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ET Stock Underperforms its Industry in 3 Months: How to Play?
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Units of Energy Transfer LP (ET - Free Report) have gained 2.3% in the past three months compared with the Zacks Oil and Gas - Production Pipeline - MLB industry’s growth of 5.6%. In the same time period, the S&P 500 has dropped 4.9% and Zacks Oil and Energy sector gained 5.7%.
The oil and gas midstream firm owns a wide network of pipelines across the United States and is pursuing opportunities to serve the growing power loads from new demand centers across its network. The firm is also a top exporter of liquefied petroleum gas, exporting to 80 countries and territories and among its global customers, including Chevron (CVX - Free Report) and Shell plc (SHEL - Free Report) .
Price Performance (Three Months)
Image Source: Zacks Investment Research
The recent weakness in unit price can provide a great opportunity for investors to accumulate this midstream stock. Let us delve deeper to find, apart from the near-term weakness in share prices, what other factors can assist investors in deciding whether it is a good entry point or if they should wait longer for a better entry point into the stock.
Extensive Pipelines and Accretive Acquisition Aid ET Stock
Energy Transfer owns more than 130,000 miles of pipelines across the United States and is expanding its operations through organic initiatives and acquisitions. ET’s operations are spread across 44 states. The company’s oil and gas pipelines, gathering and processing, and storage assets are spread in major U.S. basins and growing demand markets. The firm will invest $6.1 billion in 2025 to further expand and strengthen its asset base.
The firm is expanding its operations through organic means and accretive acquisitions. It has been making one large accretive acquisition each year since 2021. The WTG acquisition, which closed last year, expanded ET’s natural gas pipeline and processing network in the Permian Basin.
Due to its strong assets base, Energy Transfer has an NGL and oil export capacity of more than 1.1 million barrels per day and 1.85 million barrels per day, respectively. The firm is working to increase its NGL export capabilities through the expansion of Marcus Hook and Nederland export terminals.
Courtesy of ET’s well-spread pipelines, last month, the firm entered into a long-term agreement with CloudBurst Data Center to provide natural gas to CloudBurst’s flagship AI-focused data center development in Central Texas. This represents Energy Transfer’s first commercial arrangement to supply natural gas directly to a data center. ET is in discussion with other data center developers to provide natural gas.
Fee-Based Contracts Saves ET From Price Fluctuation
The majority of Energy Transfer’s revenues are generated from long-term fee-based contracts and are anchored by strong customers. The firm generates nearly 90% of its revenues by charging fees for transportation and storage services it provides to its strong customer base, which significantly lowers its commodity price fluctuation risks.
As oil and gas production volumes are rising across the United States, ET’s assets are well spread across the United States and 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 insiders bought more than 44 million units worth $468 million from January 2021 to February 2025. The increasing ownership of insiders indicates bright prospects and sustainable growth amid rising demand in the midstream space.
Insiders’ transactions are often considered a yardstick for judging the long-term financial health of the firm. Currently, insiders own nearly 10% of ET’s units, significantly higher than its peer companies operating in the same industry.
ET’s Earnings Estimates are Moving North
The Zacks Consensus Estimate for Energy Transfer’s 2025 and 2026 earnings per unit indicates year-over-year growth of 10.94% and 2.75%, respectively.
Image Source: Zacks Investment Research
ET Raises Unitholders' Value
Energy Transfer’s current quarterly cash distribution rate is 32.50 cents per Energy Transfer common unit. ET’s management has raised distribution rates 13 times in the past five years, and the current payout ratio is 101%.
ET’s Units are Trading at a Discount
Energy Transfer units are somewhat inexpensive relative to its industry. ET’s current trailing 12-month Enterprise Value/Earnings before Interest Tax Depreciation and Amortization (EV/EBITDA) is 10.71X compared with the industry average of 12.31X. This indicates that the firm is presently undervalued compared with its industry.
Image Source: Zacks Investment Research
Another firm operating in this space, Plains All American Pipeline (PAA - Free Report) , is trading at an EV/EBITDA of 9.74X, at a discount compared with its industry.
ET Stock’s ROE is Lower Than Industry
Energy Transfer’s trailing 12-month return on equity is 11.56%, lower than the industry average of 14.22%. Return on equity, a profitability measure, reflects how effectively a company utilizes its shareholders’ funds to generate income.
Image Source: Zacks Investment Research
Wrapping Up
Energy Transfer’s improvement in year-over-year earnings, widespread assets across the United States, expanding customer base and increasing order volume continue to boost the prospects of the firm. ET’s expansion through acquisition and organic means continues to boost the firm’s performance.
However, as the firm’s ROE is lower than the industry, those who already own this Zacks Rank #3 (Hold) stock would do well to retain it in their portfolios. New investors should wait a little longer and find a better entry point.
