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Strategies & Market Trends : Value Investing

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To: MCsweet who wrote (38669)	8/2/2010 9:15:21 PM
From: E_K_S	Read Replies (3) of 78750

Hi MCsweet - MLP vs common stock valuation You make a very good point to evaluate MLP's against equivalent MLP's. What if one is looking at a MLP vs a common stock in the same industry? I would think that the first look might be to compare the PE of each company to determine which earnings stream is cheapest at the current price? Using the YAHOO Finance "Competitor" selection for OKS, they show EP, ENB, KMP & Industry as comparisons. I was just looking at Market Cap and PE vs industry to determine size and value. finance.yahoo.com When looking at the MLP's you listed, they seem to have a similar PE (around 20) to OKS. The common stock PE for EP and ENB are almost half that of the equivalent MLPs. Are earnings calculated differently for MLPs than for the common stock companies? What do you need to adjust in the MLP income statement to be equivalent to the common stock (do you add back in a % of the depreciation expense)? Maybe it would be better just to look at enterprise Free Cash Flows. Any suggestion for other metric(s) I should consider when looking to value equivalent MLP's vs common stocks? EKS

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