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Should Value Investors Buy Energy Transfer (ET) Stock?

·3 min read

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One stock to keep an eye on is Energy Transfer (ET). ET is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 9.06. This compares to its industry's average Forward P/E of 11.53. ET's Forward P/E has been as high as 11.51 and as low as 4.74, with a median of 7.28, all within the past year.

Another valuation metric that we should highlight is ET's P/B ratio of 1.08. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.89. Over the past year, ET's P/B has been as high as 1.10 and as low as 0.74, with a median of 0.90.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. ET has a P/S ratio of 0.52. This compares to its industry's average P/S of 1.24.

Finally, investors will want to recognize that ET has a P/CF ratio of 5.36. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 8.79. Over the past 52 weeks, ET's P/CF has been as high as 5.39 and as low as 2.53, with a median of 3.29.

Another great Oil and Gas - Production Pipeline - MLB stock you could consider is PBF Logistics (PBFX), which is a # 2 (Buy) stock with a Value Score of A.

Additionally, PBF Logistics has a P/B ratio of 3.88 while its industry's price-to-book ratio sits at 1.89. For PBFX, this valuation metric has been as high as 5.41, as low as 2.84, with a median of 3.61 over the past year.

Value investors will likely look at more than just these metrics, but the above data helps show that Energy Transfer and PBF Logistics are likely undervalued currently. And when considering the strength of its earnings outlook, ET and PBFX sticks out as one of the market's strongest value stocks.


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