Flex LNG (NYSE:FLNG) vs. Energy Transfer (NYSE:ET) Critical Analysis

Energy Transfer (NYSE:ET) and Flex LNG (NYSE:FLNG) are both energy companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, dividends, analyst recommendations, profitability, institutional ownership and valuation.

Valuation and Earnings

This table compares Energy Transfer and Flex LNG”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Energy Transfer	$85.54 billion	0.82	$4.18 billion	$1.47	13.91
Flex LNG	$347.64 million	4.87	$74.82 million	$1.90	16.48

Energy Transfer has higher revenue and earnings than Flex LNG. Energy Transfer is trading at a lower price-to-earnings ratio than Flex LNG, indicating that it is currently the more affordable of the two stocks.

Dividends

Energy Transfer pays an annual dividend of $1.36 per share and has a dividend yield of 6.6%. Flex LNG pays an annual dividend of $3.00 per share and has a dividend yield of 9.6%. Energy Transfer pays out 92.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Flex LNG pays out 157.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Energy Transfer has increased its dividend for 4 consecutive years.

Profitability

This table compares Energy Transfer and Flex LNG’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Energy Transfer	4.87%	11.55%	3.69%
Flex LNG	28.50%	14.88%	4.07%

Volatility & Risk

Energy Transfer has a beta of 0.6, indicating that its share price is 40% less volatile than the S&P 500. Comparatively, Flex LNG has a beta of 0.27, indicating that its share price is 73% less volatile than the S&P 500.

Insider & Institutional Ownership

38.2% of Energy Transfer shares are held by institutional investors. 3.3% of Energy Transfer shares are held by company insiders. Comparatively, 0.3% of Flex LNG shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Energy Transfer and Flex LNG, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Energy Transfer	0	3	12	2	2.94
Flex LNG	2	0	1	0	1.67

Energy Transfer presently has a consensus target price of $24.36, indicating a potential upside of 19.08%. Flex LNG has a consensus target price of $25.00, indicating a potential downside of 20.17%. Given Energy Transfer’s stronger consensus rating and higher possible upside, research analysts clearly believe Energy Transfer is more favorable than Flex LNG.

Summary

Energy Transfer beats Flex LNG on 11 of the 18 factors compared between the two stocks.

About Energy Transfer

Energy Transfer LP provides energy-related services. The company owns and operates natural gas transportation pipeline, and natural gas storage facilities in Texas and Oklahoma; and approximately 20,090 miles of interstate natural gas pipeline. It also sells natural gas to electric utilities, independent power plants, local distribution and other marketing companies, and industrial end-users. In addition, the company owns and operates natural gas gathering pipelines, processing plant, and treating and conditioning facilities in Texas, New Mexico, West Virginia, Pennsylvania, Ohio, Oklahoma, Arkansas, Kansas, Montana, North Dakota, Wyoming, and Louisiana; natural gas gathering, oil pipeline, and oil stabilization facilities in South Texas; and transports and supplies water to natural gas producer in Pennsylvania. Further, it owns 5,700 miles of natural gas liquid (NGL) pipeline; NGL fractionation facilities; NGL storage facilities; and other NGL storage assets and terminal. Additionally, the company provides crude oil transportation, terminalling, acquisition, and marketing activities; owns and operates approximately 14,500 miles of crude oil trunk and gathering pipelines in the Southwest, Midcontinent, and Midwest United States; and sells and distributes gasoline, middle distillate, and motor fuels and other petroleum products. It also offers natural gas compression services; carbon dioxide and hydrogen sulfide removal services; and manages coal and natural resources properties, as well as sells standing timber, leases coal-related infrastructure facilities, collects oil and gas royalty, and generate electrical power. The company was formerly known as Energy Transfer Equity, L.P. and changed its name to Energy Transfer LP in October 2018. Energy Transfer LP was founded in 1996 and is headquartered in Dallas, Texas.

About Flex LNG

FLEX LNG Ltd. engages in the seaborne transportation of liquefied natural gas (LPG) through the ownership and operation of LNG carriers. The company was founded by Philip Eystein Fjeld, Trym Tveitnes and Jostein Ueland in September 2006 and is headquartered in Hamilton, Bermuda.