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ET Stock Trading at a Discount to Industry at 8.96X: How to Play?
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Key Takeaways
ET units trade at an 8.96X EV/EBITDA, below the industry's 10.47X average.
ET is expanding pipelines, export facilities and LNG via partnerships and investments.
ET's revenues are nearly 90% fee-based, reducing commodity price risk and stabilizing earnings.
Energy Transfer LP’s (ET - Free Report) units are somewhat inexpensive relative to its Zacks Oil and Gas Production Pipeline – MLB industry. ET’s current trailing 12-month Enterprise Value/Earnings before Interest Tax Depreciation and Amortization (EV/EBITDA) is 8.96X compared with the industry average of 10.47X. It indicates that the firm is presently undervalued compared with its industry peers.
The oil and gas midstream firm owns a wide network of pipelines across the United States and is pursuing opportunities to serve growing 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 globally.
Another firm having extensive midstream operations in the United States is Plains All American Pipeline (PAA - Free Report) . PAA is also trading at an EV/EBITDA of 9.94X, at a discount compared with its industry.
ET Stock Trading at a Discount
Image Source: Zacks Investment Research
Units of Energy Transfer have lost 12.7% in the past year compared with the industry’s decline of 16.5%
Price Performance (One year)
Image Source: Zacks Investment Research
Should you consider adding Energy Transfer to your portfolio solely on the basis of softness in price movements? Let us examine the underlying factors that can provide better clarity on whether this is truly a good entry point for ET stock.
Extensive Pipelines and Well-balanced Assets Aid ET
Energy Transfer owns more than 140,000 miles of pipelines and related infrastructure spread across 44 states in the United States. The firm has a well-balanced asset mix that provides strong earnings support. ET’s oil and gas pipelines, gathering and processing, and storage assets are spread across major U.S. basins and growing demand markets. The firm will invest $4.6 billion for growth in 2025 to further expand and strengthen its asset base.
The firm is expanding its operations through organic means, accretive acquisitions and partnerships. It has been making one large accretive acquisition each year since 2021. In April 2025, Energy Transfer entered into a Heads of Agreement with MidOcean Energy for the joint development of the Lake Charles LNG project, under which the latter would commit to fund 30% of the construction costs and be entitled to 30% of the LNG production. This will allow Energy Transfer to advance the project without bearing the full expense.
Courtesy of its strong asset base, ET has NGL export capacity of more than 1.4 million barrels per day. The firm is working to increase its NGL export capabilities through the expansion of Marcus Hook and Nederland export terminals. The company’s market share of worldwide NGL exports remains around 20%.
Predominantly Fee-Based Saves ET From Price Fluctuation
The majority of Energy Transfer’s revenues are generated from fee-based contracts and anchored by strong customers. The firm generates nearly 90% of its revenues by charging fees for transportation and storage services it provides to the strong customer base. This significantly lowers the firm’s commodity price fluctuation risks.
As oil and gas production volumes are rising across the United States, ET will have enough producers who will utilize its pipelines for transportation.
Insiders Are Purchasing More ET Units
ET’s management and insiders own a sizeable chunk of its units. Management members and independent board members continue to purchase units of the firm.
Energy Transfer’s insiders and board members have regularly added to their holdings, signaling strong confidence in its future performance and steady growth trajectory. The firm’s insider ownership is estimated at about 10%, a level that surpasses many of its industry counterparts.
Insiders’ transactions are often considered a yardstick for judging the long-term financial health of the firm.
ET’s Earnings Estimates Moving North
The Zacks Consensus Estimate for Energy Transfer’s 2025 and 2026 earnings per unit indicates year-over-year growth of 7.03% and 15.82%, respectively.
Image Source: Zacks Investment Research
Another firm, operating in the space with strong operations, is Delek Logistics Partners (DKL - Free Report) . The Zacks Consensus Estimate for Delek Logistics Partners’ 2025 and 2026 earnings per unit indicates year-over-year growth of 23.08% and 37.91%, respectively.
ET Raises Unitholders' Value
ET’s current quarterly cash distribution rate is 33.25 cents per common unit. Management has raised distribution rates 16 times in the past five years and the current payout ratio is 106%.
ET Stock’s ROE Is Lower Than the Industry
Energy Transfer’s trailing 12-month return on equity (“ROE”) is 10.71%, lower than the industry average of 13.28%. ROE, a profitability measure, reflects how effectively a company utilizes its shareholders’ funds to generate income.
Summing Up
With more than 140,000 miles of pipelines and associated infrastructure, Energy Transfer is well-placed to benefit from the ongoing growth in U.S. oil, natural gas and NGL production. ET’s fee-based revenue structure and targeted acquisitions further strengthen its ability to deliver long-term value to unitholders. The company is also seeing advantages from its expanding 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 average, it will be better for the new investors to wait a little longer and find a better entry point.
