ET Stock Overview
Energy Transfer LP provides energy-related services.
Energy Transfer Competitors
Price History & Performance
|Historical stock prices|
|Current Share Price||US$11.34|
|52 Week High||US$12.49|
|52 Week Low||US$7.96|
|1 Month Change||-3.49%|
|3 Month Change||14.78%|
|1 Year Change||12.50%|
|3 Year Change||-10.78%|
|5 Year Change||-36.65%|
|Change since IPO||100.27%|
Recent News & Updates
Energy Transfer: The Executive Chairman Purchased 3 Million Units In September
Summary Insider ownership in Energy Transfer LP has been increasing during the last nine months. Henry Hub price is expected to be about $9/MMBtu in the fourth quarter of 2022. My analysis shows that Energy Transfer will report strong 3Q 2022 financial results. According to the company’s recent developments, the market condition, and its future strategic plans, the stock is a buy. Energy Transfer is worth more than $20 per share. As U.S. natural gas price hiked in the first five months of the year, Energy Transfer LP (NYSE:ET) stock price increased from $9 to $12 per share. Since June 2022, natural gas prices in the United States experienced high levels of volatility. Natural gas prices are expected to be high, and I predict ET’s financial results in the second quarter of the year to be better than in 1H 2022. It is worth noting that since January 2021, Energy Transfer insiders and independent board managers purchased more than 23 million units of ET stock. Just in September 2022, the Executive Chairman purchased 3 million Units. With insider ownership of more than 13%, which is significantly higher than the peers, combined with high natural gas prices in the fourth quarter of 2022, Energy Transfer is a buy. Quarterly highlights In its 2Q 2022 financial result, ET reported 2Q 2022 net income attributable to partners of $1.33 billion, up $700 million YoY. The company reported revenues of $25.9 billion, compared with 2Q 2021 revenues of $15.1 billion, up 72%. Energy Transfer achieved record processing volumes in the Permian Basin in the second quarter of the year. Also, the company reported record total NGL transportation and fractionation volumes in 2Q 2022. Energy Transfer increased its expected adjusted EBITDA for 2022 to $12.6 to 12.8 billion, up from the previous guide of $12.2 to $12.6 billion. In 2Q 2022, the company’s distributable cash flow increased by 35% YoY to $1.88 billion. “As a result of increasing demand for fractionation capacity, Energy Transfer recently resumed construction of its eighth fractionator at its Mont Belvieu, Texas facility. Frac VIII, which was more than half funded when construction was paused in 2020, is now expected to be in service in the third quarter of 2023 and will bring the Partnership’s total fractionation capacity at Mont Belvieu to over 1.1 million barrels per day,” the company announced. “The Partnership has entered into five long-term LNG Sale and Purchase Agreements. Under these SPAs, Energy Transfer LNG Export, LLC is expected to supply a total of 5.8 million tonnes of LNG per annum, with first deliveries expected to commence as early as 2026 under SPA terms ranging from 18 to 25 years,” the company explained. The market outlook According to Figure 1, in the second quarter of 2022, natural gas prices in the United States increased from $5.7/MMBtu to $9.3/MMBtu and then dropped to $5.4/MMBtu. In the third quarter of 2022, natural gas prices in the United States increased from $5.4/MMBtu to $9.7/MMBtu and then declined to $6.8/MMBtu. U.S. natural gas prices decreased during the past month due to weakening global economic sentiment and the threat of a recession. On the other hand, in Europe, two lines of the North Stream 1 pipeline and one line of the North Stream 2 pipeline were damaged, making the European natural gas prices increase. According to EIA’s latest short-term energy outlook, Henry Hub price will be about $9/MMBtu in the fourth quarter of 2022. However, EIA expects Henry Hub natural gas price to be about $6/MMBtu in 2023 as U.S. natural gas production increases. Thus, I expect ET to report strong 3Q 2022 financial results. Also, I expect the company’s financial results in 1H 2022 to be better than in 1H 2022. 17% of ET’s adjusted EBITDA belongs to the crude oil segment, which has significant connectivity to the Permian, Bakken, and Midcon Basins. Also, 28% of ET’s adjusted EBITDA belongs to the midstream (natural gas) segment, which has strong connectivity to the company’s operations in Permian, Eagle Ford, Anadarko, and Marcellus/Utica Basins. Figure 2 shows that oil production in Permian Basin is expected to increase from 5347 thousand barrels per day in September 2022 to 5413 thousand barrels per day in October 2022. Also, oil production in the Bakken Basin is expected to increase from 1183 thousand barrels per day in September 2022 to 1204 thousand barrels per day in October 2022. Moreover, natural gas production in Permian Basin is expected to increase by 152 million cubic feet per day in October 2022. In October 2022, Natural gas production in Eagle Ford and Anadarko is expected to increase by 119 and 9 million cubic feet per day, respectively. Thus, the market condition is in favor of ET to make a high profit in the crude oil and midstream segments. Figure 1 – Natural gas price in the United States tradingeconomics.com Figure 2 – Oil and gas production by region in September and October 2022 EIA Energy Transfer performance outlook In the case of ET's profitability ratios, I have analyzed its net profit margin and return on assets. During H12022, the company improved its net profit margin. The net profit margin sat at 5.1% in the second quarter of 2022 year-over-year compared with its amount of 4.14% at the same time in 2021. Meanwhile, it declined slightly versus its amount of 6.19% at the end of 1Q2022. Moreover, across the board of return on assets, the ROA ratio in Q2 2022 shows that 1.22% of the company's net earnings is related to its total assets. Energy Transform’s return on assets improved