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Equitrans Midstream Corp ETRN

Morningstar Rating
$10.70 +0.01 (0.09%)
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Company Report

Equitrans Earnings: More Mountain Valley Pipeline Setbacks Plus Strategic Options

Equitrans Midstream's fourth-quarter earnings were more disappointing than positive, but it may not matter to investors if the firm is acquired at a healthy premium to its current stock price. Equitrans is engaged in discussions about strategic transactions with third parties; we think an acquisition by Williams or Energy Transfer would likely make the most strategic and financial sense, considering the asset network overlap. We continue to see Equitrans as undervalued and expect to maintain our $15 fair value estimate and narrow moat rating, so a deal could provide a quick pathway toward achieving our valuation target. The timing is good for a third party, with the Mountain Valley pipeline on track to enter service by or on May 31, as it is essentially derisked. While it is unclear at what stage the talks are, we do think an acquisition makes sense for both parties. Equitrans expects to own 49% of the pipeline via a subsidiary and be the operator; its equity stake has increased recently as it has funded the latest overruns.

Price vs Fair Value

ETRN is trading within a range we consider fairly valued.
Price
$10.70
Fair Value
$45.00
Uncertainty
High
1-Star Price
$72.31
5-Star Price
$1.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

The integration of Rice Energy Midstream offers optimization opportunities, given the geographic closeness of the assets, representing $300 million to $500 million in potential capital avoidance over the next five years.

Bears

There could still be legal challenges to the MVP Southgate and Hammerhead projects, as only the MVP is protected under legislation.

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News

Trading Information

Previous Close Price
$10.69
Day Range
$10.6410.78
52-Week Range
$4.6011.00
Bid/Ask
$10.57 / $10.70
Market Cap
$4.64 Bil
Volume/Avg
57 / 4.1 Mil

Key Statistics

Price/Earnings (Normalized)
14.89
Price/Sales
3.35
Dividend Yield (Trailing)
5.61%
Dividend Yield (Forward)
5.61%
Total Yield
5.61%

Company Profile

Equitrans acquired EQM Midstream in mid-2020, consolidating the midstream family. Equitrans now own EQM assets directly versus just unit ownership. EQM Midstream provides gathering, transmission, and water services to primarily Appalachian producers in Pennsylvania, West Virginia, and Ohio.
Sector
Energy
Industry
Oil & Gas Midstream
Stock Style Box
Small Value
Total Number of Employees
773

Competitors

Valuation

Metric
ETRN
MPLX
KMI
Price/Earnings (Normalized)
14.8910.2116.31
Price/Book Value
4.441.28
Price/Sales
3.353.752.54
Price/Cash Flow
7.377.446.33
Price/Earnings
ETRN
MPLX
KMI

Financial Strength

Metric
ETRN
MPLX
KMI
Quick Ratio
0.671.000.23
Current Ratio
0.761.070.35
Interest Coverage
2.025.432.78
Quick Ratio
ETRN
MPLX
KMI

Profitability

Metric
ETRN
MPLX
KMI
Return on Assets (Normalized)
3.67%10.73%3.46%
Return on Equity (Normalized)
40.93%80.16%7.89%
Return on Invested Capital (Normalized)
7.96%13.87%6.00%
Return on Assets
ETRN
MPLX
KMI
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Oil & Gas Midstream Industry Comparables

Ticker
Name
Morningstar Rating for Stocks
Economic Moat
Market Cap
ENB
Enbridge IncJzypgq$73.9 Bil
EPD
Enterprise Products Partners LPKsz$60.3 Bil
ET
Energy Transfer LPGccyc$50.4 Bil
WMB
Williams Companies IncPfrqdf$44.3 Bil
OKE
ONEOK IncXzwnxv$43.8 Bil
TRP
TC Energy CorpJjjlbj$41.2 Bil
MPLX
MPLX LP Partnership UnitsSpkbmct$39.0 Bil
KMI
Kinder Morgan Inc Class PWdfln$38.8 Bil
LNG
Cheniere Energy IncYvr$36.7 Bil
CQP
Cheniere Energy Partners LPRfjwj$23.5 Bil

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