Tabell’s Market Letter – July 06, 1956

Walston &- Co.———Inc.– M embeTS New Y07'k Stock Exchange NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO BASLE (Sw,'ml.nd OFFICES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM TABEll'S MARKET lETTER July.6, 1956 PANHANDLE EASTERN PIPE LINE CO. Statistics Current Market Current Dividend Current Yield 92 3.00 3.3 When good news or good earnings are expected from a company in the midst of a bull market,the general tendency is for the price Funded Debt-Parent 138 801,000 of the stock to advance rather discount.lng the goodkI'e- 4 Cum.Pfd.Stock (100 par) 119,880 shs. in advance. When the pro- Common Stock 3 379 332 shs Jected finally takes place, often the stock will hold in a narrow Operating Revenues-1956-E 110,000,000 Operating Revenues-1955 98,800,000 Earnings per Share-1956-E Earned per Share-1955 6.50 5.01 Market Range-1956-53 94 3/4 – 64 1/2 trading range for a long period afterward, digesting the advance in price. Upon further improvement in the status of the company, this narrow trading range often forms a springboard for a new major advance in price. Such will be the case, we believe, with Panhandle East- ern Pipe Line. In early 1953, Panhandle made a new high at 88. In the summer of 1953 the stock reacted sharply, making a low of 65. The stock then held within these limits for three years, and only last Monday reached a new high. . . From a technical viewpoint, upside implications of the three-year base are very interesting rver the very long term, and even the in- . termediate tives are consider,ably….abolfe present levels. The three-year consolidating area must now be considered as support, vlith strong resistance to any reaction being shoVin at 85-80. Panhandle's original rise to 88 was due, in great part, to fundamentals, as Vias the subsequent trading range in which the stock held. The company's operating revenues rose from 36 million in 1949 to 91 million in 1952 and 95 million in 1953 as the company undertook a huge expansion program. For the next two years, revenues continued to stabilize at 87 million in 1954 and 98 million in 1955. During this time, however, demand increased, leading to a 50 increase in capacity. Most of this expansion program was completed in 1955 and 1956 earnings are just beginning to show the results. Thus the first quarter of 1956 showed operating revenues of almost 30 million versus 26 million and per-share earnings of 1.69 versus 1.41 as compared to the like 1955 quarter. Further earnings gains are in prospect for the remainder of the year and a minimum expectation for the full year would be in the neighborhood of 6.50 The current dividend, 3.00, could well be liberalized. 111\ ,', , The bulk of Panhandle's earnings comes from its natural gas trans- mission system which runs northeast from the Texas panhandle to the -Detroit area, serv-ing the -way..Trunkline – Company, 96.8 owned, operates a pipeline running along the South Texas coast and thence Northward to connect with Panhandle's main line at Decatur, Illinois. Although the pip'eline system provides the main source of revenue, a much larger long-term potential is provided by Panhandle's own huge gas and oil reserves. The company owns mineral rights on some 821,000 acres in the Anadarko basin of Texas,Oklahoma, Kansas and Colorado with a large part of this acreage in the rich Pan- handle and Hugoton gas fields. Gas reserves at the end of 1955 were 4 trillion cubic feet. Valued at the very conservative figure of 5/ per mcf these reserves have a total value of 200 million or about 59 per Panhandle share. Thus, at current prices, only 33.00 is being paid for a transmission company with better than 6 annual earnings capacity ThiS market lettcr IS not and under no Circumstances IS to be as, nn olTer to 'ell or 0. solicItation to buy any securities referred to herein The informatIon contained herem IS not g'uaranteed .IS to accuracy or completeness and the furnl,hlnJ.! thereof is not, and under no Circumstances IS to bcconstrucd us, 11 representation hy \'lalston & Co Inc All exprcsslOns of opmlOn are subject to change Without notice ' nlston & Co, Inc, or any Officer, Dlrectol or Stockholder thereof, may hn\e nn Interest Iii the SCCUritles mentIOned herem ThiS market Jetter IS Intended find prescnted meleIy as a general, IllfurmaI commellt,lry on dn to news lind not us a complete annbsis AddItlOnailllformatlon With respect to nny sleurlue; referred to herem III be furnished upon request ,,,