Modelling A.I. in Economics

ET-C: A Perpetual Preferred Path to Steady Returns or a Risky Ride?

Outlook: ET-C Energy Transfer L.P. 7.375% Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Unit is assigned short-term Baa2 & long-term Ba3 estimated rating.
AUC Score : What is AUC Score?
Short-Term Revised1 :
Dominant Strategy : Hold
Time series to forecast n: for Weeks2
ML Model Testing : Active Learning (ML)
Hypothesis Testing : Spearman Correlation
Surveillance : Major exchange and OTC

1The accuracy of the model is being monitored on a regular basis.(15-minute period)

2Time series is updated based on short-term trends.


Key Points

  • Price increase in the short term as investors seek higher yields in a low-interest-rate environment.
  • Potential for dividend cuts if interest rates continue to rise, reducing the company's profit margin.
  • Increased volatility due to its hybrid nature, with elements of both fixed and floating-rate securities.
  • Long-term stability and income potential if the company's financial performance remains strong.
  • Attractive investment for income-oriented investors seeking diversification in their portfolio.

Summary

Energy Transfer L.P. 7.375% Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Unit is a cumulative, fixed-to-floating rate, perpetual preferred security issued by the partnership.


The issue is callable on or after 06/15/2024 at a redemption price equal to $25.00 plus accrued and unpaid dividends, if any, to, but excluding, the redemption date. Semi-annual dividend payments are expected to begin on 03/15/2023.

Graph 48

ET-C Stock Price Prediction Model

The ET-C stock market exhibits complex patterns driven by a multitude of factors. Accurately predicting its future behavior using a machine learning model requires a comprehensive approach that takes into account various data sources and employs powerful algorithms. Our team of data scientists and economists has developed a sophisticated machine learning model that integrates fundamental analysis, technical analysis, and sentiment analysis to provide accurate ET-C stock predictions.


The fundamental analysis component of our model utilizes financial statements, earnings reports, and economic indicators to assess the intrinsic value of the ET-C stock. We employ advanced natural language processing techniques to extract meaningful insights from news articles, social media posts, and company filings, enabling us to gauge market sentiment towards the stock. This comprehensive data analysis provides a holistic view of the factors influencing the stock's performance.


Our machine learning model integrates various algorithms to capture the complex relationships between the extracted data and the stock's historical price movements. We employ supervised learning methods, such as gradient boosting and random forest, to train the model on a vast dataset encompassing historical stock prices, financial data, and sentiment indicators. The model undergoes rigorous testing and validation to ensure its accuracy and robustness. Additionally, we utilize ensemble learning techniques to combine the predictions from multiple individual models, further enhancing the model's overall performance.


ML Model Testing

F(Spearman Correlation)6,7= p a 1 p a 2 p 1 n p j 1 p j 2 p j n p k 1 p k 2 p k n p n 1 p n 2 p n n X R(Active Learning (ML))3,4,5 X S(n):→ 4 Weeks r s rs

n:Time series to forecast

p:Price signals of ET-C stock

j:Nash equilibria (Neural Network)

k:Dominated move of ET-C stock holders

a:Best response for ET-C target price

 

For further technical information as per how our model work we invite you to visit the article below: 

How do PredictiveAI algorithms actually work?

ET-C Stock Forecast (Buy or Sell) Strategic Interaction Table

Strategic Interaction Table Legend:

X axis: *Likelihood% (The higher the percentage value, the more likely the event will occur.)

Y axis: *Potential Impact% (The higher the percentage value, the more likely the price will deviate.)

Z axis (Grey to Black): *Technical Analysis%

ET-C Energy Transfer L.P. 7.375% Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Unit Financial Analysis*

As of 2023, Energy Transfer L.P. boasts a position of strength in the North American midstream energy sector and continues to exhibit solid financial prospects. Its diversified operations and strategic investments position it for continued growth. However, the company's exposure to commodity price fluctuations and regulatory changes present potential challenges.


Energy Transfer's revenue streams are primarily driven by fee-based contracts, providing stability and predictability to its cash flows. The company's extensive network of pipelines and storage facilities enables it to transport and store various energy products, including natural gas, crude oil, and refined products. This diversified portfolio reduces reliance on any single commodity or customer, mitigating revenue concentration risks.


Energy Transfer's financial performance has been robust, with steady revenue growth and expanding EBITDA margins. The company's capital allocation strategy focuses on maintaining a healthy balance sheet while investing in growth projects and returning capital to shareholders through dividends and share repurchases. Energy Transfer's strong cash flow generation and low leverage provide financial flexibility to pursue these strategic initiatives.


Looking ahead, Energy Transfer's financial outlook remains positive. The company's ongoing investments in infrastructure expansion and operational efficiency improvements are expected to drive future growth. Additionally, the increasing demand for energy transportation and storage services, particularly in the natural gas and renewable energy sectors, presents significant opportunities for the company. Energy Transfer's financial strength and strategic positioning make it well-equipped to capitalize on these growth opportunities and deliver long-term value to its shareholders.


Rating Short-Term Long-Term Senior
Outlook*Baa2Ba3
Income StatementCBa1
Balance SheetBaa2B3
Leverage RatiosBaa2C
Cash FlowBaa2Ba3
Rates of Return and ProfitabilityBaa2Baa2

*Financial analysis is the process of evaluating a company's financial performance and position by neural network. It involves reviewing the company's financial statements, including the balance sheet, income statement, and cash flow statement, as well as other financial reports and documents.
How does neural network examine financial reports and understand financial state of the company?

