EPD's 7.1% forward yield, one of the highest in the energy infrastructure sector. This yield, combined with a $5 billion stock buyback program with $3.6 billion remaining capacity, signals management's confidence in the stock's undervaluation. Historically, EPD's EV/EBITDA has fluctuated between 7.67 and 16.72 over the past 13 years according to Gurufocus data, indicating that the current multiple is well within a historically attractive range.

2026 Growth Catalysts: Free Cash Flow Inflection and Project Ramping

The key to EPD's 2026 growth lies in the completion of capital-intensive projects that are expected to transition from construction to full operational contribution. The Frac 14 NGL fractionator and Bahia Pipeline, both slated to begin operations by late 2025, are projected to drive a significant inflection in free cash flow in 2026. These projects, part of a broader $4.5 billion 2025 capital deployment cycle, are anticipated to enhance EBITDA by reducing reliance on high-cost spreads.

Capital expenditures are expected to decline to $2.2–$2.5 billion in 2026 from $4.5 billion in 2025 according to Investing.com data, freeing up cash for debt reduction, buybacks, and distribution growth. This shift aligns with EPD's 26-year streak of consecutive distribution increases, a testament to its disciplined capital allocation. With 1.5 times DCF coverage of the current distribution, the company is well-positioned to sustain and potentially accelerate payouts as FCF normalizes.

Risks and Mitigants: Navigating Analyst Concerns

Despite the bullish outlook, challenges persist. J.P. Morgan's recent downgrade highlighted concerns over competition and slower earnings growth according to SimplyWall Street analysis, while the normalization of spreads in niche markets like propylene could temper short-term margins. However, these risks are mitigated by EPD's fee-based model, which insulates it from commodity price volatility, and its strong liquidity position, with $635 million in retained DCF as of Q3 2025 according to earnings reports.

Moreover, the company's strategic focus on high-return projects-such as the Bahia Pipeline, which enhances NGL transportation capabilities-positions it to capture long-term demand from the Permian Basin and Gulf Coast markets according to market research. Analysts at Nasdaq note that these developments could drive EBITDA growth even in a low-growth macro environment according to Nasdaq coverage.

Conclusion: A Buy for Income-Focused Investors

EPD's combination of an attractively low forward EV/EBITDA, a robust buyback program, and a clear path to 2026 FCF growth makes it a compelling buy for income-focused investors. While near-term risks exist, the company's disciplined capital allocation, fee-based revenue structure, and project-driven growth trajectory provide a strong foundation for long-term value creation. For those seeking a high-yield, infrastructure-anchored investment with upside potential, EPD appears well-positioned to deliver.