Investing in Energy Transfer: A Deep Dive into Financial Performance and Prospects Deciphering Energy Transfer’s Financial Performance and Market Prospects

Written By Michael Gary Scott

Units of Energy Transfer LP ET have surged 21.8% year to date, surpassing the industry’s 20.8% growth. The company boasts an extensive pipeline network spanning the United States, strategically positioning itself to meet escalating power demands in emerging centers.

Recognized as a leading exporter of liquefied petroleum gas, Energy Transfer is actively broadening its natural gas liquids export facilities to seize the mounting global demand for NGL.

The stock has not only outperformed its sector but has also surpassed the S&P 500 in the year-to-date period.

Pricing Surge Year to Date

Zacks Investment Research

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Driving Forces Behind ET Stock

Energy Transfer’s 130,000-mile pipeline network expansion efforts through organic projects and strategic acquisitions have been instrumental in its growth trajectory. Each year, the company undertakes a major accretive acquisition, with the recent WTG acquisition enhancing its presence in the Permian Basin.

The company’s well-diversified asset portfolio, including oil and gas pipelines, processing, and storage facilities across key U.S. basins and growing demand hubs, serves as a robust revenue driver. Notably, Energy Transfer plans to invest $3-3.2 billion in 2024 to bolster its asset base further.

Boasting NGL and Crude oil export capacities of over 1.1 million and 1.9 million barrels per day, respectively, Energy Transfer is diligently working on expanding its NGL export capabilities through the Marcus Hook and Nederland terminals. The firm commands around 20% of the global share in NGL exports.

Upsurge in Management Ownership

Energy Transfer’s notable insider ownership signifies a bullish outlook, with management and independent board members continuously investing in the company. Since January 2021, insiders have collectively purchased over 44 million units worth $468 million, reflecting confidence in sustained growth amid escalating midstream demand.

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Optimistic Earnings Outlook for ET

The Zacks Consensus Estimate forecasts a 28.4% and 12.6% year-over-year increase in Energy Transfer’s 2024 and 2025 earnings per unit, respectively.

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Unlocking Value in Undervalued Units

Energy Transfer units present an attractive value proposition with a trailing 12-month EV/EBITDA of 10.32, standing at a discount compared to the industry average of 11.62. Similarly, Plains All American Pipeline PAA is also trading favorably on an EV/EBITDA basis relative to its peers.

Zacks Investment Research

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Concluding Remarks

Energy Transfer’s extensive pipeline infrastructure spread across 44 states positions the company favorably to capitalize on the burgeoning oil, natural gas, and NGL production volumes in the U.S.

With encouraging earnings estimates and a discounted valuation, now could be an opportune moment for investors to consider entering the market. Moreover, the escalating insider ownership underscores the potential for sustained growth.

For existing holders of the Zacks Rank #3 (Hold) stock, retaining positions could prove to be a prudent strategy.