Why Are People Buying ET Shares?

By Chris Stiles • Thursday, March 28 15:14 • Permanent Link

One of the standouts of today's afternoon trading session was Energy Transfer LP, which logged a 1.1% performance and outperformed the S&P 500 by 1.0%. The Oil & Gas Transportation and Processing stock is now trading at $15.71 per share and may still have upside potential because it is still -13.61% under its average target price of $18.19. Analysts have set target prices ranging from $15.0 to $23.0 dollars per share, and have given the stock an average rating of buy.

The market seems to share this rosy outlook, since Energy Transfer LP has a short interest of only 1.2%. This represents the percentage of the share float that is being shorted, and each short position stands for an investor's expectation that the price of the stock will go down in the future.

When a stock is sold short, it means an investor has borrowed shares of the stock from their broker, and then sold them at the going market price. The investor hopes for the price to decline, so that they might buy those shares back at a lower price in the future. Once they do, they can return the borrowed shares to their broker, and keep the profit they made on the transaction.

We can make inferences about the market sentiment surrounding Energy Transfer LP by analyzing its rate of institutional ownership. If institutions such as hedge funds and pension funds are the primary shareholders of a corporation, it most likely means that its shares are a good investment according to those institutions' analysts.

At 34.2%, the rate of institutional ownership is average, indicating that a sufficient number of institutions have concluded that it is a stable investment. Beware, however, that the rate of institutional ownership could also indicate an ongoing proxy battle or takeover attempt -- so you should also periodically check the news about a stock whose institutional ownership you are tracking.

In conclusion, we see positive market sentiment regarding Energy Transfer LP because of an analyst consensus of some upside potential, a buy rating, a very low short interest, and only a small number of institutional investors. At Market Inference, we believe that any investment decision should be preceded by an in-depth analysis of the company's fundamental values and a comparison with similar stocks.

Here's a snapshot of some important facts to keep in mind about ET:

The stock has trailing 12 month earnings per share (EPS) of $1.09
Energy Transfer LP has a trailing 12 month Price to Earnings (P/E) ratio of 14.4 compared to the S&P 500 average of 15.97
The company has a Price to Book (P/B) ratio of 1.75 in contrast to the S&P 500's average ratio of 2.95
Energy Transfer LP is a Utilities company, and the sector average P/E and P/B ratios are 17.53 and 1.71 respectively

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.