Based on analysts’ estimates, Energy Transfer (ET) stock has a median target price of $21.12 compared to its current market price of $15.00, which implies an upside potential of ~41% over the next 12 months.
Among the 18 analysts covering Energy Transfer stock, eight recommended a “strong buy,” eight recommended a “buy,” and two recommended a “hold.” None of the analysts recommended a “sell” as of March 5.
Energy Transfer stock looks to be trading at a discount compared to its peers. The stock is trading at a forward EV-to-EBITDA multiple close to 9x based on analysts’ estimated earnings for the next 12 months. The company’s historical five-year average EV-to-EBITDA multiple is close to 16x, while peers’ average valuation multiple is close to 10x. Energy Transfer stock appears to be trading at a discounted valuation compared to its historical average.
Energy Transfer offers a distribution yield of 8.1%, which is higher than its five-year average yield. The Alerian MLP ETF (AMLP) is trading at a yield of 8.0%. Energy Transfer raised its distribution 13.4% compounded annually in the last five years—higher than many of its peers.
Currently, many MLPs have handsome total return potential. Energy Transfer offers the highest upside potential and distribution yield among the midstream giants we’re discussing in this series.