3 Energy Stocks With Low PE Ratios and High Dividends

A low P/E ratio is an indicator that a company is currently undervalued or is performing exceptionally well compared to its past performance, making such companies’ stock an investment prospect. These stocks are low-risk and an apt choice for value-focused investors.

Amid this backdrop, it could be wise to invest in low P/E ratio energy stocks Enterprise Products Partners L.P. (EPD), Energy Transfer LP (ET), and Weatherford International plc (WFRD), which also pay high dividends.

The escalating conflict in the Middle East and Russia’s ongoing war in Ukraine are likely to cause further supply chain disruptions and accelerate the pace of surging oil prices. The recent incidents of crude production abruption at Norway's Johan Sverdrup oilfield and the intensifying war in Ukraine further boosted prices.

International Energy Agency (IEA) forecasts world oil demand to expand by 920 kb/d to reach 102.8 mb/d in 2024 and is expected to grow by 1 mb/d to a total of 103.8 mb/d in 2025. Further, global oil supply increased by 290 kb/d in October to 102.9 mb/d. Amid the recovery from the global energy crisis, IEA expects global gas demand to grow by over 2.5% in 2024 and at a similar rate in 2025.

Further, the global oil and gas market is expected to reach $8.92 trillion by 2031, exhibiting growth at a CAGR of 3.7%. Market growth is driven by increasing exploration and production activities in remote geographical areas, improved extraction technologies, and advancements in other technologies.

Amid these market trends, low P/E ratio stocks that distribute regular dividends to shareholders present appealing opportunities. Such stocks are stable; hence, they can potentially protect your investment portfolio and are suitable for value-focused investors.

Given the industry’s bright prospects, investing in fundamentally strong energy stocks EPD, ET, and WFRD could be wise.

Let’s discuss the fundamentals of these stocks in detail:

Enterprise Products Partners L.P. (EPD)

EPD provides midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, petrochemicals, and refined products. The company operates through four segments: NGL Pipelines & Services; Crude Oil Pipelines & Services; Natural Gas Pipelines & Services; and Petrochemical & Refined Products Services.

In terms of forward non-GAAP P/E, EPD is trading at 12.80x, 1.4% lower than the industry average of 12.98x. Likewise, the stock’s forward EV/Sales multiple of 1.89 is 10.1% lower than the industry average of 2.11. Further, its forward Price/Sales of 1.33x is 14.7% lower than the industry average of 1.56x.

On October 29, EPD completed the second phase of its Texas Western Products system. Situated in Grand County, Utah, the facility is a refined products truck terminal catering to the Grand Junction, Colorado, and Moab, Utah, areas. It has a storage capacity of 400,000 barrels for gasoline and diesel and can load trucks at a rate of up to 20,000 bpd.

Also, on October 2, EPD’s board of directors declared a quarterly cash distribution of $0.525 per unit for the third quarter of 2024. The distribution was paid on November 14, 2024, to common unitholders of record as of the close of business on October 31, 2024. This distribution represents a 5% increase from the distribution declared within the third quarter of 2023.

EPD’s annual dividend of $2.10 translates to a yield of 6.10% at the current share price. Its four-year average dividend yield is 7.47%. Moreover, the company’s dividend payouts have increased at a CAGR of 4.9% over the past three years. EPD has raised its dividends for 26 consecutive years.

During the third quarter of 2024, which ended on September 30, 2024, EPD’s total revenues increased 14.8% year-over-year to $13.78 billion, while its operating income rose 5% from the prior-year quarter to $1.78 billion. The company’s net income attributable to common unitholders amounted to $1.42 billion or $0.65 per unit, up 7.5% and 8.3% from the prior year’s quarter, respectively.

Furthermore, the company’s adjusted EBITDA grew 4.9% year-over-year to $2.44 billion, and its non-GAAP free cash flow rose 4.3% year-over-year to $907 million.

The consensus revenue estimate of $14.85 billion for the first quarter (ending March 2025) reflects a marginal increase year-over-year. Also, its consensus EPS estimate of $0.71 for the same period indicates a 5.9% improvement year-over-year. Further, EPD topped the consensus EPS estimates in three of the trailing four quarters.

EPD’s stock has gained 22.8% over the past six months and 30.2% over the past year to close the last trading session at $34.43.

EPD’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

It has a B grade for Value, Momentum, and Stability. It is ranked #5 out of 22 stocks in the B-rated MLPs – Oil & Gas industry.

In addition to the POWR Ratings we’ve stated above, we also have EPD ratings for Growth, Sentiment, and Quality. Get all EPD ratings here.

