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ETE, EPD, KMI, and WMB: What the Current Valuations Indicate

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Dec. 4 2020, Updated 10:51 a.m. ET

Forward EV-to-EBITDA multiples

Kinder Morgan (KMI) is currently trading at a forward EV-to-EBITDA[1. enterprise value to earnings before interest, tax, depreciation, and amortization] multiple of nearly 11.4x. This is much lower than its five-year average multiple of nearly 17.4x. 

In comparison, Enterprise Products Partners (EPD), Energy Transfer Equity (ETE), and Williams Companies (WMB) are currently trading at forward EV-to-EBITDA multiples of nearly 13.7x, 15.6x, and 11.8x, respectively.

As the above graph shows, the forward multiples of EPD, WMB, and KMI are lower compared to their respective five-year average multiples. This indicates possible undervaluation.

Energy Transfer Equity’s forward EV-to-EBITDA multiple, on the other hand, is higher than its five-year average multiple. ETE’s multiple is also higher compared to its peers. In the absence of superior risk-return metrics, ETE’s higher multiple may indicate a likely overvaluation.

In the final part of this series, we’ll take a look at what Wall Street analysts recommend for ETE, EPD, KMI, and WMB.

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