Moving Averages Indicate a Bearish Trend for Energy Transfer Equity
Energy Transfer Equity’s market performance
Energy Transfer Equity (ETE) operates as a pure play GP (general partner). It lost 53.9% of its market value since the beginning of this year. The Alerian MLP ETF (AMLP) is comprised of 22 midstream energy MLPs. It fell by 32.9%.
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As a pure play GP, Energy Transfer Equity’s earnings mainly depend on distribution income from its subsidiaries including Energy Transfer Partners (ETP), Sunoco Logistics Partners (SXL), and Sunoco LP (SUN). All three subsidiaries continued to grow their distribution from the past several quarters. This drove Energy Transfer Equity’s distributable cash flows and distributions. However, investors still dumped Energy Transfer Equity’s units. They doubted the future profitability of MLPs’ distributions in the current low energy price environment. General negative sentiments prevailed in the energy sector.
Moving averages indicate a bearish trend
Currently, Energy Transfer Equity is trading below its 50-day and 200-day moving averages by 39.4% and 105.5%, respectively. This indicates a bearish trend in its stock. The moving average crossover, where the 50-day moving average crossed the 200-day moving average, was the start of a bearish trend. Since then, Energy Transfer Equity lost 49%.
Energy Transfer Equity’s recent earnings
Energy Transfer Equity’s fiscal 3Q15 distributable cash flow was $325 million—compared to $234 million in fiscal 3Q14—a YoY (year-over-year) rise of 38.9%. For the first nine months, Energy Transfer Equity’s distributable cash flow was $981 million—compared to $652 million during the same period in previous year. It rose 50.5% YoY. Its distribution coverage ratio was 1.09x and 1.16x for the three month and nine month period ending September 30, 2015.
In this series, we’ll analyze Energy Transfer Equity’s analyst projections, segment-wise operating performance, leverage position, and cash flow measures. Following an analysis of Energy Transfer Equity’s financial statements, we’ll look at Energy Transfer Equity’s valuations and its commodity price exposure.