Energy Transfer: An 8.1% Yield, Undervalued And A Buy As Debt Fears Are Overdone
Summarize this article with:
Dhierin BechaiInvesting Group LeaderFollow5ShareSavePlay(8min)CommentsSummaryEnergy Transfer is rated a buy, offering an 8.1% yield with 20–39% upside potential by 2026 as market discounts overstate risk.ET’s fee-based, long-term contracts drive stable cash flows, with 90% of EBITDA shielded from commodity price volatility and steady demand growth tailwinds.While EBITDA margins may soften, sales growth and reduced CapEx are expected to improve net debt leverage after a near-term peak.I expect the current high yield to be sustainable, supported by predictable cash flows and no anticipated distribution cuts despite elevated leverage. Sky_Blue/iStock via Getty Images Over the past months, I have started expanding coverage towards midstream companies. I believe midstream companies are attractive due to their pricing model, which provides extremely limited exposure to volatility in commodity prices. This results in predictable distributable cashThis article was written byDhierin Bechai22.15K FollowersFollowDhierin-Perkash Bechai is an aerospace, defense and airline analyst. Dhierin runs the investing group The Aerospace Forum, whose goal is to discover investment opportunities in the aerospace, defense and airline industry. With a background in aerospace engineering, he provides analysis of a complex industry with significant growth prospects, and offers context to developments as they occur, describing how they might affect investment theses. His investing ideas are driven by data informed analysis. The investing group also provides direct access to data analytics monitors. Learn more.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. 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. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.