Is the energy transfer (ET) stock undervalued right now? – October 11, 2022
While Zacks’ proven rankings emphasize earnings estimates and revisions to estimates to find strong stocks, we also know that investors tend to develop their own individual strategies. With that in mind, we always look at value, growth and momentum trends to uncover great companies.
Looking at the history of these trends, perhaps none is more popular than value investing. This strategy simply aims to identify companies that are undervalued by the broader market. Value investors use proven metrics and fundamental analysis to find companies they believe are undervalued at their current stock price level.
In addition to the Zacks Ranking, investors can also consult our innovative style score system to find stocks with specific characteristics. For example, value investors will want to focus on the “Value” category. Stocks with high Zacks ranks and “A” ratings for value will be among the highest quality value stocks in the market today.
A stock to watch is Energy transfer (HEY – Free report) . ET currently sports a Zacks rank of No. 2 (buy), as well as a value rating of A. The stock has a forward P/E ratio of 8.50. This compares to its industry average Forward P/E of 9.96. Over the past 12 months, ET’s Forward P/E has been as high as 11.51 and as low as 4.74, with a median of 8.52.
Note also that ET has a P/B ratio of 1.03. P/B is a method of comparing the market value of a stock to its book value, which is defined as total assets minus total liabilities. This company’s current P/B looks solid compared to its industry average P/B of 1.70. Over the past year, ET’s P/B has been as high as 1.11 and as low as 0.74, with a median of 0.96.
Value investors also value the P/S ratio, which is calculated by simply dividing a stock’s price by the company’s sales. Some people prefer this measure because sales are more difficult to manipulate on an income statement. This means it could be a truer performance indicator. ET has a P/S ratio of 0.43. This compares to its industry average P/S of 1.04.
Finally, investors will want to recognize that ET has a P/CF ratio of 4.62. This measure takes into account a company’s operating cash flow and can be used to find undervalued stocks based on their strong cash flow outlook. ET’s P/CF compares to its industry average P/CF of 7.32. Over the past 12 months, ET’s P/CF has been as high as 5.49 and as low as 2.53, with a median of 3.95.
If you’re looking for another solid value Oil & Gas – Production Pipeline – MLB stock, take a look at American Plains Pipeline (PAA – Free report) . PAA is a #1 (strong buy) stock with a value score of A.
Plains All American Pipeline also has a P/B ratio of 0.75; this compares to its industry’s price-to-book ratio of 1.70. Over the past 52 weeks, the P/B of the PAA has been as high as 1.15, as low as 0.63, with a median of 0.75.
These numbers are just a few of the value indicators that investors tend to look at, but they help show that Energy Transfer and Plains All American Pipeline are likely undervalued right now. Given that, along with the strength of its earnings outlook, ET and PAA appear to be a high value stock at the moment.