Energy Transfer Partners (ETP) Stock Could Rally Back to $50
NEW YORK (TheStreet) -- Shares of Action Alerts PLUS holding Energy Transfer Partners (ETP) have nearly been cut in half. Is it finally ready to rally?
ETP, see above chart, is still below the falling 50-day and 200-day moving averages. However, we can see a nice bullish divergence between the equal price lows in September and November and the higher lows seen from the momentum study. The On-Balance-Volume (OBV) line is trying to base and that could happen soon with a short string of higher closes.
The chart above shows a big decline in ETP. Note the heavier volume of trading in recent months, which may suggest that the weak holders have been flushed out. Also notice the bullish divergence on this timeframe -- we have lower lows in prices, but in the bottom panel we have equal lows from the momentum study. This bullish divergence could be foreshadowing a rally for ETP back into the $45 to $50 area. A close above the October highs will be a welcomed development.
TheStreet Ratings team rates ENERGY TRANSFER PARTNERS -LP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
We rate ENERGY TRANSFER PARTNERS -LP (ETP) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its respectable return on equity which we feel is likely to continue. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, generally higher debt management risk and poor profit margins.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ENERGY TRANSFER PARTNERS -LP's return on equity is below that of both the industry average and the S&P 500.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 40.74%, 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.
- You can view the full analysis from the report here: ETP
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.