slightly during the previous quarter and sat at 1.22% in 2Q2022 versus its level of 1.16% at the end of the first quarter of 2022. However, the company has increased its ROA by 57 bps year-over-year compared to its previous level of 0.65% at the same time last year. We all know that oil and gas profit margins are so volatile due to the volatility of energy prices. Thus, considering this reality, Energy Transfer’s profitability ratios cater a good capture of its ability to generate income relative to its revenue and assets (see Figure 3). Figure 3- ET’s profitability ratios Author (based on SA data) Furthermore, we can analyze ET's coverage ability across the board of its interest coverage and cash-coverage ratios. Its ICR in Q2 2022 indicates that 4.7 times the company can pay its interest expenses on its debt with its operating income. Notwithstanding a decline in its interest coverage ratio of 4.71 in the second quarter versus the previous level of 4.82 in 1Q2022, ET’s ICR is more than twofold compared with the same time in 2021. Meanwhile, as a conservative metric to compare the company's cash balance to its annual interest expense, ET's cash coverage ratio in Q2 2022 was 0.17, which was unchanged versus the first quarter of 2022, for, both the operating cash flow and current liabilities were almost constant. In sum, there may not be concerns about Energy Transfer's ability to cover its obligations (see Figure 4). Figure 4 - ET’s coverage ratios Author (based on SA data) Energy Transfer stock valuation I used Competitive Companies Analysis (CCA) to evaluate Energy Transfer stock. I have updated my peer group, compared ET with other competitors, and used the CCA method to estimate the stock's fair value. In my opinion, Energy Transfer is undervalued and has an upside potential to reach around $20. I have selected the peers and used common key ratios in a CCA method to illustrate the value of similar companies. Data was gathered from the most recent quarterly and TTM data (see Table 1).
MPLX's 10% Yield Vs. Energy Transfer's 9% Yield: Which Is Better?
Summary Energy midstream names have sold off in recent weeks. The macro environment is compelling, however. Both ET and MPLX offer hefty income yields. There are differences when it comes to near-term dividend growth potential and dividend consistency, however. What are the pros and cons of these two high-yield picks? Article Thesis Fears about a recession and an overall weak equity market have made the stocks of many energy midstream companies drop considerably in the recent past. That holds true despite the fact that the macro environment is very positive for these companies right now. Income investors have the chance to load up on high-yielding pipeline players, which is why we pitch Energy Transfer (ET) and its 9% yield versus MPLX (MPLX) and its 10% yield in this article in order to see which one is more attractive right here. The Macro Environment For Energy Midstream Companies Is Compelling Right now, the world is experiencing a massive energy crisis. Growing energy hunger following the pandemic, underinvestment in new production over many years, and supply disruptions caused by the current Russia-Ukraine war explain why energy prices have soared around the globe. This holds true for coal, natural gas, oil, and even electricity. In this environment, the companies that make money by supplying these commodities are highly profitable. But infrastructure players that offer pipeline and storage services benefit as well, in several ways. First, due to massive energy hunger around the world, their services are in high demand. Pipelines are easily filled as producing oil and gas and moving those commodities to demand centers is highly profitable. The strong profits for upstream and downstream players in the energy space mean that counterparty risk for midstream infrastructure players has declined to a very low level -- with Exxon Mobil (XOM) and others generating record profits, infrastructure players don't have to worry that these energy companies won't pay their bills. At the same time, midstream companies benefit from high inflation rates. Many fee-based contracts are CPI-linked, which means that the cash flows that the pipelines of ET, MPLX, and others generate will be growing considerably. High inflation also makes the value of the underlying assets increase over time -- those are "real assets", after all. Since debt has been locked in at lowish rates, interest expenses are not rising a lot in the near term, which results in debt getting inflated away in real terms, as most midstream players pay far less than 8% on their debt. Energy Infrastructure Has Been Sold Off One can thus argue that the macro environment for energy infrastructure companies, including MPLX and Energy Transfer, is one of the best in many years. And yet, their stocks have sold off in the recent past: Data by YCharts Over the last month alone, MPLX and ET have dropped by double-digits. Their business prospects have not declined to the same degree. In fact, ET's and MPLX's forecasted EBITDA for the current year is essentially flat in the same time frame, as we can see in the following chart: Data by YCharts There thus is a clear discrepancy between how the outlook for the two businesses has changed, and the performance of these two stocks. The discrepancy can be explained by the indiscriminate selling of equities due to the ongoing correction. At the same time, forced selling by energy ETFs also seems to play a role in the weak performance of energy infrastructure players, even though the outlook for their businesses has not really changed. For enterprising investors, this disconnect provides a compelling buying opportunity, we believe. After all, buying stocks that have dropped without a good reason can make for attractive entry points and compelling starting dividend yields. Both seem to be the case with MPLX and ET. MPLX Versus ET: Pros And Cons One can of course argue that energy midstream as a whole is an