Like other energy commodities, Energy Transfer (ET) stock has continued to be pressured recently amid growing trade tensions. The stock is up only 4% this year despite strong earnings growth, underperforming many of its peers.
Energy Transfer stock’s chart indicators suggest weakness
Energy Transfer stock is currently trading at $13.20, almost 3% and 9% below its 50-day and 200-day simple moving averages, respectively. These discounts indicate weakness in the stock. Its 50-day average of $14.20 could act as short-term resistance for the stock, and its December price of $12 could act as long-term support.
The Alps Alerian MLP ETF (AMLP) closed at $8.80 last week, 5% and 9% below its 50-day and 200-day moving averages, respectively. AMLP’s 50-day average crossing below its 200-day average is a bearish sign, referred to by technical analysts as a “death cross.” In the short term, $9.60 might act as a resistance for AMLP, which has risen just 1% this year. Energy Transfer forms more than 10% of the ETF.
The midstream space’s recent decline has pushed many stocks into “oversold” territory. Energy Transfer’s and AMLP’s relative strength index scores both closed at around 30 last week.
Energy Transfer stock is currently trading at nine times analysts’ 12-month earnings estimate, making it look cheaper than peers. In comparison, Kinder Morgan (KMI) and Enterprise Products Partners (EPD) have forward PE multiples of 19x and 12x, respectively.
Analysts expect Energy Transfer’s EPS to grow more than 20% this year and 5% in 2020. Meanwhile, they expect Kinder Morgan’s EPS to grow 10% and 7% in 2019 and 2020, respectively, and Enterprise Products Partners’ to grow marginally for the next few years. To learn more, read Looking at Energy MLPs with Strong Growth Prospects.
Institutional ownership of Energy Transfer stock
In the second quarter, Invesco Advisers bought net 62 million Energy Transfer shares. It held 2.4% of the energy infrastructure company at the end of Q2 2019, according to its 13F filing.
Meanwhile, Goldman Sachs sold net 8.2 million shares and held approximately 3% of Energy Transfer in the second quarter. UBS Financial Services sold approximately 4.6 million Energy Transfer shares during the quarter.
Analysts’ mean price target of $21.20 for Energy Transfer stock implies a 61% upside for the next 12 months. They seem positive on the stock. Of the 20 analysts covering Energy Transfer, ten recommend “strong buy,” eight recommend “buy,” and two recommend “hold.”