Should Value Investors Buy Energy Transfer Equity (ETE) Stock?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One company to watch right now is Energy Transfer Equity (ETE). ETE is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 8.59. This compares to its industry's average Forward P/E of 15.02. Over the last 12 months, ETE's Forward P/E has been as high as 17.92 and as low as 7.93, with a median of 9.86.
We should also highlight that ETE has a P/B ratio of 0.69. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. ETE's current P/B looks attractive when compared to its industry's average P/B of 1.55. Within the past 52 weeks, ETE's P/B has been as high as 0.79 and as low as 0.52, with a median of 0.66.
Finally, we should also recognize that ETE has a P/CF ratio of 4.58. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. ETE's current P/CF looks attractive when compared to its industry's average P/CF of 9.22. Over the past year, ETE's P/CF has been as high as 4.87 and as low as 3.52, with a median of 4.16.
These are only a few of the key metrics included in Energy Transfer Equity's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, ETE looks like an impressive value stock at the moment.