Today the analyst at M* raised ETP to a 5 Star buy rating.
ETP is certainly in the right place. NG demand looks very promising. Global demand for natural gas is expected to increase 1.5% a year for the next 30 years. At 45, ETP is yielding 8%. Even if distributions eventually become taxable, which seems to be the handwriting on the wall, the after tax yield is still looks good.
What analyst Jason Stevens wrote:
"Energy Transfer Partners ETP reported somewhat better results than we had expected for the first quarter. We had been concerned that the intrastate segment would be hurt by lower gas volumes and margins because of continued flat basis differentials between gas market hubs in Texas. Although volumes were down this quarter compared with last year, Energy Transfer managed to increase gas sales margins to mitigate some of the impact. Also, transportation volumes increased about 5% from the fourth quarter of 2009. Interstate transportation delivered a 12% increase over last year, and the midstream segment benefited from strong processing margins and natural gas liquids prices, more than doubling operating income from last year. Propane results were slightly down from l ast year. Overall, Energy Transfer generated $344 million in operating income, $427 million in EBITDA, and $378 million in distributable cash flow. We're pleased with this level of distributable cash flow, as by our calculations it is enough to cover distributions 1.4 times, suggesting that Energy Transfer will be positioned to contemplate a distribution increase later this year."
ETP reported that 'Distributable cash flow for the three months ended March 31, 2010 totaled $376.8 million, a decrease of $64.8 million from the three months ended March 31, 2009'
ETP had 2009 DCF of $3.55/uni compared to a distribution of $3.575. Q1-10 DCF [in absolute terms] is falling, and with more units out there [could not find number of units outstanding in the earnings release], DCF per unit is falling even more.
Yet the analyst from Morningstar is "pleased with this level of distributable cash flow, as by our calculations it is enough to cover distributions 1.4 times, suggesting that Energy Transfer will be positioned to contemplate a distribution increase later this year."
One of us is getting a failing grade on their reading and comprehension of this release - and while I hope it is me [given that I am an ETP unit holder], I think the above is going to be another example of how Morningstar and the other part time MLP analysts do not understand the sector.
Factoids, in listening to the cc there was a lot of discussion about the effect of derivatives (hedges) that were put in place at various times and the up and down nature of nat. gas prices during that time frame. The bottom line that there quarter performance exceeded there expectations in part due to stronger nat. gas liquids prices. Drilling will slow in the shales if prices go below $3.50. Until then they should be okay. Did you listen to the cc and if so come away with any additional thoughts. Very few questions from the analysts this time, the least that I remember.
I come away with the thought that ETP has simply been unable to achieve the kind of growth goals that are necessary to compete with smaller more dynamic MLPs like a NGLS for example.
Nor has ETP shown any propensity to keep up with the biggest MLP, EPD.
Yesterday I doubled my position in EPD and NGLS and sold all of my ETP this morning. I bet that the prices for EPD and NGLS were too juicy near those lows yesterday and followed thru on the bet to sell ETP into a rally post armegeddon yesterday.
I have lost faith in this mgmt team to deliver. My own impression is that ETP has a lot of assets that simply underperform other sector peers' assets.
Good luck. I don't have to be right about ETP for all to prosper but I do believe greater total returns lie elsewhere in this sector.
Unlike you I read the quarterly releases and I read analyst reports and two analyst firms expected 4% distribution growth from ETP in 2010 in their SEP reports. By DEC reports the analysts dialed down to 2% and now one analyst report expects perhaps 1%.....
This while other MLPs are putting decent distribution growth out there. ETP has promising projects coming on line but it looks like the behemoth is unable to move quickly to strategically get into the hot zones for growth.
If you don't like my impressions perhaps you should dismiss them with something lost in our culture which is a counterargument rather than the usual flip response that offers nothing to your fellow board posters.
<<<Yesterday I doubled my position in EPD and NGLS and sold all of my ETP this morning. >>
We were thinking somewhat alike. I got out of ETP as well today, but maintained my positions in NRGP, EPD and WPZ. I added to LINE wanting a little more exposure to crude oil.
And, I wish I'd been a half-second quicker yesterday to add to NRGP and more to LINE...damn, missed some real bargains by a click. Bid/Ask changed so quickly it was hard to get out ahead of it.
Here's your counter argument--->>> ACAS <<---
Oh, and I should add --->> HRP <<---
You, Ferd Turd, are the exact type of investor who sounds as if they know something, but, in actuality, "a little knowledge is a dangerous thing" applies well to you!
Having followed your posts for a long, long time, I conclude, very simply, that investors can use your suggestions on stocks as almost a perfect contrary indicator! Buy what Ferd Turd sells, and sell what Ferd Turd buys! That would bring the riches investors desire.
Keep posting Ferd, you provide value for those who see you correctly for what you are.