Of the four midstream companies we’re comparing in this series—Enterprise Products Partners (EPD), Williams Companies (WMB), Energy Transfer Equity (ETE), and Kinder Morgan (KMI)—Enterprise Products Partners has received the highest percentage of “buy” recommendations from the analysts surveyed by Reuters. Of the surveyed analysts, 96% have rated Enterprise Products a “buy.”
By comparison, 74% of the surveyed analysts recommend Energy Transfer Equity as a “buy,” while 76% recommend Williams Companies as a “buy,” and 52% recommend Kinder Morgan as a “buy.” None of the surveyed analysts has given a “sell” recommendation to any of these four stocks.
The above chart compares analyst recommendations for the four stocks.
The consensus target prices for EPD, ETE, KMI, and WMB are $31.0, $20.0, $22.0, and $35.0, respectively. These target prices imply a price return of 7%, 11%, 13%, and 5%, respectively, for EPD, ETE, KMI, and WMB over the next year. Kinder Morgan thus offers the highest upside potential, followed by Energy Transfer Equity, based solely on the analysts’ recommendations.
Enterprise Products Partners’ consistent earnings and distribution growth, reasonable leverage, simple structure, and financial discipline have likely contributed to the high percentage of “buy” recommendations for the stock. The company appears to be well-placed for consistent growth going forward.
Kinder Morgan is taking steps in the right direction to strengthen its financial profile. But its lower yield, negative earnings growth in the latest quarter, and high leverage could concern investors. Williams Companies is also taking numerous steps to position itself for long-term growth, while Energy Transfer Equity’s high leverage will likely remain a key concern of investors.
Higher oil prices over the past few months, combined with continuous efforts by the companies to strengthen their financial profiles for long-term growth, could place the midstream giants in strong positions for future.