attractive sector right now and opt for an ETF, although leveraged ETFs are risky and it could thus be a good idea to avoid them. For those that opt for individual stocks, which I personally prefer, we'll look into the pros of MPLX and ET -- two high-yielding midstream infrastructure players that are both attractive. Income Consistency And Growth Both companies offer high dividend yields, with MPLX offering a slightly higher yield right now. That being said, ET's 9% dividend yield is also very attractive, although slightly lower than MPLX's yield. But high yields alone do not make for great investments, as reliability and growth need to be considered as well. Energy Transfer angered many (former) investors when it decided to cut its dividend in half during the midst of the pandemic. MPLX has fared better, as it didn't cut its dividend during the pandemic. Even better, it actually increased its payout in both 2020 and 2021, maintaining its dividend growth streak even during this crisis. MPLX thus clearly wins out on dividend reliability and when it comes to management being committed to the dividend. ET, however, has more dividend growth potential, one could say. The company's management team has stated repeatedly that bringing the dividend to pre-crisis levels was its top priority. The company also has hiked the dividend by a combined 53% over the last year, which is more than the dividend growth delivered by MPLX. If Energy Transfer increases the dividend to the pre-pandemic level of $1.22, that would mean another 33% in dividend increases from the current level. ET could achieve that over the next year if its recent dividend growth pace is maintained. MPLX will most likely not deliver similar dividend growth. Overall, MPLX is thus the more conservative income investment. Energy Transfer has a weaker track record but more potential, making it the more aggressive, or higher-risk/higher-reward income from a dividend growth perspective. Balance Sheet Strength Balance sheet strength matters due to two reasons. First, it helps protect a company during an industry downturn (although energy is experiencing a favorable macro environment right now). On top of that, balance sheet strength also matters due to the fact that rising interest rates will make high debt loads more costly over time. Data by YCharts When we look at each company's debt load and the forecasted EBITDA for next year, we see that MPLX is more conservatively financed. Its net leverage ratio is 3.3, which is far from high for an infrastructure company with strong cash flows and low capital expenditure needs. ET is more leveraged, sporting a 3.7x net debt to EBITDA ratio. When we adjust for some accounting items at ET, such as its partially-owned daughter entities USA Compression Partners (USAC) and Sunoco (SUN), its net leverage ratio is even higher, in the 4x range. That makes for a considerably weaker balance sheet relative to MPLX, but ET does still not seem overly risky from a financial health perspective. Its debt load has declined and its cash flows are high enough to pay growing dividends while bringing down debt further. With EBITDA likely growing over time due to fee increases etc. it's highly likely that ET's leverage ratio will decline further in the next couple of years -- although it will remain higher than that of MPLX. Again, MPLX looks like the more conservative, lower-risk pick, while ET has somewhat higher risk. Valuation Quality has its price. That is reflected in the valuations of MPLX and Energy Transfer: Data by YCharts
Energy Transfer: Remarkable Dividend Yield, Noteworthy Recent Insider Transactions
Summary Energy Transfer has a 4-year average dividend yield in the double-digits and an outstanding forward yield of 7.88%. Being up around 45% year-to-date, the stock has greatly outperformed the broader market and the energy sector. With a sub-10 P/E ratio, Energy Transfer has an attractive valuation compared to its peers and has the potential to run even more. There has been tons of insider activity lately, all being buys, which is a fantastic sign, as the CEO picked up over $30 million in shares himself this trading week. Energy has been the best performing sector this year, being up nearly 45%, and with a flood of recent insider buying activity, Energy Transfer LP can be primed for another run-up. Overview of Energy Transfer LP and my Investment Thesis Energy Transfer LP (NASDAQ:ET) has been a strong outperformer in this year's bear market. With its high volume of recent insider buying activity, this can be another indication of a potential move higher. Energy Transfer is a company that operates as a midstream oil company with terminals mainly in Texas, Louisiana, and a portion of the Northeast. They are a midstream oil company tasked with managing the pipeline and gathering facilities that move the gas from the well (upstream) to businesses and consumers (downstream). Locations of Oil Terminals and Pipelines for Energy Transfer (September 2022 Investor Presentation) There were significant buys from the CEO, Kelcy Warren, and recent purchases from the CFO Bradford Whitehurst and directors Richard Brannon and Michael Grimm. These purchases have all been in the range of $10-12. Considering that these executives purchased shares earlier in the year at around $7.50/share, which is much lower than current levels, investors might consider some potential for another move higher. Not only does ET have solid fundamentals/valuation relative to industry averages, but it also pays out a significant dividend, along with this flurry of confidence from the insiders. Given all of this recent buying activity, especially at a high volume, this makes me more confident in potentially investing in ET at these levels. Moving forward in this analysis, I will back my buy thesis with the many strengths I see in this company compared to its peers, as well as some risks to my thesis. YTD Performance of ET and Energy Funds (YCharts) How Energy Transfer Excels Ahead of its Peers