Assessing NGL Energy Partners (NGL) Valuation After Its US$950m Refinancing And Capital Structure Reset

NGL Energy Partners (NGL) has drawn fresh investor attention after closing a seven year US$950 million senior secured term loan and amending its asset based revolving credit facility to reshape its capital structure.

See our latest analysis for NGL Energy Partners.

These financing moves come after a strong run for investors, with the 1 year total shareholder return at about 140%. At the same time, the recent 1 month share price return of a 6.67% decline suggests some cooling in short term momentum, while the 5 year total shareholder return of about 3.8x points to a much stronger long term picture.

If this kind of balance sheet reset has caught your attention, it could be a good time to broaden your search and check out 24 power grid technology and infrastructure stocks as another way to uncover potential opportunities linked to energy infrastructure trends.

With NGL Energy Partners trading at US$11.20 and an intrinsic value estimate implying roughly a 27% discount, the key question is whether the recent refinancing leaves you with an undervalued income infrastructure play, or if the market is already pricing in future growth.

Preferred Price-to-Sales of 0.4x: Is it justified?

On a P/S basis, NGL Energy Partners trades at 0.4x, which looks inexpensive next to both its US Oil and Gas peers and its closest comparables.

The P/S ratio compares the partnership’s market value to its revenue and is often used for companies that are not consistently profitable, as is the case here. With NGL still loss making but forecast to grow earnings, a low P/S can suggest the market has limited expectations baked into the current $11.20 unit price.

Compared with the US Oil and Gas industry average P/S of 1.9x and a peer average of 3.7x, NGL’s 0.4x stands out as sharply lower. That gap signals the market is valuing each dollar of NGL’s revenue far below sector norms, even though our SWS fair P/S estimate is already around 0.4x. This is the level the market could eventually gravitate toward.

Explore the SWS fair ratio for NGL Energy Partners

Result: Price-to-Sales of 0.4x (UNDERVALUED)

However, you also need to weigh risks like the 31% annual revenue decline and current net loss of US$33.629m, which could pressure sentiment if such trends persist.

Find out about the key risks to this NGL Energy Partners narrative.

Another angle: what does our DCF say?

While the 0.4x P/S ratio hints at value, our DCF model presents a similar picture with an estimated future cash flow value of about $15.42 per unit compared with the current $11.20 price, suggesting NGL trades at a discount. Does that align with how you think about cash flow risk?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out NGL Energy Partners for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 48 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

If this all feels mixed, that is the point. It helps to move fast, check the numbers yourself, and weigh the 3 key rewards against the risks before deciding what it means for you.

Looking for more investment ideas?

If NGL has sharpened your focus, do not stop here. You will want a wider watchlist so you are ready when new opportunities line up.

• Target value with focus and check out 48 high quality undervalued stocks that pair compelling prices with underlying quality metrics.
• Prioritise resilience by reviewing 68 resilient stocks with low risk scores that score well on stability and downside protection.
• Spot under followed opportunities early by scanning our screener containing 26 high quality undiscovered gems that combine solid fundamentals with lighter market attention.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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