Today we're going to take a closer look at Large-Cap Utilities company Energy Transfer LP, whose shares are currently trading at $17.11. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!
The Market May Be Undervaluing Energy Transfer LP's Assets and Equity:
Energy Transfer LP, together with its subsidiaries, provides energy-related services in the United States. The company belongs to the Utilities sector, which has an average price to earnings (P/E) ratio of 21.16 and an average price to book (P/B) ratio of 2.36. In contrast, Energy Transfer LP has a trailing 12 month P/E ratio of 13.5 and a P/B ratio of 1.87.
Energy Transfer LP has moved 6.8% over the last year compared to 16.7% for the S&P 500 — a difference of -9.9%. Energy Transfer LP has a 52 week high of $21.45 and a 52 week low of $14.6.
The Firm Has a Highly Leveraged Balance Sheet:
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $54,213 | $38,954 | $67,417 | $89,876 | $78,586 | $82,671 |
| Operating Margins | 13% | 8% | 13% | 9% | 11% | 11% |
| Net Margins | 6% | -2% | 8% | 5% | 5% | 6% |
| Net Income (M) | $3,518 | -$648 | $5,470 | $4,756 | $3,935 | $4,814 |
| Net Interest Expense (M) | $2,331 | $2,327 | $2,267 | $2,306 | $2,578 | $3,125 |
| Depreciation & Amort. (M) | $3,147 | $3,678 | $3,817 | $4,164 | $4,385 | $4,701 |
| Diluted Shares (M) | 2,638 | 2,696 | 2,740 | 3,097 | 3,177 | 3,420 |
| Earnings Per Share | $1.33 | -$0.24 | $2.0 | $1.54 | $1.24 | $1.41 |
| EPS Growth | n/a | -118.05% | 933.33% | -23.0% | -19.48% | 13.71% |
| Free Cash Flow (M) | $2,096 | $2,231 | $8,340 | $5,670 | $6,421 | $7,342 |
| CAPEX (M) | $5,960 | $5,130 | $2,822 | $3,381 | $3,134 | $4,164 |
| Total Debt (M) | $51,054 | $51,438 | $49,702 | $48,262 | $52,388 | $59,760 |
| Net Debt / EBITDA | 4.9 | 7.67 | 3.92 | 4.03 | 4.12 | 4.3 |
| Current Ratio | 0.97 | 1.07 | 0.97 | 1.17 | 1.1 | 1.12 |
Energy Transfer LP has generally positive cash flows, rapidly growing revenues and decreasing reinvestment in the business, and positive EPS growth. However, the firm suffers from weak operating margins with a stable trend and a highly leveraged balance sheet. Finally, we note that Energy Transfer LP has just enough current assets to cover current liabilities, as shown by its current ratio of 1.12.
