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Inergy, L.P. Message Board

  • richardleeds richardleeds Jun 17, 2011 5:26 PM Flag

    NRGY still looks overpriced to me

    I own the following energy companies paying high yields and NRGY on a price to book is much more expensive than my current holdings:

    NRGY - P/B 3.45
    Line - P/B 2.3
    CLMT - P/B 2.4
    ENP - P/B 3.1
    GLP - P/B 1.4

    what is the justification to pay 50% more in price to the book value of the assets on NRGY over the other holdings I have? Distributions are pretty close among all these companies, so the question is why pay 50% more for the balance sheet of NRGY over the other holdings.

    All of my positions have been raising dividends over the last three years, so growth is not a real issue.

    thanks, R.

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    • Price -to-Book is a meaningless calculation unless you include ROE.....Better yet for MLP'S what is the DCF Return on Equity (book)??...

      • 1 Reply to racehorse9
      • Sure, cash flow is more meaningful but it does not wash away the reality that NRGY has paid 1/2 billion in goodwill which is blue sky. That with a sector that is out of favor. It is better to own one of the other investments and come back into NRGY a year from now after the sector looks better.

        I would rather collect the same dividend in a company where the shares are climbing with less negativity by the analysts.

        I think the other companies mentioned could go up 5-10% over the next year and agree with Citi, that NRGy could go down 10%.

    • Beats the obama out of me. I'm here for what I hope will be a pop back to it's 200 day of 39 and change and then I will be gone. In Friday at 34.48. So far,so good. Good luck with that accounting and cost question.

    • With creative bookkeeping being used by corporations today the book value means nothing and are for the most part not accurate.

      • 1 Reply to rebeldoe
      • we are talking about companies that report their cost of assets on the balance sheet which they write off as depreciation and d the number of shares of stock issued.

        So the question remains why pay 50% more for NRGY since the price of its shares are more expensive.

        Billion dollar businesses all have certified audits which disclose the cost they pay for their leases, equipment, pipelines, drilling, storage, etc. These companies all write off as much as they can according to the Internal Revenue Code over the useful life of the equipment according to schedules established by the IRS.

        So why is NRGY 50% more expensive than my other holdings for each share of stock for about the same dividend yield.