NGL Energy Partners (NGL) is back in focus after outlining a Lea County Express Pipeline expansion in New Mexico, paired with a $100 million unit buyback and a new $950 million term loan facility.

The stock has climbed toward a new 52 week high at a share price of $16.13, with a 30 day share price return of 25.92% and a very large 1 year total shareholder return. This suggests that recent pipeline and financing news may be reshaping investor expectations.

If this kind of momentum has your attention, it could be a good time to see what else is moving in energy infrastructure and related themes through 36 power grid technology and infrastructure stocks

With the units up sharply over the past year, a very large 1 year total return on the board and an estimated 12% intrinsic discount still indicated, the key question now is whether NGL is undervalued or whether the market is already pricing in future growth.

Preferred Price-to-Sales of 0.6x: Is It Justified?

NGL currently screens as good value on a P/S basis compared to both the broader US Oil and Gas industry and its closest peers, even after a very strong 1 year total shareholder return and a sharp recent move toward its 52 week high.

The P/S multiple compares the company’s market value to its annual revenue, which can be helpful when earnings are negative or volatile. For NGL, this lens matters because the partnership is still unprofitable, reports a net loss of $33.6 million, and operates in capital intensive midstream and water solutions markets where cash flow and volume can be as important as headline earnings.

According to Simply Wall St’s checks, NGL trades on a P/S of 0.6x. That level is described as expensive relative to an estimated fair P/S of 0.4x that the SWS fair ratio model suggests the market could gravitate toward over time. Yet it still sits well below the US Oil and Gas industry average of 2.1x and the peer average of 2.8x, indicating the market prices NGL at a material discount to many comparable stocks even with the recent rally.

Result: Price-to-Sales of 0.6x (ABOUT RIGHT)

However, there are clear pressure points here. These include a revenue decline of 31% and a net loss of $33.6 million that could challenge the current optimism.

Another View: DCF Points to Undervaluation

While the 0.6x P/S ratio sits above the 0.4x fair ratio, our DCF model takes a different angle on NGL. At a unit price of $16.13, the SWS DCF model estimates a value of $18.37, suggesting the units trade at a discount despite the recent rally. That raises a simple question: is the cash flow story stronger than the revenue multiple suggests?

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 51 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

With all this in mind, sentiment around NGL may feel mixed. Act while the data is fresh and form your own view by reviewing the 3 key rewards

Looking for more investment ideas?

If NGL has sharpened your focus, do not stop here. Broaden your watchlist now so you are not catching up after the next big move.

• Target stability seekers by scanning 72 resilient stocks with low risk scores that may hold up when volatility picks up.
• Hunt for potential value by reviewing 51 high quality undervalued stocks that combine appealing prices with stronger fundamentals.
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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.