EnLink Midstream’s enterprise value
EnLink Midstream Partners (ENLK) has the second-highest enterprise value of $10.4 billion among selected peers. Western Gas Partners (WES) precedes ENLK. Enterprise value—approximately equal to market equity value plus the net debt (debt less cash)—is an important metric for the valuation of the entire business. Equity value alone only shows the value to equity holders.
EnLink Midstream’s EV-to-EBITDA multiple
ENLK’s forward EV-to-EBITDA (earnings before interest, taxes, depreciation, and amortization) multiple of 12.5x is the highest among selected peers. This difference might reflect ENLK’s low leverage and significant expansion opportunities. Crestwood Equity Partner (CEQP) has the lowest forward EV-to-EBITDA of 8.9x.
EnLink Midstream’s operating margin
Excluding Crestwood Equity Partners (CEQP) and Enable Midstream Partners (ENBL), which have negative operating margins, EnLink Midstream has the lowest operating margin among the selected peer group. This difference might be due to ENLK’s higher commodity price exposure. Western Gas Partners has the highest operating margin of 24.3% in the peer group.
EnLink Midstream’s distribution yield
EnLink Midstream’s distribution yield of 8.9% is lower than the group average of 9.1%. This difference might reflect EnLink Midstream’s lower leverage and significant expansion opportunities compared to peers. Low distribution yield likely indicates low risk and low cost of equity capital.
In the next part of this series, we’ll analyze EnLink Midstream’s exposure to commodity prices.