Within the Energy Sector Some peers not only within the energy sector but also in the oil and gas transportation and storage industry include Cheniere Energy Inc (NASDAQ:LNG), Kinder Morgan Inc (NASDAQ:KMI), and ONEOK Inc (NASDAQ:OKE). I will show a comprehensive analysis comparing Energy Transport LP with these competitors and reiterate why I think ET shines above these names. I will use valuation ratios and compare the dividend yields of each peer to get a general comparison of the sector and industry. Data Provided By (YCharts) As you can see above, Energy Transfer excels in the price-to-earnings ratio category, with a multiple that is nearly half of its peers' ratios. Although there has been a slight uptick in ET's PE ratio due to its outstanding stock performance in 2022, it remains cheaply valued and is given a pretty strong B+ valuation rating by Seeking Alpha. Energy Transfer has done an exceptional job at securing contracts and increasing net income margins, making its valuation appear more attractive. The execution of six long-term liquefied natural gas SPAs to supply around 8 million tons of LNG per year, with first deliveries expected to commence as early as 2026 under SPA terms ranging from 18 to 25 years. This will allow ET to penetrate the midstream market even stronger and enable management to target higher payout yields and deleverage. Comparable EV/EBITDA Ratios Across the Energy Sector (ET September 2022 Investor Presentation) Another metric in which ET is extremely undervalued is its EV/EBITDA multiple. Above, you can see the value Energy Transfer attains when compared to its peers across the industry. ET remains one of the strongest valued companies across Energy using the EV/EBITDA ratio, which illustrates the company's ability to turn sales into profits reliably. While delivering growth projects, they've also been able to significantly eliminate debt from the balance sheets, providing a stronger EV/EBITDA multiple. Competitive Dividend Yield Energy Transfer noted that they now have $1.88 billion in distributable cash flow in Q2 2022, which is up 35% YOY. Because Energy Transfer has been able to bolster its free cash flow recently, they are now focused on increasing the yield again and target anywhere from $.90-1.20/share in annualized yields. This is a significant number considering the present inflation rate in America and all over the globe. ET's current yield of around 7% offers as an excellent inflation hedge while also providing robust growth strategies in the liquified natural gas space. Average yields have been in a downtrend since 2019; however, the company primarily targeted debt reduction during these times and allocated most of its FCF towards deleveraging its balance sheet.
Energy Transfer (NYSE: ET) is a Solid Combination of Yield and Value
Some analysts argue that the oil sector is experiencing the tobacco market treatment in the 1990s. The public sentiment is negative, yet most are still consuming those products. However, despite all the efforts and sustainability plans, global economies are still very much addicted to oil and natural gas – enabling companies like Energy Transfer to pay out hefty dividends to their shareholders.
Energy Transfer: Who's On The Bandwagon?
Summary Energy Transfer stock appears to be getting a lot more attention these days. The bandwagon is filling up. Unit prices have improved as investors have become cozy with energy sector stocks. In this article, I will cover seven different topics relevant to Energy Transfer investors. Introduction I've been writing about Energy Transfer (ET) for a number of years. In times past, sometimes it felt like hardly any Seeking Alpha authors were writing about the company, whereas now it seems like everyone is writing about ET. Personally, I'm happy for it. Let's call it the "bandwagon" factor. Over the past month, I counted 17 Seeking Alpha focus articles about Energy Transfer. In 2019 and 2018, there were ~half the number of articles written about ET over the same time period. In each of those prior years, one of those articles was mine. Is this important? Well, I've found that there seems to be a correlation between the relative volume of S.A. ticker coverage and broad stock sentiment. Stock sentiment is a factor in determining price. It may reveal itself in higher valuation multiples. In the article, I'll offer several observations about topics that revolve around the most recent earnings report but were not unpacked. These include: The current debt leverage ratio as determined by the rating agencies The sale of Energy Transfer's Canadian assets The status of the OG&E sale of ET common units The cash distribution The "KW factor" Common unit performance Unit Valuation General Energy Transfer Investment Thesis I remain constructive on Energy Transfer common units. Over the past few years, my investment thesis hasn't changed much. Energy Transfer has assembled one of the strongest sets of pipeline transportation assets in the United States. Several years ago, management undertook major construction projects that became lightning rods for pipeline opponents. Doing so cost the company dearly in terms of financial performance. "Pioneers take the arrows." However, these projects are now complete. Opponents' attacks have lost some starch. The company is now running for cash and reducing debt leverage. ET units may be poised to command comparable valuation multiples to peers. If so, ET stock remains discounted and offers strong cash distributions yield to boot. Let's break down the bullet points denoted earlier. Debt Leverage From time-to-time, I've provided readers with my take on Energy Transfer's debt-to-EBITDA ratio. Rightfully, this metric has dogged the stock for a long time. Some years back, Energy Transfer management over-leveraged itself. Some of it had to do with timing (the 2015 - 2016 energy price collapse), and a lot of it had to do with chasing too many deals with too many hooks and sinkers attached. Using what I believe is the