Water-Logged And Getting Wetter Stock Of The Day: Energy Transfer Partners (ETP)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Energy Transfer Partners ( ETP) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Energy Transfer Partners as such a stock due to the following factors:

  • ETP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $123.1 million.
  • ETP has traded 3.2 million shares today.
  • ETP traded in a range 213.4% of the normal price range with a price range of $1.67.
  • ETP traded below its daily resistance level (quality: 53 days, meaning that the stock is crossing a resistance level set by the last 53 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on ETP:

Energy Transfer Partners, L.P. engages in the natural gas midstream, and intrastate transportation and storage businesses in the United States. The stock currently has a dividend yield of 7.2%. ETP has a PE ratio of 86. Currently there are 9 analysts that rate Energy Transfer Partners a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Energy Transfer Partners has been 2.4 million shares per day over the past 30 days. Energy Transfer has a market cap of $28.0 billion and is part of the basic materials sector and energy industry. The stock has a beta of 0.52 and a short float of 1.6% with 2.39 days to cover. Shares are down 15.2% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Energy Transfer Partners as a buy. Among the primary strengths of the company is its respectable return on equity which we feel is likely to continue. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • Despite the weak revenue results, ETP has outperformed against the industry average of 38.7%. Since the same quarter one year prior, revenues fell by 22.1%. 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. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ENERGY TRANSFER PARTNERS -LP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • ENERGY TRANSFER PARTNERS -LP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, ENERGY TRANSFER PARTNERS -LP turned its bottom line around by earning $1.65 versus -$0.24 in the prior year. For the next year, the market is expecting a contraction of 18.2% in earnings ($1.35 versus $1.65).
  • The gross profit margin for ENERGY TRANSFER PARTNERS -LP is currently extremely low, coming in at 10.55%. Regardless of ETP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.94% trails the industry average.
  • Net operating cash flow has decreased to $506.00 million or 25.80% when compared to the same quarter last year. Despite a decrease in cash flow ENERGY TRANSFER PARTNERS -LP is still fairing well by exceeding its industry average cash flow growth rate of -53.29%.

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