Energy Transfer (NYSE: ET) is one of 35 public companies in the “Natural gas transmission” industry, but how does it compare to its peers? We will compare Energy Transfer to similar companies based on the strength of its institutional ownership, valuation, profitability, analyst recommendations, risk, dividends and earnings.

Volatility and Risk

Energy Transfer has a beta of 1.9, meaning that its stock price is 90% more volatile than the S&P 500. Comparatively, Energy Transfer’s peers have a beta of 1.53, meaning that their average stock price is 53% more volatile than the S&P 500.

Insider and Institutional Ownership

45.6% of Energy Transfer shares are held by institutional investors. Comparatively, 51.1% of shares of all “Natural gas transmission” companies are held by institutional investors. 3.3% of Energy Transfer shares are held by insiders. Comparatively, 6.7% of shares of all “Natural gas transmission” companies are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings and price targets for Energy Transfer and its peers, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Energy Transfer 0 0 1 0 3.00
Energy Transfer Competitors 442 1733 2258 86 2.44

Energy Transfer currently has a consensus price target of $20.00, indicating a potential upside of 33.96%. As a group, “Natural gas transmission” companies have a potential downside of 60.99%. Given Energy Transfer’s stronger consensus rating and higher probable upside, analysts plainly believe Energy Transfer is more favorable than its peers.

Earnings & Valuation

This table compares Energy Transfer and its peers top-line revenue, earnings per share and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Energy Transfer $40.52 billion $915.00 million 12.34
Energy Transfer Competitors $6.00 billion $622.19 million 39.82

Energy Transfer has higher revenue and earnings than its peers. Energy Transfer is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Dividends

Energy Transfer pays an annual dividend of $1.22 per share and has a dividend yield of 8.2%. Energy Transfer pays out 100.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. As a group, “Natural gas transmission” companies pay a dividend yield of 8.0% and pay out 150.6% of their earnings in the form of a dividend. Energy Transfer is clearly a better dividend stock than its peers, given its higher yield and lower payout ratio.

Profitability

This table compares Energy Transfer and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Energy Transfer 2.58% 5.75% 1.99%
Energy Transfer Competitors 16.15% 16.43% 8.93%

Summary

Energy Transfer beats its peers on 8 of the 15 factors compared.

About Energy Transfer

Energy Transfer LP provides diversified energy-related services in the United States. It owns and operates approximately 7,900 miles of natural gas transportation pipelines and three natural gas storage facilities in Texas; and approximately 11,800 miles of interstate natural gas pipelines. The company sells natural gas to electric utilities, independent power plants, local distribution companies, industrial end-users, and other marketing companies. It owns and operates natural gas and natural gas liquid (NGL) gathering pipelines, as well as natural gas processing plants, treating facilities, and conditioning facilities in Texas, New Mexico, West Virginia, Pennsylvania, and Louisiana; natural gas gathering, oil pipeline, and oil stabilization facilities in South Texas; a natural gas gathering system in Ohio; and transportation and supply of water to natural gas producers in Pennsylvania. The company also owns approximately 4,300 miles of NGL pipelines, 5 NGL and propane fractionation facilities, and NGL storage facilities with aggregate working storage capacity of approximately 53 million barrels. It also sells gasoline, middle distillates, and motor fuel at retail, as well as crude oil, NGLs, and refined products; operates convenience stores; and distributes motor fuels and other petroleum products. The company provides natural gas compression services; treating services, such as carbon dioxide and hydrogen sulfide removal, natural gas cooling, dehydration, and British thermal unit management services; and manages coal and natural resources properties, as well as sells standing timber, leases coal-related infrastructure facilities, collects oil and gas royalties, and generates a total of 75 megawatts electrical power. The company was formerly known as Energy Transfer Equity, L.P. and changed its name to Energy Transfer LP in October 2018. The company was founded in 2002 and is based in Dallas, Texas.

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