Image: Bigstock
ET Stock Underperforms its Industry in 3 Months: How to Play?
Units of Energy Transfer LP (ET - Free Report) have gained 2.3% in the past three months compared with the Zacks Oil and Gas - Production Pipeline - MLB industry’s growth of 5.6%. In the same time period, the S&P 500 has dropped 4.9% and Zacks Oil and Energy sector gained 5.7%.
The oil and gas midstream firm owns a wide network of pipelines across the United States and is pursuing opportunities to serve the growing power loads from new demand centers across its network. The firm is also a top exporter of liquefied petroleum gas, exporting to 80 countries and territories and among its global customers, including Chevron (CVX - Free Report) and Shell plc (SHEL - Free Report) .
Price Performance (Three Months)
Image Source: Zacks Investment Research
The recent weakness in unit price can provide a great opportunity for investors to accumulate this midstream stock. Let us delve deeper to find, apart from the near-term weakness in share prices, what other factors can assist investors in deciding whether it is a good entry point or if they should wait longer for a better entry point into the stock.
Extensive Pipelines and Accretive Acquisition Aid ET Stock
Energy Transfer owns more than 130,000 miles of pipelines across the United States and is expanding its operations through organic initiatives and acquisitions. ET’s operations are spread across 44 states. The company’s oil and gas pipelines, gathering and processing, and storage assets are spread in major U.S. basins and growing demand markets. The firm will invest $6.1 billion in 2025 to further expand and strengthen its asset base.
The firm is expanding its operations through organic means and accretive acquisitions. It has been making one large accretive acquisition each year since 2021. The WTG acquisition, which closed last year, expanded ET’s natural gas pipeline and processing network in the Permian Basin.
Due to its strong assets base, Energy Transfer has an NGL and oil export capacity of more than 1.1 million barrels per day and 1.85 million barrels per day, respectively. The firm is working to increase its NGL export capabilities through the expansion of Marcus Hook and Nederland export terminals.
Courtesy of ET’s well-spread pipelines, last month, the firm entered into a long-term agreement with CloudBurst Data Center to provide natural gas to CloudBurst’s flagship AI-focused data center development in Central Texas. This represents Energy Transfer’s first commercial arrangement to supply natural gas directly to a data center. ET is in discussion with other data center developers to provide natural gas.
Fee-Based Contracts Saves ET From Price Fluctuation
The majority of Energy Transfer’s revenues are generated from long-term fee-based contracts and are anchored by strong customers. The firm generates nearly 90% of its revenues by charging fees for transportation and storage services it provides to its strong customer base, which significantly lowers its commodity price fluctuation risks.
As oil and gas production volumes are rising across the United States, ET’s assets are well spread across the United States and 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 insiders bought more than 44 million units worth $468 million from January 2021 to February 2025. The increasing ownership of insiders indicates bright prospects and sustainable growth amid rising demand in the midstream space.
Insiders’ transactions are often considered a yardstick for judging the long-term financial health of the firm. Currently, insiders own nearly 10% of ET’s units, significantly higher than its peer companies operating in the same industry.
ET’s Earnings Estimates are Moving North
The Zacks Consensus Estimate for Energy Transfer’s 2025 and 2026 earnings per unit indicates year-over-year growth of 10.94% and 2.75%, respectively.
Image Source: Zacks Investment Research
ET Raises Unitholders' Value
Energy Transfer’s current quarterly cash distribution rate is 32.50 cents per Energy Transfer common unit. ET’s management has raised distribution rates 13 times in the past five years, and the current payout ratio is 101%.
ET’s Units are Trading at a Discount
Energy Transfer units are somewhat inexpensive relative to its industry. ET’s current trailing 12-month Enterprise Value/Earnings before Interest Tax Depreciation and Amortization (EV/EBITDA) is 10.71X compared with the industry average of 12.31X. This indicates that the firm is presently undervalued compared with its industry.
Image Source: Zacks Investment Research
Another firm operating in this space, Plains All American Pipeline (PAA - Free Report) , is trading at an EV/EBITDA of 9.74X, at a discount compared with its industry.
ET Stock’s ROE is Lower Than Industry
Energy Transfer’s trailing 12-month return on equity is 11.56%, lower than the industry average of 14.22%. Return on equity, a profitability measure, reflects how effectively a company utilizes its shareholders’ funds to generate income.
Image Source: Zacks Investment Research
Wrapping Up
Energy Transfer’s improvement in year-over-year earnings, widespread assets across the United States, expanding customer base and increasing order volume continue to boost the prospects of the firm. ET’s expansion through acquisition and organic means continues to boost the firm’s performance.
However, as the firm’s ROE is lower than the industry, those who already own this Zacks Rank #3 (Hold) stock would do well to retain it in their portfolios. New investors should 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.