S&P 500 methodology, I calculate a current 4.3x or 4.4x leverage ratio. That's within the 4.0x to 4.5x sideboards management (and the rating agencies) have been fixated upon for many years. However, on the 2Q 2022 earnings conference call, co-CEO Tom Long had this to say: We also expect to reach our leverage target range by the end of this year and going forward, expect our strong coverage and balance sheet strength to allow us to further prioritize growth within our capital allocation strategy. Are my figures off? Well, that's possible. In previous articles, I've provided the specific inputs utilized. You can check the inputs and my math from the earnings report and filings. I suspect the apparent disconnect has more to do with differing methodologies used by the three major rating agencies. I've pointed this out before. Furthermore, I understand Energy Transfer management is most focused upon Moody's leverage ratio calculation. Evidently, Moody's is the most conservatively computed ratio between the credit rating agencies: S&P, Moody's and Fitch. Nonetheless, ET is on the doorstep: right here and right now. Furthermore, using my understanding of the S&P 500 methodology, Energy Transfer may find its year-end 2022 debt leverage ratio near the low end of the target range. Indeed, this presumes $11.3 billion EBITDA (management's 2022 guidance midpoint) and NO debt reduction from current levels. Barring unforeseen circumstances, it appears ET leadership has finally got this issue put to bed. It removes an overhang that's been hindering the stock for years. Canadian Asset Sale In August, Energy Transfer announced the completion of the sale of its Canadian assets. The sale raised $270 million cash and reduced consolidated debt by $550 million. All good stuff. These assets were not core to the company and management got a good price for them. However, I don't expect the deal to have a significant effect on net debt. On the conference call, Tom Long offered remarks on another transaction: This week, Energy Transfer signed an agreement to acquire Woodford Express, LLC, a Mid-Continent gas gathering and processing system for approximately $485 million. This bolt-on opportunity will provide a roughly 450 million cubic foot per day of cryogenic gas processing and treating capacity in Grady County, Oklahoma as well more than 200 miles of low and mid-pressure gathering lines in the heart of the SCOOP play. The assets are already connected to our inter and intrastate systems as well our gas gathering system. The system is supported by dedicated acreage with long-term predominantly fixed fee contracts with active proven producers. We're excited to have these strong assets, quality customer contracts and established operations to our footprint in the Mid-Continent, all at an attractive valuation that will be immediately accretive to Energy Transfer unitholders. The Woodford Express transaction more or less washes out the ET Canada deal. The Canadian assets netted $270 million cash and reduced debt by $550 million. Woodford should suck down ~$485 million. Net/net is $335 million, nothing to sneeze at, but it amounts to less than one percent of Energy Transfer's current consolidated debt and lease liabilities. On the other hand, investors should take note of some key wording in the statement: "...immediately accretive to Energy Transfer unitholders." The same language was used when the Enable Midstream assets were purchased. Management sold outlying non-core assets and exchanged these for assets found in the heart of the domestic, unconventional Anadarko Basin; located in South Central Oklahoma. The pipes are connected to Energy Transfer's existing system and offer immediate cash, presumably better than what was coming in from Energy Transfer Canada. OG&E Common Unit Sale Somewhat off the radar screen has been the sale of ET common units by CenterPoint Energy (CNP) and OGE Energy (OGE). Please recall the Enable Midstream acquisition was equity-funded by ET common units. After the sale closed, Enable Midstream unitholders CenterPoint and OGE announced their intent to peddle the ET units. CenterPoint finished offloading their units earlier this year. They enjoyed ~20 percent uplift on the sale and got a credit agency rating kicker. Meanwhile, OGE has quietly been selling its units, too. Initially, the company received 95.4 million units. As of June 30, 2022, management announced the business sold 73.3 million units, leaving 22.1 million remaining. This is less than one percent of the total Energy Transfer diluted common units outstanding, and about one days' average trading volume for ET. I expect OGE to wind up the process in the third quarter. The completed OGE sale will remove another overhang on the stock. Immediately after the Enable Midstream acquisition, about 200 million common units were on the block. It's down to a tenth of that. Energy Transfer's Cash Distribution In 3Q 2020, Energy Transfer slashed its quarterly common unit dividend in half; from 30.5 cents to 15.25 cents. Investors howled. Since that time, the payout has been increasing. Here's the lowdown: 4Q 2021 distribution raised to 17.5 cents (15 percent) 1Q 2022 distribution raised to 20 cents (15 percent) 2Q 2022 distribution raised to 23 cents (15 percent) On the 2Q 2022 conference call, Tom Long added these remarks: As a reminder, future increases to distribution level will be evaluated quarterly with the ultimate goal of returning distributions to the previous level of $0.305 per quarter or $1.22 on an annualized basis while balancing our leverage target, growth opportunities and unit buybacks. Let's do some arithmetic. The current distribution is 23 cents. If we add 15%, we have ~26.5 cents. Increase it another 15 percent and we're back to 30.5 cents per quarter. I suspect we've cracked the code. In another few quarters we should be back to the old cash distribution. On today's closing bid, that's a 10 percent distribution yield when the ten-year T-note yields 3 percent. My