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Are Investors Undervaluing Energy Transfer LP (ET) Right Now?

·3 min read

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One stock to keep an eye on is Energy Transfer LP (ET). ET is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 7.73 right now. For comparison, its industry sports an average P/E of 10.52. Over the past 52 weeks, ET's Forward P/E has been as high as 11.83 and as low as 4.50, with a median of 7.47.

Another notable valuation metric for ET is its P/B ratio of 0.80. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.33. Over the past 12 months, ET's P/B has been as high as 0.82 and as low as 0.44, with a median of 0.57.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. ET has a P/S ratio of 0.63. This compares to its industry's average P/S of 1.81.

Finally, investors should note that ET has a P/CF ratio of 3.80. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 6.21. Over the past year, ET's P/CF has been as high as 7.64 and as low as 2.87, with a median of 4.36.

These are just a handful of the figures considered in Energy Transfer LP's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that ET is an impressive value stock right now.


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