Energy Transfer: A Discounted MLP With A Large Upside
Summary
- Energy Transfer is one of the largest MLPs in the US, with a market cap of $31B.
- Units are cheap under 3x cash flows, which is a significant discount to the average 6.6x multiple.
- Despite a distribution cut in 2020, units have bounced back in the last couple years.
- The distribution has been hiked a couple times in 2022, and I would expect distribution growth to continue as the company continues to delever the balance sheet.
- Investors can collect a 7.9% yield and wait for price appreciation from multiple expansion.
Analyst’s Disclosure:I/we have a beneficial long position in the shares of EPD, MMP either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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