rule-of-thumb is a reasonably valued midstream MLP should offer a cash yield about 300 bps above the ten-year. While we're not to the valuation section of this article yet, a 6 percent yield on ET common units offering $1.22 a year suggest a $20 stock. The "KW Factor" While likely overhyped by ET bears, the "KW Factor" certainly appears to remain a function the stock. Unquestionably, Executive Chairman Kelcy Warren remains at the center of the Energy Transfer franchise. Energy Transfer LP is not a C-corp. As a Limited Partnership managed by a General Partner, the Executive Chairman and largest individual unitholder is Kelcy Warren; he holds the aces. We also know sentiment can and does play a role in stock prices; likely an above average role in the case of Energy Transfer. It's doesn't matter that Kelcy Warren took a sleepy intrastate pipeline company and turned it into one of America's largest and most dynamic midstream / transportation companies in the United States. Based upon TTM revenues, peers Enterprise Products (EPD), Plains All American (PAA), Kinder Morgan (KMI), Magellan Midstream (MMP) or MPLX (MPLX) are not even close. Check the most recent earnings releases for these companies; it hammers home the point. On the August earnings conference call, was the KW Factor in play? Here's some Q&A commentary from Energy Transfer management. I've highlighted certain sections: Co-CEO Mackie McCrea on Energy Transfer's interest in purchasing petrochemical assets: When Kelsey kind of gave us the directive that we need to step in to pet chem [petrochemicals], we certainly are doing that, two perspectives: one, we're - from an M&A perspective, anything that's for sale, we'll take a look at pretty much like anything in the industry; and then on the organic side, we're excited the project that we're working on... [Author observation: maybe better if these comments sounded a little more process-driven / deliberate?] Co-CEO Tom Long on the Lake Charles LNG project: Well, the bottom line of that entry is at what point are we going to go to our Board and our Executive Chairman to ask for approval. I think we've said publicly that that we can get to that 12% to 14% depending on the customer mix and of course, the infrastructure funds that will be a part of this...but certainly, we'll make that decision at the right time here towards the end of the year. [Author observation: maybe better if these remarks ended with a period and without the boldface?] There wasn't anything wrong with these statements. No one mis-spoke. However, ET stock fell 5.3 percent during two trading sessions: the day of the earnings conference call and the next day. Meanwhile, the Alerian MLP ETF (AMLP) gave back 2.1 percent and bellwethers Enterpriser Products Partners and Magellan Midstream eased 1.7 percent and 1.3 percent, respectively. Maybe I'm too jumpy. Maybe it's just optics. Or coincidence. Look, the Enable Midstream acquisition / integration has gone well. I am highly confident the Woodford Express deal will pan out just fine. The SemGroup purchase wasn't so hot, but it wasn't a terrible move, either. I think the Lake Charles LNG project has legs. I just think it would be better if we hear about the good projects Energy Transfer management and its board are contemplating instead of referencing a "KW directive." Perhaps it's best to highlight seeking approval from the Board and not call out the "Executive Chairman" specifically when speaking about getting a major project FID (Final Investment Decision). Common Unit Performance Just for the record, I thought it worthwhile to point out Energy Transfer common units have been doing well. I've observed some reader comments on other S.A. articles that might have one believe ET stock hasn't been performing well.
|ET||US Oil and Gas||US Market|
Return vs Industry: ET underperformed the US Oil and Gas industry which returned 32% over the past year.
Return vs Market: ET exceeded the US Market which returned -23.2% over the past year.
|ET Average Weekly Movement||5.1%|
|Oil and Gas Industry Average Movement||8.0%|
|Market Average Movement||6.8%|
|10% most volatile stocks in US Market||15.5%|
|10% least volatile stocks in US Market||2.8%|
Stable Share Price: ET is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 5% a week.
Volatility Over Time: ET's weekly volatility (5%) has been stable over the past year.
About the Company
Energy Transfer LP provides energy-related services. The company owns and operates approximately 11,600 miles of natural gas transportation pipeline, and three natural gas storage facilities in Texas and two natural gas storage facilities located in the state of Texas and Oklahoma; and 19,830 miles of interstate natural gas pipeline. It also sells natural gas to electric utilities, independent power plants, local distribution and other marketing companies, and industrial end-users.
Energy Transfer Fundamentals Summary
|ET fundamental statistics|
Is ET overvalued?See Fair Value and valuation analysis
Earnings & Revenue
|ET income statement (TTM)|
|Cost of Revenue||US$69.35b|
Last Reported Earnings
Jun 30, 2022
Next Earnings Date
|Earnings per share (EPS)||1.21|
|Net Profit Margin||4.57%|
How did ET perform over the long term?See historical performance and comparison
8.1%Current Dividend Yield
Is ET undervalued compared to its fair value, analyst forecasts and its price relative to the market?
Valuation Score 5/6
Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Key Valuation Metric
Which metric is best to use when looking at relative valuation for ET?
Other financial metrics that can be useful for relative valuation.
|What is ET's n/a Ratio?|
Price to Earnings Ratio vs Peers
How does ET's PE Ratio compare to its peers?
|ET PE Ratio vs Peers|
|Company||PE||Estimated Growth||Market Cap|
WMB Williams Companies
KMI Kinder Morgan
EPD Enterprise Products Partners
ET Energy Transfer
Price-To-Earnings vs Peers: ET is good value based on its Price-To-Earnings Ratio (9.4x) compared to the peer average (14.8x).
