Should Value Investors Buy Energy Transfer (ET) Stock?
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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader 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.
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 company value investors might notice is Energy Transfer (ET). ET is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock is trading with a P/E ratio of 9.04, which compares to its industry's average of 11.10. Over the past year, ET's Forward P/E has been as high as 11.51 and as low as 7.45, with a median of 8.98.
Another notable valuation metric for ET is its P/B ratio of 1.16. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. ET's current P/B looks attractive 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 1.21 and as low as 0.85, with a median of 1.04.
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 0.46. This compares to its industry's average P/S of 0.99.
Finally, we should also recognize that ET has a P/CF ratio of 4.91. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. ET's current P/CF looks attractive when compared to its industry's average P/CF of 7.81. ET's P/CF has been as high as 5.49 and as low as 3.05, with a median of 4.61, all within the past year.
These are only a few of the key metrics included in Energy Transfer's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, ET looks like an impressive value stock at the moment.
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Energy Transfer LP (ET) : Free Stock Analysis Report