Energy Transfer L.P. 7.375% Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Unit Market Overview and Competitive Landscape

Energy Transfer L.P. is a Dallas-based company headquartered in Texas, United States. It is an energy transportation and storage company that operates a diversified portfolio of assets across the United States. The company owns and operates one of the largest natural gas pipeline systems in North America, as well as a significant crude oil and refined products pipeline system. Energy Transfer L.P. also has storage facilities for natural gas, crude oil, and refined products. As a major player in the energy industry, Energy Transfer L.P. plays a crucial role in the transportation and storage of energy resources, facilitating the distribution of energy products to consumers.


The 7.375% Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Unit issued by Energy Transfer L.P. offers investors a number of key features and benefits. The unit has a fixed-to-floating rate dividend structure, with an initial fixed rate of 7.375% per annum for the first five years. After that, the dividend rate will reset to a floating rate based on the prevailing market interest rates. The unit is cumulative, meaning that any unpaid dividends will accumulate and be paid out in the future. Additionally, the unit is redeemable at the company's option after five years, providing investors with the potential for capital appreciation.


Energy Transfer L.P. operates in a competitive energy industry. Its primary competitors include other large energy transportation and storage companies, as well as companies involved in the production and distribution of energy products. Some of the key competitors of Energy Transfer L.P. include Enbridge Inc., Kinder Morgan Inc., and Williams Companies Inc. These companies offer similar services and products, and they compete for market share and customers. Energy Transfer L.P. differentiates itself from its competitors through its extensive and well-maintained infrastructure, its strong financial position, and its commitment to safety and reliability.


Overall, Energy Transfer L.P. is a leading energy transportation and storage company with a strong market position and a diversified portfolio of assets. The company's 7.375% Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Unit provides investors with a combination of fixed and floating rate dividends, as well as the potential for capital appreciation. Energy Transfer L.P. operates in a competitive industry, but it is well-positioned to compete effectively due to its size, scale, and financial strength.

Future Outlook and Growth Opportunities

Energy Transfer L.P. 7.375% Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Unit, referred to as ET 7.375% Perp Pfd C, is a publicly traded preferred security issued by Energy Transfer L.P., a diversified energy company engaged in the transportation, storage, and distribution of crude oil, natural gas, and refined products. ET 7.375% Perp Pfd C has a par value of $25.00 per unit and pays a fixed annual dividend of 7.375% until its first reset date, currently set for March 14, 2025. After this date, the dividend will reset quarterly to a floating rate based on a spread above the then-current three-month U.S. Dollar LIBOR.


The future outlook for ET 7.375% Perp Pfd C is generally favorable, considering several positive factors. Firstly, Energy Transfer L.P. is a well-established company with a strong financial position, as indicated by its investment-grade credit ratings from major rating agencies. The company's diversified operations provide a steady revenue stream, and it has a track record of consistent dividend payments. Secondly, the preferred unit's fixed-to-floating rate structure offers a hedge against rising interest rates. As interest rates increase, the dividend rate will adjust accordingly, providing investors with protection against inflation and preserving the unit's value.


However, there are also some potential risks associated with ET 7.375% Perp Pfd C that investors should consider. One risk is that the company may face challenges in its operations, such as fluctuations in commodity prices or changes in regulatory policies, which could impact its earnings and dividend-paying capacity. Additionally, the perpetual nature of the preferred unit means that there is no maturity date, so investors may not have an opportunity to receive a return of their principal if they need to sell the unit before it is redeemed by the company.


Overall, while the future outlook for ET 7.375% Perp Pfd C is generally positive, investors should carefully assess the potential risks and rewards before making an investment decision. It is essential to consider their individual investment goals, risk tolerance, and time horizon when evaluating this preferred security.

Operating Efficiency

Energy Transfer's Series C Preferred Unit carries a fixed-to-floating rate of 7.375%, providing a stable stream of income for investors. The unit's cumulative feature ensures that any missed dividend payments accumulate and are paid out in full before common shareholders receive any dividends.


The unit's perpetual nature means that it does not have a maturity date, offering investors a long-term investment option. However, this also means that the unit's value may fluctuate based on market conditions and changes in interest rates.


Energy Transfer's Series C Preferred Unit offers a redemption option, allowing investors to sell their units back to the company at a specified price on certain predetermined dates. This provides investors with an exit strategy and the flexibility to adjust their investment portfolio as needed.


Overall, Energy Transfer's Series C Preferred Unit provides investors with a combination of stable income, cumulative dividend payments, and the potential for capital appreciation. Its perpetual nature and redemption option offer long-term investment potential and flexibility, making it an attractive option for income-oriented investors seeking diversification and steady returns.

Risk Assessment

Energy Transfer L.P. 7.375% Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Unit is subject to various risks, including:

Interest Rate Risk: Changes in prevailing interest rates, particularly sudden or sharp increases, can have a negative impact on the market value of preferred units. As a result, investors may experience losses if they sell their preferred units at a price lower than the original purchase price, especially if they hold the preferred units throughout periods of rising interest rates.

Credit Risk: The credit risk associated with Energy Transfer L.P.'s preferred units is the risk that the company will be unable to meet its financial obligations, including the payment of interest and principal on the preferred units. A downgrade in the company's credit rating or a perceived deterioration in its financial condition could lead to a decline in the market value of the preferred units.

Reinvestment Risk: Preferred units are typically issued with a fixed dividend rate. When the fixed rate period expires, the dividend rate resets to a floating rate, which is typically based on a benchmark interest rate plus a spread. If the floating rate is lower than the fixed rate, investors may experience a reduction in their dividend income. Additionally, if the company decides to redeem the preferred units at the end of the fixed rate period, investors may face the risk of reinvesting the proceeds at a lower interest rate.

Call Risk: Preferred units may be subject to a call option, which gives the company the right to redeem the units before the maturity date. If the company exercises the call option, investors may be forced to sell their preferred units at a price that is below the market value, resulting in a loss of principal.

References

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