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ET Stock Outperforms Its Industry in 6 Months: Time to Buy or Hold?
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Key Takeaways
Energy Transfer rose 1.3% in six months, beating its industry's 3.6% decline.
ET expands NGL export capacity and boosts Permian processing to drive growth.
Units trade at a discount with 9.11x EV/EBITDA versus the industry's 10.36x average.
Units of Energy Transfer LP ((ET - Free Report) ) have risen 1.3% in the past six months against the Zacks Oil and Gas - Production Pipeline - MLB industry’s decline of 3.6%. The oil and gas midstream firm owns a wide network of pipelines across the United States and is pursuing opportunities to serve increasing power loads from new demand centers across its network.
The firm is also a top exporter of liquefied petroleum gas and working to expand natural gas liquids (“NGL”) export facilities to cater to the rising demand for NGL globally.
ET's Price Performance (Six Months)
Image Source: Zacks Investment Research
Another firm, Plains All American Pipeline ((PAA - Free Report) ), operating in the same space, has lost 6.4% in the past six months. PAA has extensive midstream assets in the United States.
Should you consider adding ET to your portfolio only based on positive price movements? Let us delve deeper and find out the factors that can help investors decide whether it is a good entry point to add ET stock to their portfolio.
Key Drivers Behind Energy Transfer’s Growth
Energy Transfer capitalizes on its vast midstream network spanning nearly 140,000 miles of pipelines across North America, transporting natural gas, NGLs, crude oil and refined products. This extensive and integrated infrastructure gives the company a strong competitive advantage, enabling efficient movement of volumes from key basins like the Permian, Eagle Ford and Marcellus to major demand centers and export terminals.
Energy Transfer operates gathering pipelines, processing plants, and treating and conditioning facilities, either directly or via joint ventures, with a total processing capacity of about 12.9 billion cubic feet per day (Bcf/d). In the Permian Basin, the firm has nearly 4.9 Bcf/d of processing capacity. The firm will add more processing capacity in the Permian Basin and the Midland Basin. By expanding processing facilities in the key production regions, Energy Transfer can manage greater throughput of natural gas and NGL.
Energy Transfer has achieved consistent growth through strategic acquisitions, integrating complementary assets that expand scale, diversify operations and boost efficiency. Transactions such as WTG Midstream, Lotus Midstream and Crestwood Equity Partners have enhanced ET’s natural gas and NGL infrastructure while deepening its footprint in high-growth basins, including the Permian, Williston and Haynesville.
Energy Transfer’s broad asset portfolio, underpinned by fee-based contracts, serves as the backbone of its revenue structure. Around 90% of the company’s earnings stem from these agreements, providing a solid hedge against commodity price volatility and supporting steady, predictable cash flows even in fluctuating market conditions.
ET’s Earnings Estimates Moving Up
The Zacks Consensus Estimate for Energy Transfer’s 2025 and 2026 earnings per unit indicates year-over-year growth of 7.81% and 10.67%, respectively.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Plains All American Pipeline’s 2025 and 2026 earnings per unit indicates a year-over-year decline of 5.3% and 3.5%, respectively.
ET’s Cash Distribution Rates
ET’s current quarterly cash distribution rate is 33 cents per Energy Transfer common unit. Management has raised distribution rates 16 times in the past five years and the current payout ratio is 102.
Another firm operating in the same space, Delek Logistics Partners ((DKL - Free Report) ), raised distribution rates 20 times in the past five years and the current payout ratio is 151.
ET’s Units Are Trading at a Discount
Energy Transfer units trade at a discount relative to the industry. The company’s trailing 12-month Enterprise Value-to-EBITDA ratio stands at 9.11x, below the industry average of 10.36x, indicating that it is currently undervalued compared with peers.
Image Source: Zacks Investment Research
Delek Logistics is trading at an EV/EBITDA of 16.75X, which is premium compared with its industry.
ET Stock’s ROE Is Lower Than the Industry
Energy Transfer’s trailing 12-month return on equity is 11.08%, lower than the industry average of 13.65%. Return on equity, a profitability measure, reflects how effectively a company utilizes its shareholders’ funds to generate income.
Image Source: Zacks Investment Research
Rounding Up
Energy Transfer, with a vast network exceeding 140,000 miles of pipelines and related infrastructure, is well-positioned to capitalize on rising oil, natural gas and NGL production across the United States. Supported by its fee-based revenue model and strategic acquisitions, the company is expected to generate continued value for its unitholders. The firm is also gaining from its increasing processing capacity.
Investors holding this Zacks Rank #3 (Hold) stock can consider maintaining their positions and benefit from its steady cash distributions.