Energy Transfer LP (ET)

ET is a provider of energy-related services. It owns and operates natural gas transportation pipelines and natural gas storage facilities in Texas and Oklahoma and approximately 20,090 miles of interstate natural gas pipeline. The company is also engaged in the sale of natural gas to electric utilities, independent power plants, local distribution, and other marketing companies.

ET’s forward non-GAAP PEG of 0.96x is 45.8% lower than the industry average of 1.77x. Also, the stock’s forward Price/Cash Flow of 5.54x is 2.1% lower than the industry average of 5.66x. Similarly, its forward Price/Sales of 0.84x is 46% lower than the 1.56x industry average.

On October 28, ET increased its quarterly cash distribution to $0.32 per common unit for the third quarter that ended September 30, 2024, reflecting a 3.2% increase compared to the third quarter of 2023. The cash distribution was paid on November 19, 2024, to unitholders of record as of the close of business on November 8, 2024.

ET pays a $1.29 annual dividend yielding 6.50% at the current share price. Its four-year average dividend yield is 8.13%. Also, the company’s dividends have increased at a 27.9% CAGR over the past three years.

For the third quarter that ended September 30, 2024, ET’s revenues increased marginally year-over-year to $20.77 billion, and its operating income was $2.18 billion. The company’s net income came in at $1.43 billion and $0.32 per common unit, up 37% and 113.3% from the previous year’s period, respectively.

In addition, the company’s adjusted EBITDA increased 11.8% year-over-year to $3.96 billion. Also, its distributable cash flow was up 4.7% from the prior year to $2.63 billion.

Analysts expect ET’s revenue and EPS for the fiscal year 2024 to grow 3% and 32.6% year-over-year to $80.93 billion and $1.45, respectively. Also, the company’s revenue and EPS for the first quarter (ending March 2025) are expected to grow 10.5% and 10.1% year-over-year to $23.90 billion and $0.35.

Shares of ET have soared 28.5% over the past six months and 44.9% over the past year to close the last trading session at $19.82.

ET’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.

The stock has a B grade for Value, Momentum, Sentiment, and Stability. Within the Energy – Oil & Gas industry, ET is ranked #4 on the list of 78 stocks.

Click here to access additional ratings of ET for Growth, and Quality.

Weatherford International plc (WFRD)

WFRD is an energy services company that provides equipment and services for drilling, evaluation, completion, production, and intervention in oil, geothermal, and natural gas wells worldwide. It operates in three segments: Drilling and Evaluation; Well Construction and Completions; and Production and Intervention.

In terms of forward non-GAAP P/E, WFRD is trading at 11.61x, 10.6% lower than the industry average of 12.98x. Further, the stock’s forward EV/EBITDA multiple of 4.94 is 21.8% lower than the 6.31 industry average. And its forward Price/Sales of 1.07x is lower than the industry average of 1.56x.

On November 7, WFRD was awarded a three-year contract for providing rigless services as part of the reactivation of ADNOC onshore strings. Under the contract, WFRD will deploy multiple intervention solutions, advancing the operational efficiency and reliability of ADNOC’s onshore assets.

On October 17, WFRD’s Board declared a cash dividend of $0.25 per share of the company’s ordinary shares, to be paid on December 5, 2024, to shareholders of record as of November 6, 2024. WFRD pays an annual dividend of $1, which translates to a yield of 1.22% at the current share price. Its four-year average dividend yield is 0.03%.

WFRD’s total revenues increased 7.3% year-over-year to $1.41 billion for the third quarter that ended September 30, 2024. Its operating income grew 11.5% from the year-ago value to $243 million. Net income attributable to WFRD was $157 million, or $2.06 per share, indicating increases of 27.6% and 24.1% from the prior year’s quarter, respectively.

In addition, the company’s adjusted EBITDA rose 16.4% year-over-year to $355 million. And its adjusted free cash flow rose 34.3% from the prior-year quarter to $184 million.

Analysts expect WFRD’s revenue for the first quarter (ending March 2025) to increase marginally year-over-year to $1.37 billion. The company’s EPS for the same quarter is expected to increase 5.7% year-over-year to $1.59. Furthermore, the company surpassed the consensus EPS estimates in three of the trailing four quarters.

WFRD’s stock has surged 2.9% over the past month to close the last trading session at $82.30.

WFRD’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

It has a B grade for Quality and Value. WFRD is ranked #5 among 78 stocks in the Energy – Oil & Gas industry.

Click here to access WFRD’s ratings for Momentum, Stability, Sentiment, and Growth.

What To Do Next?

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EPD shares were trading at $33.87 per share on Monday morning, down $0.56 (-1.63%). Year-to-date, EPD has gained 38.25%, versus a 28.13% rise in the benchmark S&P 500 index during the same period.

Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.

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