Is it advisable to purchase Energy Transfer (ET) shares before August 6? This piece reveals historical trends.

Is it advisable to purchase Energy Transfer (ET) shares before August 6? This piece reveals historical trends.

In the world of midstream energy companies, Energy Transfer (ET) stands out for its high dividend yield and role as a master limited partnership (MLP). As the ex-dividend date for Energy Transfer approaches on Aug. 8, investors are eagerly awaiting the company's fiscal second-quarter earnings report, scheduled for Aug. 6.

While Energy Transfer's stock price has shown mixed reactions to its earnings reports, the focus should be on trusting the long-term returns of the stock. Over the past eight quarters, Energy Transfer has beaten earnings-per-share (EPS) estimates three times, missed estimates four times, and hit the mark once.

Recent revisions in Energy Transfer's EPS estimates have shown some sensitivity in the stock price. For instance, a 1.72% decline in the Zacks Consensus EPS estimate over the past month was accompanied by a slide in the stock, despite broader market rises. This suggests that changes in the earnings outlook can impact the stock price in the short term.

However, it's essential to note that there hasn't been a strong correlation between Energy Transfer's earnings and near-term stock price movements. The stock currently has a Zacks Rank of #3 (Hold), indicating a moderate expected performance based on earnings revisions.

The current yield of Energy Transfer's cash distribution is approximately 7.2%, making it an attractive option for income-focused investors. However, it's worth mentioning that the current yield is less than the company's three-year average, suggesting a potential decrease in the dividend payout.

In terms of valuation, Energy Transfer trades at a forward P/E ratio in line with the industry average (12.36), suggesting that valuation relative to earnings is not significantly distorting price movements.

Investors should approach Energy Transfer with a long-term perspective, given the lack of correlation with near-term stock price movements. The scheduled dividend payout date for Energy Transfer is Aug. 19, with a payout of $0.33.

Data sources for this article include AlphaQuery and YCharts.

[1] Source: Zacks Investment Research [2] Source: YCharts

1. In the finance industry, Energy Transfer's high dividend yield and status as a master limited partnership (MLP) make it an appealing choice for income-focused investors, particularly those involved in the energy business.
2. Even though Energy Transfer's stock price reacted unpredictably to past earnings reports, investors should prioritize trusting in the stock's long-term returns, considering its historically fluctuating EPS performance.
3. To effectively manage investments in Energy Transfer, it is crucial to maintain a long-term perspective, as changes in the earnings outlook may affect the stock price in the short term but have a weaker correlation with near-term stock price movements.

Read also: