Could Energy Transfer Equity Stock Recover?

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Could Energy Transfer Equity Stock Recover? PART 1 OF 6

Could Energy Transfer Equity Stock Regain Upward Momentum?

Energy Transfer Equity’s recent performance

Energy Transfer Equity’s (ETE) weakness has continued despite a mild recovery in the midstream energy sector. ETE, Energy Transfer Partners’ (ETP) MLP GP (general partner), has lost 8.9% over the past month, while the Alerian MLP ETF (AMLP) has lost 3.8%. Overall, ETE has fallen 10.1% since the start of this year, and AMLP has fallen 3.2%.

Could Energy Transfer Equity Stock Regain Upward Momentum?

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What’s weighing on ETE’s stock?

ETE’s underperformance of AMLP could be attributed to company-specific issues, including the following:

  • regulatory and environmental concerns at Energy Transfer Partners (ETP)
  • weak distribution coverage and high leverage at Sunoco LP (SUN)
  • an expected rise in leverage for ETE following the completion of its USAC (USA Compression Partners) deal.

ETP’s regulatory hurdles include construction halting in the Bayou Bridge pipeline project and the recent suspension of operations for the Mariner East 1 project. The Pennsylvania Public Utility Commission suspended operations at Mariner East after the discovery of three sinkholes near the project. The Mariner East 1 pipeline moves ~70,000 barrels per day of natural gas liquids from the Marcellus and Utica shale formations to markets in Pennsylvania and the Marcus Hook industrial complex on the East Coast. Energy Transfer Equity is dependent upon Energy Transfer Partners and Sunoco LP for distribution income.

Energy Transfer Equity’s historical performance

ETE has lost 16.2% over the past year. In comparison, peers NuStar GP Holdings (NSH) and Plains GP Holdings (PAGP) have fallen 60.7% and 27.9%, respectively. C-corp peer Williams Companies (WMB) has fallen 2.3%.

Series overview

In this series, we’ll discuss whether ETE could regain upward momentum. We’ll also look into the GP’s price forecast, technical indicators, distribution yield, valuation, and analyst recommendations.


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