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Crosstex Energy, Komandit ┼×irket Message Board

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  • jdb_1234 jdb_1234 Jan 5, 2010 11:31 AM Flag

    Valuation question

    I take a simple approach to valuation-yield. Presently, it is reasonable to place an 8% yield on the G & P's. Actually, many of the really stable ones have lower yield. But, others, viewed as higher risk are heading to 8%. If you take an estimate of the coming yearly distribution, you can place an 8% yield on that and price accordingly. I think .80/yr; .20/qtr is possible.
    So, you get $10/share. But, the company is not paying that, so uncertainty should reduce expected share price a bit. In other words, we are fully priced. Doesn't mean the share price won't keep going up as you are also buying potential and there appears to be good demand at this point, but you get the general idea.

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    • Yield does not seem to be a strong factor in XTXI pricing. If you look back at period of two years including 2006 and 2007, XTXI only paid divi of close to $1 per year. The average stock price during this two year period has been about $30. That is an annual yield of only about 3.3%.

      So, back to my question, what is it about XTXI that gives it this type of valuation? XTEX paid a little over $2 per year over the same period and averaged a little over $35 per share over the time period yielding around 6%.

      Obviously, there is a different valuation applied to both stocks based on past pricing. Of course, owning XTEX pays a much better distribution regardless of the differing valuation.