Energy Transfer LP (ET) Has Many Growth Opportunities

Energy Transfer LP (NYSE:ET) is now being followed by Citigroup, as they initiated the stock at Buy on November 29.

ET stock dropped -0.53% in recent trade and currently has a stock-market value of $40.03B. The shares finished at $15.08, after trading as low as $15.07 earlier in the session. It hit an intraday high Thursday at $15.31. Trading activity significantly weakened as the volume at ready counter decreased to 4,661,405 shares versus 11,102,815 in average daily trading volume over the past 20 days. So far this year, the volume has averaged about 12,413,937 shares. The stock is now 29.11% above against its bear-market low of $11.68 on December 24, 2018. It has retreated -27.25% since it’s 52-week high of $19.19 reached in August. Now the market price is down -1.69% on the year and up 14.16% YTD.

Wall Street’s most bullish Energy Transfer LP (NYSE:ET) analysts are predicting the share price to blow past $28 per share during the next 12 months. The current median share price forecast by them is $21, suggesting that the stock could increase 39.26% in that time frame. The average price target of $21.22 calls for a nearly 40.72% increase in the stock price.

Energy Transfer LP (ET)’s 50 day simple moving average (SMA 50) price is $14.76 and its 200-day simple moving average (SMA 200) price is $16.15. The company’s stock currently has a total float of 2.27B shares. Its weekly volatility is hovering around 1.63% and felt 2.25% volatility in price over a month. On the upside, the share price will test short term resistance at around $15.24. On a downside, the stock is likely to find some support, which begins at $15. The failure to get near-term support could push it to $14.91.

When looking at valuations, Energy Transfer LP (ET) has a cheap P/E of 10.85x as compared to industry average of 45.37x. Moreover, it trades for 10.36 times the next 12 months of expected earnings. Also, it is trading at rather expensive levels at just over 1.72x price/book and 0.74x price/sales. Compared to others, Energy Transfer LP is in a different league with regards to profitability, having net margins of 3.1%. To put some perspective around this, the industry’s average net margin is 7.61%. ET’s ROE is 39.8%, which is also considerably better than the industry’s ROE of 5.2%. It’s also not liquid in the near term, with a current ratio of 0.7. The stock has a debt/capital of 2.24.

ET last reported earnings that receded expectations. The company raked in $0.27 per share, -98.66% change on the same period last year. That was worse than consensus for $0.34. Revenue for the recent quarter stood at $13.57 billion, up 19% on last year and below the $14.23 billion predicted by analysts. For this quarter, Wall Street analysts forecast revenue in a range of $12.59 billion to $15.98 billion, which should be compared with $14.44 billion generated last year. EPS is seen in a range of $0.27 to $0.62, against the $0.47 reported a year ago.