Can Energy Transfer Partners Bounce Back in 2012?

With 2012 just beginning, now's a great time to gauge how the stocks you're interested in are likely to do this year and beyond. By knowing what stock analysts and fellow investors expect from a stock, you'll be smarter about whether you should buy it for your portfolio -- or sell it if you already own it.

Today, let's take a look at Energy Transfer Partners (NYSE: ETP  ) . As I discussed last month, Energy Transfer Partners has suffered somewhat from the glut of natural gas and competition among pipeline and storage peers. But with consolidation activity picking up in the industry, could the company actually be best positioned to take advantage of changing conditions in 2012? Below, I'll take a closer look at what people expect from Energy Transfer Partners and its rivals.

Forecasts on Energy Transfer Partners

Median Target Stock Price $49
2011 EPS Estimate                           $1.57
2012 EPS Estimate $2.45
Expected Annual Earnings Growth, Next 5 Years 19%
Forward P/E 19.2
CAPS Rating *****

Source: Yahoo! Finance.

Will Energy Transfer Partners rise in 2012?
Analysts are giving mixed messages about Energy Transfer Partners. On one hand, their target price of the stock is less than $2 above the current share price. However, they still expect huge earnings growth for the company in 2012. Motley Fool CAPS members weigh in on the optimistic side, giving the company their top rating of five out of five stars.

One challenge the whole industry faces is that the natural gas market can't seem to catch a break. Both Range Resources (NYSE: RRC  ) and Ultra Petroleum (NYSE: UPL  ) have gotten off to a horrible start in 2012, as the gas-focused stocks have some of the heaviest exposure to natural gas prices, which have fallen to decade-lows to start off the year. Among pipeline companies, those pressures have led to consolidation in the industry, with combinations aiming to build extensive networks across the continent.

Price weakness doesn't directly translate to problems for Energy Transfer Partners, though. The company has an agreement with ExxonMobil (NYSE: XOM  ) subsidiary XTO Energy to provide processing and transportation for gas in the Barnett and Woodford shale areas. But as Energy Transfer Partners' recent dispute with Enterprise Products Partners (NYSE: EPD  ) over a proposed Cushing-Houston pipeline reveals, deals aren't a sure thing until they're done.

If natural gas will ever stabilize, then Energy Transfer Partners could profit in a big way from the increased demand. For now, though, the company may need to tread water in an ultra-competitive market in order to hold its own.

Energy Transfer Partners may shine in a good environment for gas, but we've got another stock we think is an even more exciting gas play. Join the thousands who've already found out its name and more about the company in the Motley Fool's special free report on natural gas, but don't wait -- get it today.

Click here to add Energy Transfer Partners to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. The Motley Fool owns shares of Ultra Petroleum. Motley Fool newsletter services have recommended buying shares of Ultra Petroleum, Enterprise Products Partners, and Range Resources. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool has a disclosure policy.

Read/Post Comments (1) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 23, 2012, at 2:30 PM, CMFMutwa wrote:

    Pipeline companies are somewhat agnostic to underlying price of the commodity. If their pipes and storage are full, that's all they care. And if they are, they get to raise their rates.

    The bigger issue for ETP is competition from other companies. KMP's acquisition of El Paso, which will generate a cross-Texas capacity, makes this a problem for ETP, which has a big Texas footprint.

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