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Midstream Struggles to Cross the 100-Day Moving Averages

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Jan. 19 2016, Updated 7:58 a.m. ET

Moving averages

As of January 15, 2016, the 100-day moving averages of midstream companies’ stocks showed strong resistance. All of the midstream companies in the following table were trading below their 100-day moving averages. On average, midstream companies are trading 30% below the 100-day averages.

Specifically, Kinder Morgan Energy Partners (KMI) and Williams Companies (WMB) were trading 47% and 55%, respectively, below their 100-day moving averages as of January 15. Midstream companies were also trading well below their 20-day moving averages.

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Spectra Energy Partners (SEP) managed to trade 1.6% above its 100-day moving average as of January 15. This is close compared to other midstream companies. The stock continuously struggled to cross its 100-day moving average. It’s trading with a difference from its 100-day moving average either upside or downside.

In comparison, the Alerian MLP ETF (AMLP) was trading 22.5% below its 100-day moving average.

Wall Street analysts’ consensus estimates

Wall Street analysts’ consensus estimates suggest an impressive 73% upside for these midstream companies—compared to the 66.5% upside consensus estimates for large-cap upstream companies. Over the next 12 months, midstream operators Williams Companies and Energy Transfer Partners (ETP) could see rises of 112% and 85%, respectively, from their levels as of January 15. Below is a rundown of three other midstream operators and Wall Street analysts’ estimates for each company over the next 12 months:

  • Kinder Morgan could see a 62% rise.
  • Spectra Energy could see a 32% rise.
  • Williams Partners (WPZ) could see a 103% rise.

Interestingly, the forward PE (price-to-earnings) ratio for the next year suggests that Energy Transfer Partners and Williams Partners are cheaper than other MLPs.

In the next part of this series, we’ll discuss the moving averages and analysts’ estimates for integrated oil and gas companies.

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