The Razor's Edge

2-Year Price History

Ockham's Rating

Rating Specific Information Withheld Premium Access Only

ETP Revenue

As a value investing shop, we are interested in seeing how ETP's revenues measure up against past performances. One easily understandable way of doing that is to compare Price to Sales per share levels over a given time frame. Assuming it is available, Ockham prefers to look at ten years of history (for this stock there are 10 years of history available) and we weigh recent years more heavily. This allows us to find weighted average historical high and low Price to Sales ratios, which give us a better idea of the stock's current underlying value. Using this method, we have established a high range for Price to Sales of 0.90x and the low end of the range at 0.55x.

With respect to these historically rational metrics, notice that the current Price to Sales per share ratio for ETP of 0.45x is well below its normal historic Price to Sales levels. At a price of $33.13, ETP is 38% below where we would expect to see it. Clearly, this stock looks undervalued compared to historical levels, at least on a Price to Sales basis. This will positively affect our analysis because it is rare to find a stock this far below historical norms, and we would expect some price appreciation to bring this metric back towards a more normal range.

ETP Cash Earnings

Cash Earnings is always one of the most important factors to review for a company and, more importantly, an investment in a stock. ETP is significantly below their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for ETP, the current level of Cash Earnings compared to its historical levels helps identify where ETP is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 10.14 and a historical low Cash Earnings per share ratio of 6.19, an investor can relate where value becomes optimal.

So what does "significantly below" mean when we talk about Price to Cash Earnings numbers for ETP? From the Ockham perspective, we are looking specifically at ETP to see if the market is recognizing the huge disparity between ETP's past stock price to Cash Earnings ratio to today's levels. At a difference of 35% below the average historical Price to Cash Earnings ratio, our view would be quite positive at this point. However, as with all metrics, we need to also take other factors into account when looking at ETP. While we view better Cash Earnings metrics as very important, if the market is slow to identify this value, or if Cash Earnings were to fall from these levels, we would become more neutral in our stance.

ETP Dividends

When determining a company's future prospects for success, Ockham Research sees analysis of dividend payments as a key additional factor. Even though it isn't imperative for ETP to shell out a dividend in order to receive a positive rating, it can be helpful to further our analysis.

The estimated annual dividend for ETP is $3.58 producing a current dividend yield of 10.81%. Much like our evaluation of Sales and Cash Earnings per share, we review dividend yields from ETP against the historic high and low levels over all available dividend history. Because dividends are a decision made exclusively by management, we view a healthy and rising dividend as a sign of confidence and strength. The highest dividend yield from ETP over previous years was 15.98% while the lowest dividend yield was 4.62%. Management at ETP has encouraged us with a current dividend yield of 4.95% above the historical median.