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Midstream Companies’ Moving Averages and Analysts’ Estimates

Robert Scott

What to Expect from Midstream Companies: Will They Recover?

(Continued from Prior Part)

Moving averages

As of December 11, 2015, the 100-day moving averages of many midstream companies’ stocks showed strong resistance. For example, all of the midstream companies in the following table were trading below their 100-day moving average. Midstream companies are trading 30% below their 100-day moving average on an average basis.

Kinder Morgan (KMI) and Williams Companies (WMB) were trading 42% and 37% below their 100-day moving averages as of December 11. Midstream companies were also trading well below their 20-day moving averages. Only Magellan Midstream Partners (MMP) and Spectra Energy Partners (SPE) managed to trade 4% and 6% below their respective 20-day moving average as of December 10. This is close compared to other midstream companies.

The Energy Select Sector SPDR Fund (XLE) was trading 9.5% below its 100-day and 20-day moving averages, respectively.

Wall Street analysts’ consensus estimate

Wall Street analysts’ consensus estimate suggests a 66% upside for these midstream companies—compared to a 42% upside for large-cap upstream companies. Over the next 12 months, midstream operators like Williams Companies and Energy Transfers Partners (ETP) could see rises of 72% and 75%, respectively, from the levels as of December 11. Below is a rundown of three other midstream operators and Wall Street analysts’ estimate for each company over the next 12 months:

  • Kinder Morgan could see a 29% rise.
  • Spectra Energy could see a 48% rise.
  • Williams Partners (WPZ) could see a 90% rise.

Interestingly, the forward PE (price-to-earnings) ratio for the next year suggests that Energy Transfer Partners and Williams Partners are cheaper than other MLPs. The above graph shows these midstream operators’ moving averages and forward target prices.

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