Price to Earnings Ratio vs Industry
How does ET's PE Ratio compare vs other companies in the US Oil and Gas Industry?
Price-To-Earnings vs Industry: ET is expensive based on its Price-To-Earnings Ratio (9.4x) compared to the US Oil and Gas industry average (8.8x)
Price to Earnings Ratio vs Fair Ratio
What is ET's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.
|Current PE Ratio||9.4x|
|Fair PE Ratio||18.4x|
Price-To-Earnings vs Fair Ratio: ET is good value based on its Price-To-Earnings Ratio (9.4x) compared to the estimated Fair Price-To-Earnings Ratio (18.4x).
Share Price vs Fair Value
What is the Fair Price of ET when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.
Below Fair Value: ET ($11.34) is trading below our estimate of fair value ($22.84)
Significantly Below Fair Value: ET is trading below fair value by more than 20%.
Analyst Price Targets
What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?
Analyst Forecast: Target price is more than 20% higher than the current share price and analysts are within a statistically confident range of agreement.
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How is Energy Transfer forecast to perform in the next 1 to 3 years based on estimates from 9 analysts?
Future Growth Score1/6
Future Growth Score 1/6
Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Forecasted annual earnings growth
Earnings and Revenue Growth Forecasts
Analyst Future Growth Forecasts
Earnings vs Savings Rate: ET's forecast earnings growth (4.1% per year) is above the savings rate (1.9%).
Earnings vs Market: ET's earnings (4.1% per year) are forecast to grow slower than the US market (14.8% per year).
High Growth Earnings: ET's earnings are forecast to grow, but not significantly.
Revenue vs Market: ET's revenue (2.7% per year) is forecast to grow slower than the US market (7.7% per year).
High Growth Revenue: ET's revenue (2.7% per year) is forecast to grow slower than 20% per year.
Earnings per Share Growth Forecasts
Future Return on Equity
Future ROE: ET's Return on Equity is forecast to be low in 3 years time (17.4%).
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How has Energy Transfer performed over the past 5 years?
Past Performance Score2/6
Past Performance Score 2/6
Growing Profit Margin
Earnings vs Industry
Historical annual earnings growth
Earnings and Revenue History
Quality Earnings: ET has high quality earnings.
Growing Profit Margin: ET's current net profit margins (4.6%) are lower than last year (7.1%).
Past Earnings Growth Analysis
Earnings Trend: ET's earnings have grown significantly by 20.5% per year over the past 5 years.
Accelerating Growth: ET's earnings growth over the past year (1.6%) is below its 5-year average (20.5% per year).
Earnings vs Industry: ET earnings growth over the past year (1.6%) underperformed the Oil and Gas industry 184.6%.
Return on Equity
High ROE: ET's Return on Equity (12.7%) is considered low.
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How is Energy Transfer's financial position?
Financial Health Score3/6
Financial Health Score 3/6
Short Term Liabilities
Long Term Liabilities
Financial Position Analysis
Short Term Liabilities: ET's short term assets ($15.4B) exceed its short term liabilities ($13.5B).
Long Term Liabilities: ET's short term assets ($15.4B) do not cover its long term liabilities ($54.0B).
Debt to Equity History and Analysis
Debt Level: ET's net debt to equity ratio (115.7%) is considered high.
Reducing Debt: ET's debt to equity ratio has reduced from 176.3% to 116.6% over the past 5 years.
Debt Coverage: ET's debt is not well covered by operating cash flow (18.1%).
Interest Coverage: ET's interest payments on its debt are well covered by EBIT (3.7x coverage).
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What is Energy Transfer current dividend yield, its reliability and sustainability?
Dividend Score 5/6
Cash Flow Coverage
Current Dividend Yield
Dividend Yield vs Market
|Energy Transfer Dividend Yield vs Market|
|Company (Energy Transfer)||8.1%|
|Market Bottom 25% (US)||1.6%|
|Market Top 25% (US)||4.6%|
|Industry Average (Oil and Gas)||4.8%|
|Analyst forecast in 3 Years (Energy Transfer)||10.3%|
Notable Dividend: ET's dividend (8.11%) is higher than the bottom 25% of dividend payers in the US market (1.67%).
High Dividend: ET's dividend (8.11%) is in the top 25% of dividend payers in the US market (4.75%)
Stability and Growth of Payments
Stable Dividend: ET's dividend payments have been volatile in the past 10 years.
Growing Dividend: ET's dividend payments have increased over the past 10 years.
Earnings Payout to Shareholders
Earnings Coverage: With its reasonable payout ratio (59.3%), ET's dividend payments are covered by earnings.
Cash Payout to Shareholders
Cash Flow Coverage: With its reasonable cash payout ratio (51.2%), ET's dividend payments are covered by cash flows.
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How experienced are the management team and are they aligned to shareholders interests?
Average management tenure
Mackie McCrea (63 yo)
Mr. Marshall S. McCrea, III, also known as Mackie, has been Co-Chief Executive Officer of LE GP, LLC at Energy Transfer LP since January 01, 2021. He serves as Co-Chief Executive Officer of Panhandle Easte...