Yet, at present, the firm’s ROE is lower than the industry, it will be better for the new investors to wait a little longer and find a better entry point.
Image: Bigstock
ET Stock Outperforms Its Industry in 6 Months: Time to Buy or Hold?
Key Takeaways
Units of Energy Transfer LP ((ET - Free Report) ) have risen 1.3% in the past six months against the Zacks Oil and Gas - Production Pipeline - MLB industry’s decline of 3.6%. The oil and gas midstream firm owns a wide network of pipelines across the United States and is pursuing opportunities to serve increasing power loads from new demand centers across its network.
The firm is also a top exporter of liquefied petroleum gas and working to expand natural gas liquids (“NGL”) export facilities to cater to the rising demand for NGL globally.
ET's Price Performance (Six Months)
Image Source: Zacks Investment Research
Another firm, Plains All American Pipeline ((PAA - Free Report) ), operating in the same space, has lost 6.4% in the past six months. PAA has extensive midstream assets in the United States.
Should you consider adding ET to your portfolio only based on positive price movements? Let us delve deeper and find out the factors that can help investors decide whether it is a good entry point to add ET stock to their portfolio.
Key Drivers Behind Energy Transfer’s Growth
Energy Transfer capitalizes on its vast midstream network spanning nearly 140,000 miles of pipelines across North America, transporting natural gas, NGLs, crude oil and refined products. This extensive and integrated infrastructure gives the company a strong competitive advantage, enabling efficient movement of volumes from key basins like the Permian, Eagle Ford and Marcellus to major demand centers and export terminals.
Energy Transfer operates gathering pipelines, processing plants, and treating and conditioning facilities, either directly or via joint ventures, with a total processing capacity of about 12.9 billion cubic feet per day (Bcf/d). In the Permian Basin, the firm has nearly 4.9 Bcf/d of processing capacity. The firm will add more processing capacity in the Permian Basin and the Midland Basin. By expanding processing facilities in the key production regions, Energy Transfer can manage greater throughput of natural gas and NGL.
Energy Transfer has achieved consistent growth through strategic acquisitions, integrating complementary assets that expand scale, diversify operations and boost efficiency. Transactions such as WTG Midstream, Lotus Midstream and Crestwood Equity Partners have enhanced ET’s natural gas and NGL infrastructure while deepening its footprint in high-growth basins, including the Permian, Williston and Haynesville.
Energy Transfer’s broad asset portfolio, underpinned by fee-based contracts, serves as the backbone of its revenue structure. Around 90% of the company’s earnings stem from these agreements, providing a solid hedge against commodity price volatility and supporting steady, predictable cash flows even in fluctuating market conditions.
ET’s Earnings Estimates Moving Up
The Zacks Consensus Estimate for Energy Transfer’s 2025 and 2026 earnings per unit indicates year-over-year growth of 7.81% and 10.67%, respectively.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Plains All American Pipeline’s 2025 and 2026 earnings per unit indicates a year-over-year decline of 5.3% and 3.5%, respectively.
ET’s Cash Distribution Rates
ET’s current quarterly cash distribution rate is 33 cents per Energy Transfer common unit. Management has raised distribution rates 16 times in the past five years and the current payout ratio is 102.
Another firm operating in the same space, Delek Logistics Partners ((DKL - Free Report) ), raised distribution rates 20 times in the past five years and the current payout ratio is 151.
ET’s Units Are Trading at a Discount
Energy Transfer units trade at a discount relative to the industry. The company’s trailing 12-month Enterprise Value-to-EBITDA ratio stands at 9.11x, below the industry average of 10.36x, indicating that it is currently undervalued compared with peers.
Image Source: Zacks Investment Research
Delek Logistics is trading at an EV/EBITDA of 16.75X, which is premium compared with its industry.
ET Stock’s ROE Is Lower Than the Industry
Energy Transfer’s trailing 12-month return on equity is 11.08%, lower than the industry average of 13.65%. Return on equity, a profitability measure, reflects how effectively a company utilizes its shareholders’ funds to generate income.
Image Source: Zacks Investment Research
Rounding Up
Energy Transfer, with a vast network exceeding 140,000 miles of pipelines and related infrastructure, is well-positioned to capitalize on rising oil, natural gas and NGL production across the United States. Supported by its fee-based revenue model and strategic acquisitions, the company is expected to generate continued value for its unitholders. The firm is also gaining from its increasing processing capacity.
Investors holding this Zacks Rank #3 (Hold) stock can consider maintaining their positions and benefit from its steady cash distributions.
Yet, at present, the firm’s ROE is lower than the industry, it will be better for the new investors to wait a little longer and find a better entry point.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.