Tall Grass Energy Partners

Tall Grass Energy Partners is a LP built to own a crude oil pipeline network spanning Colorado and Wyoming.

Tall Grass Energy Partners still holds an S&P ‘Strong Buy’ Rating, and is considered a very strong ‘A’ rating by Schwab, but we weren’t able to find any information that backed up those ratings – in all likeliness they just haven’t been downgraded yet. In early November at $22.00 they were easily a strong buy – prices have climbed 18% since then. However, this issue has just about reached all price targets – and we believe those targets are now overestimates.

EPS is estimated to grow, but at nowhere near the rate it has been growing, and Revenue is projected to remain flat. Insider trading took off early in the week, with upper management selling a total of over 15,000,000 shares. TEGP saw incredible growth early in the year, with GAAP growth of nearly 200%. Unfortunately, this growth will not continue and during this rapid growth P/E rose to 33.90 whereas the industry average is 18.9. As growth levels out, share price is going to fall until P/E is more in line with the industry average.

 

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