Dividend Stock Review of ETP: ENERGY TRANSFER PARTNERS L P
It’s a windy evening in Honolulu Hawaii, and I’m in a cafe with my Mom blogging a review of a potentially high dividend yielding stock ETP – Energy Transfer Partners LP...
If you are interested in Financial Freedom, you might be like me and are interested in creating more and more passive income for yourself…
…well, I’ve been investing for dividends for over 5 years now and it’s been a bit of trial and error, and also has motivated to research all of the best higher yielding stocks available…
…so let’s dive into today’s pick, ETP – Energy Transfer Partners LP!
ETP is earning 12.81% so should you invest in this company?
Read on to find out more…
Energy Transfer Partners LP (Tickler Symbol: ETP)
Let’s get straight to the point, as of today 4-11-16 ETP is yielding 12.81% on a quarterly basis, and the last dividend earnings date was on 2/16/16.
The price per share at close of trading was $32.37, and it’s lowest price in the last 52 weeks occurred on 2/9/16 at $18.62, which was 5 days after the ex-dividend date on 2/4/16.
The highest price in the last 52 weeks was $59.37 on 5/1/15, so over the last year the price has decreased by roughly 50%.
From 1997 to 2000 the price averaged at $10/share, after which it steadily increased as high as $64.79/share on 1/1/2015.
Financials for the company can be accessed here
Etrade describes ETP as follows:
“Energy Transfer Partners, L.P. is a master limited partnership. The Company’s operating segments include Intrastate Transportation and Storage segment; Interstate Transportation and Storage segment; Midstream segment; Liquids Transportation and Services segment; Investment in Sunoco Logistics segment; Retail Marketing segment and All Other segment. It is engaged in natural gas operations, including natural gas midstream and intrastate transportation and storage, and interstate natural gas transportation and storage; Liquids operations, including NGL transportation, storage and fractionation services; product and crude oil operations, including product and crude oil transportation, terminalling services and acquisition and marketing activities and retail marketing of gasoline and middle distillates. It is managed by its general partner Energy Transfer Partners GP, L.P. Its brands include Sunoco, Stripes, Aplus, Aloha Island Mart, Exxon, Valero, Mobil, Shell and Chevron, among others.”
J.P. Morgan’s Review of ETP
Per TheStreet J.P. Morgan put out the following favorable review of ETP: “Double digit distribution secure, market underappreciates ETE support. We believe ETP has outlined a clear path to funding needed through YE16, after which ETP should start to realize the benefit of the ~$10bn of projects under construction. The ~$2.2bn drop down to SUN announced at the recent Analyst Day pre-funds nearly 70% of planned 2016 equity needs, with the potential for non-core asset sales and/or IDR waivers on future equity issuance to cover the balance. ETE’s growth depends upon a strong ETP, and we believe ETE will do what it takes to defend ETP.”
I looked up information on (ETE) ENERGY TRANSFER EQUITY L P COM UT LTD PTN and here is what Etrade has to say about it:
“Energy Transfer Equity, L.P. (ETE) is a limited partnership company. The Company, directly and indirectly, owns equity interests in Energy Transfer Partners, L.P. (ETP) and Regency Energy Partners LP (Regency), both of which are master limited partnerships engaged in diversified energy-related services. Its segments include Investment in ETP, including the consolidated operations of ETP and Regency; Investment in Lake Charles LNG, including the operations of Lake Charles LNG Company, LLC (Lake Charles LNG), and Corporate and Other, including the activities of ETE. The Company’s Lake Charles LNG provides terminal services for shippers by receiving liquefied natural gas (LNG) at the facility for storage and delivering such liquefied natural gas (LNG) to shippers. It, through ETP, operates various brands, such as Sunoco, Stripes, Aplus, Aloha Island Mart, Exxon, Mobil, Valero, Shell and Chevron. In March 2015, ETE transferred its 45% interest in the Bakken Pipeline project to ETP.”
Upon further research, I found that in early April a lawsuit was filed against ETE, by it’s potential merging partner Williams Cos. The dispute is over the offering of preferred shares of ETE to ETE’s stockholder’s, without including Williams’ stockholders.
It is unclear how to lawsuit will pan out and whether their merger will be successful.
TheStreet’s review pointed up some valid points regarding the strengths and weaknesses of ETP.
- Net operating cash flow has significantly increased by 104.27% to $860.00 million when compared to the same quarter last year. In addition, ENERGY TRANSFER PARTNERS -LP has also vastly surpassed the industry average cash flow growth rate of -26.50%.
- Along with the very weak revenue results, ETP underperformed when compared to the industry average of 36.8%. Since the same quarter one year prior, revenues plummeted by 55.8%. Weakness in the company’s revenue seems to have hurt the bottom line, decreasing earnings per share.
- Despite any intermediate fluctuations, we have only bad news to report on this stock’s performance over the last year: it has tumbled by 46.65%, worse than the S&P 500’s performance. Consistent with the plunge in the stock price, the company’s earnings per share are down 77.27% compared to the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, ETP is still more expensive than most of the other companies in its industry.
- The debt-to-equity ratio of 1.30 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, ETP maintains a poor quick ratio of 0.86, which illustrates the inability to avoid short-term cash problems.
Conclusion – Reasons I’m Not Going To Recommend Investing in ETP
After this review of the current conditions surrounding ETP, I personally would not invest in this company.
My reasons are that the litigation against it’s parent company ETE show ineffective communication between potential business partner Williams Cos.
Also, the revenues for the company dropped substantially in the past year, perhaps due to the drop in the price of gasoline.
In general, the energy market seems to be a little too uncertain for me to invest in at this point.
There could be a large shift away from fossil fuels in the near future that could almost wipe out the profits of this type of fossil fuel company.
What are your thoughts? Want to invest in ETE? Let us know by writing in a comment!