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How Does ONEOK Partners’ Valuation Compare to Its Peers’?


Jun. 1 2016, Updated 5:06 p.m. ET

OKS’s forward yield

As we learned in the previous article, ONEOK Partners (OKS) trades at a forward distribution yield of ~8%. This is slightly lower than the average 8.5% yield of its peers Enbridge Energy Partners (EEP), Energy Transfer Partners (ETP), MPLX (MPLX), and Spectra Energy Partners (SEP).

The forward distribution yield of a company is calculated by dividing its estimated one-year future distribution per unit by its market price per unit.

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OKS’s expected distribution growth

The graph above compares the forward yields of OKS and its peers relative to their expected distribution growths. As the graph shows, analysts expect OKS’s flat distributions to continue over the next two years. Among OKS’s peers, MPLX is expected to provide highest distribution growth, followed by SEP.

OKS, ETP, and EEP’s lower expected distribution growths likely contribute to their relatively higher yields.

EV-to-EBITDA multiple

ONEOK Partners is trading at a trailing-12-month EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple of 12.2x. In comparison, Enbridge Energy Partners (EEP), Energy Transfer Partners (ETP), MPLX (MPLX), and Spectra Energy Partners (SEP) are trading at EV-to-EBITDA multiples of 12.9x, 11.3x, 28.7x, and 12.8x, respectively. Excluding the exceptionally high multiple for MPLX, ONEOK Partners’ EV-to-EBITDA is close to the peer average.

As for forward multiples, OKS trades at a forward EV-to-EBITDA of 10.0x. EEP, ETP, MPLX, and SEP trade at forward EV-to-EBITDA ratios of 11.2x, 8.9x, 11.5x, and 10.3x, respectively. These lower forward ratios indicate expectations of EBITDA growth for all the companies in 2016.

Next, we’ll take a look at the recent changes in institutional investors’ ownerships in ONEOK Partners.


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