Surging Earnings Estimates Signal Upside for Energy Transfer LP (ET) Stock
Energy Transfer LP (ET) appears an attractive pick given a noticeable improvement in the company's earnings outlook. The stock has been a strong performer lately, and the momentum might continue with analysts still raising their earnings estimates for the company.
The upward trend in estimate revisions for this energy-related services provider reflects growing optimism of analysts on its earnings prospects, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. This insight is at the core of our stock rating tool -- the Zacks Rank.
The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.
Consensus earnings estimates for the next quarter and full year have moved considerably higher for Energy Transfer LP, as there has been strong agreement among the covering analysts in raising estimates.
The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:
12 Month EPS
Current-Quarter Estimate Revisions
For the current quarter, the company is expected to earn $0.37 per share, which is a change of +27.59% from the year-ago reported number.
Over the last 30 days, one estimate has moved higher for Energy Transfer LP while two have gone lower. As a result, the Zacks Consensus Estimate has increased 11.03%.
Current-Year Estimate Revisions
For the full year, the company is expected to earn $1.41 per share, representing a year-over-year change of -25.4%.
There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, one estimate has moved up for Energy Transfer LP versus two negative revisions. This has pushed the consensus estimate 11.28% higher.
Favorable Zacks Rank
The promising estimate revisions have helped Energy Transfer LP earn a Zacks Rank #1 (Strong Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.
Energy Transfer LP shares have added 12.7% over the past four weeks, suggesting that investors are betting on its impressive estimate revisions. So, you may consider adding it to your portfolio right away to benefit from its earnings growth prospects.
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