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Energy Transfer (NYSE: ET) stock price has continued to outperform the market in the past few months. It has soared by more than 35% in the past 12 months while the SPDR S&P 500 ETF has jumped by almost 20%. ET stock has also done better than the Vanguard Energy ETF (VDE), which has risen by over 5%. Most importantly, Energy Transfer has beaten other MLP companies like Williams, Cheniere, and Kinder Morgan.
ET stock continues to outperform
Energy Transfer is a major company in the energy industry. It is Master Limited Partnership (MLP), which is a good thing for the company since it does not pay corporate taxes. Instead, the company’s taxes are paid by unit or shareholders who must file their K-1 forms.
Energy Transfer is a major company that is able to transport over 4 million barrels of oil every day. It also has the ability to gather and transport over 20 million MMbtu. In all these, the company makes money by charging a fee through long-term contracts with producers.
By relying on fees, Energy Transfer has been able to weather different storms in the past. However, it has gone through numerous challenges in the past. In 2015, its revenue plunged to over $31.5 billion as oil and gas prices dropped. Similarly, its revenue dropped to $38.36 as demand plunged during the pandemic.
In all these cases, the company’s business has consistently bounced back. For example, the company’s revenue soared to over $66 billion in 2021 and $89 billion in 2022. Its profits have also recovered after all its downturns. It moved from a $647 million loss in 2020 to more than $5.4 billion in 2021.
Investors love Energy Transfer because of its stron dividends. After pausing its dividends in 2020, the company resumed its payouts and it plans to increase them by between 3% and 5%. Energy Transfer has also slashed its total debt to $47.2 billion from the previous $48.2 billion.
Is Energy Transfer stock a good investment?
Analysts have a positive outlook of Energy Transfer stock. According to WeBull, 50% of analysts who track the stock have a strong buy rating while the rest have a buy rating. The average price target for the stock is $17.21, which is about $5 higher than where it is today. Further, SeekingAlpha analysts have a buy rating on the company.
Meanwhile, a DCF calculation by Simply Wall Street estimates that the Energy Transfer share price was trading about 33% below its fair value.
Technically speaking, as shown in the chart above, we see that the shares have hit a major wall by failing to move above the resistance point at $12.96. It has failed to move above this price several times since January this year. More upside will be confirmed if it moves above this level, which is also the higher side of the ascending triangle pattern.
The post Wall Street is bullish on Energy Transfer stock price and its 10% yield appeared first on Invezz.
