Back to top

Image: Bigstock

Are Investors Undervaluing Energy Transfer (ET) Right Now?

Read MoreHide Full Article

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

Energy Transfer (ET - Free Report) is a stock many investors are watching right now. ET is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock holds a P/E ratio of 8.77, while its industry has an average P/E of 11.31. ET's Forward P/E has been as high as 11.51 and as low as 4.74, with a median of 7.27, all within the past year.

Another notable valuation metric for ET is its P/B ratio of 1.06. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.77. Within the past 52 weeks, ET's P/B has been as high as 1.10 and as low as 0.74, with a median of 0.89.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. ET has a P/S ratio of 0.49. This compares to its industry's average P/S of 1.14.

Finally, investors will want to recognize that ET has a P/CF ratio of 5.09. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 8.36. Within the past 12 months, ET's P/CF has been as high as 5.24 and as low as 2.53, with a median of 3.34.

If you're looking for another solid Oil and Gas - Production Pipeline - MLB value stock, take a look at PBF Logistics (PBFX - Free Report) . PBFX is a # 2 (Buy) stock with a Value score of A.

PBF Logistics also has a P/B ratio of 3.48 compared to its industry's price-to-book ratio of 1.77. Over the past year, its P/B ratio has been as high as 5.44, as low as 2.84, with a median of 3.62.

These are just a handful of the figures considered in Energy Transfer and PBF Logistics's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that ET and PBFX is an impressive value stock right now.

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

Energy Transfer LP (ET) - free report >>

PBF Logistics LP (PBFX) - free report >>

Published in