Image: Bigstock
ET Stock Trading at a Discount to Industry at 8.96X: How to Play?
Key Takeaways
Energy Transfer LP’s (ET - Free Report) units are somewhat inexpensive relative to its Zacks Oil and Gas Production Pipeline – MLB industry. ET’s current trailing 12-month Enterprise Value/Earnings before Interest Tax Depreciation and Amortization (EV/EBITDA) is 8.96X compared with the industry average of 10.47X. It indicates that the firm is presently undervalued compared with its industry peers.
The oil and gas midstream firm owns a wide network of pipelines across the United States and is pursuing opportunities to serve growing 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 globally.
Another firm having extensive midstream operations in the United States is Plains All American Pipeline (PAA - Free Report) . PAA is also trading at an EV/EBITDA of 9.94X, at a discount compared with its industry.
ET Stock Trading at a Discount
Image Source: Zacks Investment Research
Units of Energy Transfer have lost 12.7% in the past year compared with the industry’s decline of 16.5%
Price Performance (One year)
Image Source: Zacks Investment Research
Should you consider adding Energy Transfer to your portfolio solely on the basis of softness in price movements? Let us examine the underlying factors that can provide better clarity on whether this is truly a good entry point for ET stock.
Extensive Pipelines and Well-balanced Assets Aid ET
Energy Transfer owns more than 140,000 miles of pipelines and related infrastructure spread across 44 states in the United States. The firm has a well-balanced asset mix that provides strong earnings support. ET’s oil and gas pipelines, gathering and processing, and storage assets are spread across major U.S. basins and growing demand markets. The firm will invest $4.6 billion for growth in 2025 to further expand and strengthen its asset base.
The firm is expanding its operations through organic means, accretive acquisitions and partnerships. It has been making one large accretive acquisition each year since 2021. In April 2025, Energy Transfer entered into a Heads of Agreement with MidOcean Energy for the joint development of the Lake Charles LNG project, under which the latter would commit to fund 30% of the construction costs and be entitled to 30% of the LNG production. This will allow Energy Transfer to advance the project without bearing the full expense.
Courtesy of its strong asset base, ET has NGL export capacity of more than 1.4 million barrels per day. The firm is working to increase its NGL export capabilities through the expansion of Marcus Hook and Nederland export terminals. The company’s market share of worldwide NGL exports remains around 20%.
Predominantly Fee-Based Saves ET From Price Fluctuation
The majority of Energy Transfer’s revenues are generated from fee-based contracts and anchored by strong customers. The firm generates nearly 90% of its revenues by charging fees for transportation and storage services it provides to the strong customer base. This significantly lowers the firm’s commodity price fluctuation risks.
As oil and gas production volumes are rising across the United States, ET will have enough producers who will utilize its pipelines for transportation.
Insiders Are Purchasing More ET Units
ET’s management and insiders own a sizeable chunk of its units. Management members and independent board members continue to purchase units of the firm.
Energy Transfer’s insiders and board members have regularly added to their holdings, signaling strong confidence in its future performance and steady growth trajectory. The firm’s insider ownership is estimated at about 10%, a level that surpasses many of its industry counterparts.
Insiders’ transactions are often considered a yardstick for judging the long-term financial health of the firm.
ET’s Earnings Estimates Moving North
The Zacks Consensus Estimate for Energy Transfer’s 2025 and 2026 earnings per unit indicates year-over-year growth of 7.03% and 15.82%, respectively.
Image Source: Zacks Investment Research
Another firm, operating in the space with strong operations, is Delek Logistics Partners (DKL - Free Report) . The Zacks Consensus Estimate for Delek Logistics Partners’ 2025 and 2026 earnings per unit indicates year-over-year growth of 23.08% and 37.91%, respectively.
ET Raises Unitholders' Value
ET’s current quarterly cash distribution rate is 33.25 cents per common unit. Management has raised distribution rates 16 times in the past five years and the current payout ratio is 106%.
ET Stock’s ROE Is Lower Than the Industry
Energy Transfer’s trailing 12-month return on equity (“ROE”) is 10.71%, lower than the industry average of 13.28%. ROE, a profitability measure, reflects how effectively a company utilizes its shareholders’ funds to generate income.
Summing Up
With more than 140,000 miles of pipelines and associated infrastructure, Energy Transfer is well-placed to benefit from the ongoing growth in U.S. oil, natural gas and NGL production. ET’s fee-based revenue structure and targeted acquisitions further strengthen its ability to deliver long-term value to unitholders. The company is also seeing advantages from its expanding 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 average, 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.