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4 Reasons to Add Energy Transfer (ET) to Your Portfolio Now
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Energy Transfer’s (ET - Free Report) growth prospects, strong distribution history and systematic investments make it a great investment opportunity in the oil and gas sector.
Let’s focus on factors that make this Zacks Rank #1 (Strong Buy) stock a robust investment option at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for the company’s 2024 earnings per unit (EPU) increased 24.13% to $1.44 per unit in the past 60 days. The Zacks Consensus Estimate for ET’s total revenues for 2024 is pegged at $94.24 billion, indicating year-over-year growth of 19.91%.
ET delivered an average positive earnings surprise of 3.7% in the last four quarters.
Solvency & Liquidity
ET’s times interest earned ratio (TIE) at the end of the fourth quarter of 2023 was 3.2. The TIE ratio of more than 1 indicates that the firm will be able to meet its interest payment obligations in the near term without any problems.
The current ratio at the end of the fourth quarter was 1.1, higher than the industry’s average of 1.02. The ratio, being greater than one, indicates the company’s ability to meet its future short-term liabilities without difficulties.
Distribution History
ET has been increasing unitholders’ value through distribution payments. In January 2024, Energy Transfer announced a quarterly distribution of 31.5 cents per unit, up 1.6% from the previous level of 31 cents per unit. This resulted in an annual distribution of $1.26 per unit. ET’s current distribution yield is 8.38%, better than the Zacks S&P 500 composite’s 6.95%.
Expansion Through Investment & Acquisition
Strategic capital investments are making Energy Transfer stronger and more resilient. The company had a capital expenditure of $2.86 billion in 2023. ET expects its growth capital expenditure to be in the range of $2.4-$2.6 billion for 2024. Maintenance capital expenditures for 2024 are expected in the range of $835-$865 million.
The firm completed the acquisition of Crestwood Equity Partners on Nov 3, 2023. It expects to generate an annual cost synergy of $65 million in 2024 and anticipates cost synergy of $80 million by 2026.
Price Performance
In the past three months, the stock has returned 9.7% compared with the sector’s rise of 4.5%.
AROC’s long-term earnings (three to five years) growth rate is 7%. The Zacks Consensus Estimate for Archrock’s 2024 EPS is pegged at $1, indicating a year-over-year improvement of 44.93%.
UGP’s long-term earnings growth rate is 5.01%. The Zacks Consensus Estimate for Ultrapar Participacoes’s 2024 EPS is pegged at 32 cents, which suggests a year-over-year decline of 28.89%.
FSLR’s long-term earnings growth rate is 43.03%. The Zacks Consensus Estimate for First Solar’s 2024 EPS is pegged at $13.55, which calls for a year-over-year surge of 75.06%.
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4 Reasons to Add Energy Transfer (ET) to Your Portfolio Now
Energy Transfer’s (ET - Free Report) growth prospects, strong distribution history and systematic investments make it a great investment opportunity in the oil and gas sector.
Let’s focus on factors that make this Zacks Rank #1 (Strong Buy) stock a robust investment option at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for the company’s 2024 earnings per unit (EPU) increased 24.13% to $1.44 per unit in the past 60 days. The Zacks Consensus Estimate for ET’s total revenues for 2024 is pegged at $94.24 billion, indicating year-over-year growth of 19.91%.
ET delivered an average positive earnings surprise of 3.7% in the last four quarters.
Solvency & Liquidity
ET’s times interest earned ratio (TIE) at the end of the fourth quarter of 2023 was 3.2. The TIE ratio of more than 1 indicates that the firm will be able to meet its interest payment obligations in the near term without any problems.
The current ratio at the end of the fourth quarter was 1.1, higher than the industry’s average of 1.02. The ratio, being greater than one, indicates the company’s ability to meet its future short-term liabilities without difficulties.
Distribution History
ET has been increasing unitholders’ value through distribution payments. In January 2024, Energy Transfer announced a quarterly distribution of 31.5 cents per unit, up 1.6% from the previous level of 31 cents per unit. This resulted in an annual distribution of $1.26 per unit. ET’s current distribution yield is 8.38%, better than the Zacks S&P 500 composite’s 6.95%.
Expansion Through Investment & Acquisition
Strategic capital investments are making Energy Transfer stronger and more resilient. The company had a capital expenditure of $2.86 billion in 2023. ET expects its growth capital expenditure to be in the range of $2.4-$2.6 billion for 2024. Maintenance capital expenditures for 2024 are expected in the range of $835-$865 million.
The firm completed the acquisition of Crestwood Equity Partners on Nov 3, 2023. It expects to generate an annual cost synergy of $65 million in 2024 and anticipates cost synergy of $80 million by 2026.
Price Performance
In the past three months, the stock has returned 9.7% compared with the sector’s rise of 4.5%.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same sector are Archrock (AROC - Free Report) , Ultrapar Participacoes (UGP - Free Report) , each sporting a Zacks Rank #1, and First Solar (FSLR - Free Report) carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AROC’s long-term earnings (three to five years) growth rate is 7%. The Zacks Consensus Estimate for Archrock’s 2024 EPS is pegged at $1, indicating a year-over-year improvement of 44.93%.
UGP’s long-term earnings growth rate is 5.01%. The Zacks Consensus Estimate for Ultrapar Participacoes’s 2024 EPS is pegged at 32 cents, which suggests a year-over-year decline of 28.89%.
FSLR’s long-term earnings growth rate is 43.03%. The Zacks Consensus Estimate for First Solar’s 2024 EPS is pegged at $13.55, which calls for a year-over-year surge of 75.06%.