CEO Compensation Analysis
|Mackie McCrea's Compensation vs Energy Transfer Earnings|
|Date||Total Comp.||Salary||Company Earnings|
|Jun 30 2022||n/a||n/a|
|Mar 31 2022||n/a||n/a|
|Dec 31 2021||US$21m||US$1m|
|Sep 30 2021||n/a||n/a|
|Jun 30 2021||n/a||n/a|
|Mar 31 2021||n/a||n/a|
|Dec 31 2020||US$8m||US$1m|
|Sep 30 2020||n/a||n/a|
|Jun 30 2020||n/a||n/a|
|Mar 31 2020||n/a||n/a|
|Dec 31 2019||US$12m||US$1m|
|Sep 30 2019||n/a||n/a|
|Jun 30 2019||n/a||n/a|
|Mar 31 2019||n/a||n/a|
|Dec 31 2018||US$11m||US$1m|
|Sep 30 2018||n/a||n/a|
|Jun 30 2018||n/a||n/a|
|Mar 31 2018||n/a||n/a|
|Dec 31 2017||US$12m||US$1m|
|Sep 30 2017||n/a||n/a|
|Jun 30 2017||n/a||n/a|
|Mar 31 2017||n/a||n/a|
|Dec 31 2016||US$11m||US$1m|
|Sep 30 2016||n/a||n/a|
|Jun 30 2016||n/a||n/a|
|Mar 31 2016||n/a||n/a|
|Dec 31 2015||US$9m||US$840k|
Compensation vs Market: Mackie's total compensation ($USD21.46M) is above average for companies of similar size in the US market ($USD13.04M).
Compensation vs Earnings: Mackie's compensation has increased by more than 20% in the past year.
Experienced Management: ET's management team is not considered experienced ( 1.8 years average tenure), which suggests a new team.
Experienced Board: ET's board of directors are considered experienced (5.5 years average tenure).
Who are the major shareholders and have insiders been buying or selling?
Insider Trading Volume
Insider Buying: ET insiders have bought more shares than they have sold in the past 3 months.
Recent Insider Transactions
|13 Sep 22||BuyUS$6,769,348||Kelcy Warren||Individual||571,253||US$11.85|
|12 Sep 22||BuyUS$29,242,114||Kelcy Warren||Individual||2,428,747||US$12.04|
|15 Aug 22||BuyUS$115,000||Bradford Whitehurst||Individual||10,000||US$11.50|
|09 Aug 22||BuyUS$17,406,546||Kelcy Warren||Individual||1,591,092||US$10.94|
|08 Aug 22||BuyUS$12,666,864||Kelcy Warren||Individual||1,158,908||US$10.93|
|15 Jul 22||BuyUS$1,334,660||Richard Brannon||Individual||137,680||US$9.75|
|06 Apr 22||BuyUS$5,605,000||Michael Grimm||Individual||500,000||US$11.21|
|06 Apr 22||BuyUS$52,026||Michael Grimm||Individual||4,600||US$11.32|
|17 Dec 21||BuyUS$25,232||Michael Grimm||Individual||3,040||US$8.30|
|10 Dec 21||BuyUS$499,998||Bradford Whitehurst||Individual||67,121||US$7.45|
|10 Dec 21||BuyUS$600,003||Thomas Long||Individual||80,546||US$7.45|
|10 Dec 21||BuyUS$250,003||Matthew Ramsey||Individual||33,561||US$7.45|
|10 Dec 21||BuyUS$120,000,198||Kelcy Warren||Individual||16,109,139||US$7.45|
|10 Dec 21||BuyUS$999,996||Ray Davis||Individual||134,242||US$7.45|
|Owner Type||Number of Shares||Ownership Percentage|
Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 14.1%.
|Ownership||Name||Shares||Current Value||Change %||Portfolio %|
Energy Transfer LP's employee growth, exchange listings and data sources
- Name: Energy Transfer LP
- Ticker: ET
- Exchange: NYSE
- Founded: 1996
- Industry: Oil and Gas Storage and Transportation
- Sector: Energy
- Implied Market Cap: US$35.006b
- Shares outstanding: 3.09b
- Website: https://energytransfer.com
Number of Employees
- Energy Transfer LP
- 8111 Westchester Drive
- Suite 600
- United States
|Ticker||Exchange||Primary Security||Security Type||Country||Currency||Listed on|
|ET||NYSE (New York Stock Exchange)||Yes||Common Units||US||USD||Feb 2006|
|ET *||BMV (Bolsa Mexicana de Valores)||Yes||Common Units||MX||MXN||Feb 2006|
|ET.PRD||NYSE (New York Stock Exchange)||7.625 PFD UNIT D||US||USD||Apr 2021|
|ET.PRE||NYSE (New York Stock Exchange)||7.60% CUM PFD E||US||USD||Apr 2021|
|ET.PRC||NYSE (New York Stock Exchange)||7.375% PFD SR C||US||USD||Apr 2021|
Company Analysis and Financial Data Status
|Data||Last Updated (UTC time)|
|Company Analysis||2022/10/03 00:00|
|End of Day Share Price||2022/10/03 00:00|
Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.