ET - Energy Transfer: Less Attractive For Fresh Buyers (Rating Downgrade)
2024-06-13 06:28:40 ET
Summary
- Energy Transfer has outperformed the S&P 500 since my last 'Buy' upgrade on the security. However, I am now downgrading my stance to a 'Neutral/Hold':
- Operating performance continues to be stable and healthy, especially in the crude oil pipelines business.
- ET's acquisition of WTG Midstream is at a good price, and I am optimistic about management's ability to make more reasonable midstream M&A deals.
- Valuation discounts have shrunk since my last update in January 2024; today, Energy Transfer trades closer to its long-term median valuation multiples.
- Relative technical analysis vs the S&P 500 suggests increased chances of sideways movement followed by a breakdown.
Performance Assessment
In my last article on Energy Transfer ( ET ), I had a bullish outlook with an initial 'Neutral/Hold' rating, which soon got upgraded to a buy (see pinned comment in my last article) on 26 Jan 2024. Since then, ET has generated +12.30% vs the S&P 500's ( SPY ) ( SPX ) +10.51%, outperforming the market index by +1.79%:
ET vs SPY Performance since my Buy Upgrade (TradingView)
