We've been asking ourselves recently if the market has placed a fair valuation on Energy Transfer LP. Let's dive into some of the fundamental values of this large-cap Utilities company to determine if there might be an opportunity here for value-minded investors.
Energy Transfer LP Is Reasonably Valued:
Energy Transfer LP provides energy-related services. The company belongs to the Utilities sector, which has an average price to earnings (P/E) ratio of 17.53 and an average price to book (P/B) ratio of 1.71. In contrast, Energy Transfer LP has a trailing 12 month P/E ratio of 12.9 and a P/B ratio of 1.59.
Energy Transfer LP's PEG ratio is 1.23, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
The Company Has a Highly Leveraged Balance Sheet:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $54,087 | $54,213 | $38,954 | $67,417 | $89,876 | $78,555 |
| Revenue Growth | n/a | 0.23% | -28.15% | 73.07% | 33.31% | -12.6% |
| Operating Margins | 10% | 13% | 8% | 13% | 9% | 10% |
| Net Margins | 7% | 9% | 2% | 10% | 7% | 7% |
| Net Income (MM) | $3,630 | $4,899 | $739 | $6,871 | $6,072 | $5,465 |
| Net Interest Expense (MM) | $2,055 | $2,331 | $2,327 | $2,267 | $2,306 | $2,484 |
| Depreciation & Amort. (MM) | $2,859 | $3,147 | $3,678 | $3,817 | $4,164 | $4,287 |
| Diluted Shares (MM) | 1,461 | 2,638 | 2,696 | 2,740 | 3,097 | 3,214 |
| Free Cash Flow (MM) | $99 | $2,096 | $2,231 | $8,340 | $5,670 | $6,279 |
| Capital Expenditures (MM) | $7,407 | $5,960 | $5,130 | $2,822 | $3,381 | $3,318 |
| Current Ratio | 0.69 | 0.97 | 1.07 | 0.97 | 1.17 | 1.05 |
| Total Debt (MM) | $46,028 | $51,054 | $51,438 | $49,702 | $48,262 | $47,164 |
| Net Debt / EBITDA | 5.52 | 4.9 | 7.67 | 3.92 | 4.03 | 3.84 |
