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Time to Buy the Dip on Energy Transfer Stock?
The Motley Fool· 2025-03-08 09:28
Core Viewpoint - Energy Transfer's recent unit price dip presents a buying opportunity for long-term investors seeking passive income, with a distribution yield of approximately 7.3% compared to the S&P 500's 1.3% [2][10] Group 1: Financial Performance - Energy Transfer's unit price has decreased over 15% since early January, following a 50% increase over the past year [1] - The MLP reported a 13% increase in adjusted EBITDA last year, indicating steady growth [3] - The company generated $8.4 billion in distributable cash flow last year, covering its cash distribution of about $4.4 billion with an excess of $4 billion [4] Group 2: Growth Prospects - Energy Transfer is targeting 3% to 5% annual growth in its distribution, supported by increasing earnings and a solid financial profile [4] - The company has secured new expansion projects, including the Hugh Brinson Pipeline, and plans to increase its capital-spending budget to about $5 billion this year [5] - Major growth catalysts include Permian Basin volume growth, rising natural gas power demand, and global demand for U.S. natural gas liquids [7] Group 3: Strategic Initiatives - Energy Transfer is advancing several projects to support growing gas production and demand, such as the Lake Charles LNG export facility [8] - The company has signed contracts to supply gas to new data centers, enhancing its long-term growth outlook [9] - The current valuation does not reflect the company's long-term growth prospects, making the recent price dip an attractive buying opportunity [10]
Energy Transfer Is Cashing In on a Powerful New Growth Opportunity
The Motley Fool· 2025-03-04 09:07
Core Viewpoint - Energy Transfer is positioned for significant growth in the natural gas sector, driven by increasing electricity demand and its extensive infrastructure [2][3][6]. Growth Prospects - The company delivered double-digit earnings and cash-flow growth last year, supported by acquisitions and organic expansion [2]. - U.S. power demand is expected to grow by 55% over the next 20 years, significantly outpacing the previous two decades' growth of around 9% [3]. Market Demand - The anticipated surge in power demand will drive the need for various power sources, particularly natural gas [4]. - Total U.S. natural gas demand was approximately 110 Bcf/d last year, with future demand potentially exceeding 10 to 12 Bcf/d [5][4]. Infrastructure Advantage - Energy Transfer operates over 105,000 miles of natural gas pipelines and has a storage capacity of 236 Bcf, positioning it well to meet rising demand [6]. - The company has received requests for connections to around 62 new power plants and over 70 prospective data centers [7]. Strategic Initiatives - A long-term agreement with CloudBurst data centers to supply natural gas for an AI-focused data center in Texas marks the beginning of potential commercial agreements [7][8]. - The company plans to invest $5 billion in growth projects this year, a $2 billion increase from the previous year, to support future growth [9].
ET Stock Outperforms its Industry in 12 Months: How to Play
ZACKS· 2025-02-27 16:00
Core Viewpoint - Energy Transfer LP (ET) has outperformed the Zacks Oil and Gas - Production Pipeline - MLB industry over the past year, with a stock price increase of 31.9% compared to the industry's 24.6% growth [1][2] Group 1: Company Performance - Energy Transfer owns over 130,000 miles of pipelines across 44 states in the U.S. and is expanding operations through organic initiatives and acquisitions [6] - The company has been making one large accretive acquisition each year since 2021 [6] - Nearly 90% of Energy Transfer's earnings come from fee-based contracts, providing strong earnings support as oil and gas production volumes rise [7] Group 2: Capital Investments - Energy Transfer's total capital expenditures for 2024 are projected to be approximately $4.6 billion, a 60% increase year-over-year [8] - For 2025, growth capital expenditures are expected to be nearly $5 billion, with maintenance capital expenditures around $1.1 billion [8] - The firm is expanding its processing capacity in the Permian Basin to meet increasing regional demand [11] Group 3: Infrastructure Expansion - The firm approved the 9th fractionator at Mont Belvieu, which will have a design capacity of 165,000 barrels per day, expected to be operational by late 2026 [9] - The Sabina 2 pipeline conversion project increased capacity from 25,000 barrels per day to nearly 40,000 barrels per day, with plans to expand to 70,000 barrels per day by mid-2026 [10] Group 4: Financial Metrics - Energy Transfer's current quarterly cash distribution rate is 32.50 cents per common unit, with management raising distribution rates 13 times in the past five years [12] - The Zacks Consensus Estimate indicates year-over-year earnings growth of 14.06% for 2025 and 4.25% for 2026 [13] - Energy Transfer's trailing 12-month EV/EBITDA is 10.78X, lower than the industry average of 12.04X, suggesting the firm is undervalued [15] Group 5: Profitability - Energy Transfer's trailing 12-month return on equity (ROE) is 11.56%, which is below the industry average of 14.84% [18]
Energy Transfer: An Undervalued Cash Cow With More To Offer
Seeking Alpha· 2025-02-26 14:34
Group 1 - The company Energy Transfer (NYSE: ET) is part of a hyper-concentrated investment portfolio, indicating a focused investment strategy [1] - Crude Value Insights provides an investment service centered on oil and natural gas, emphasizing cash flow generation and growth potential [1] - The service offers subscribers access to a model account with over 50 stocks, detailed cash flow analyses of exploration and production firms, and live discussions about the sector [2] Group 2 - A two-week free trial is available for new subscribers, promoting engagement with the oil and gas sector [3]
Think It's Too Late to Buy Energy Transfer? Here's the Biggest Reason There's Still Time.
The Motley Fool· 2025-02-25 10:11
Core Viewpoint - Energy Transfer has experienced significant growth in 2023, with a price increase of over 40%, and despite this surge, it remains an attractive investment due to its low valuation and strong growth potential [1][2]. Financial Performance - Energy Transfer has achieved a record adjusted EBITDA of $15.5 billion, reflecting a 13% growth from the previous year, driven by acquisitions, organic expansion, and favorable market conditions [2]. - The company is currently trading at the second-lowest valuation among its peers, indicating potential for further price appreciation [2]. Growth Projections - The company anticipates a moderation in EBITDA growth to around 5% for the current year, primarily due to a lack of significant acquisition activity [3]. - Starting next year, Energy Transfer expects a resurgence in growth driven by organic expansion projects, with planned capital expenditures of $5 billion for this year following a $3 billion investment last year [3][4]. Future Expansion - Major projects are expected to begin operations from mid-2023 through the end of 2024, with significant earnings growth anticipated in 2026 and 2027 [4]. - Energy Transfer is developing additional expansion projects, including initiatives to meet the growing gas demand from AI data centers, which is one of three key catalysts for growth through the end of the decade [5].
The Best Pipeline Stock to Invest $2,000 in Right Now
The Motley Fool· 2025-02-20 11:15
Core Viewpoint - The pipeline master limited partnerships (MLPs) sector is experiencing strong performance, with the Alerian MLP Infrastructure Index showing a total return of 26.7% in 2024 and nearly 10% year-to-date [1] Industry Summary - The MLP pipeline sector is attracting investor interest due to strong distribution payments, robust yields, historically low valuations, and increasing growth opportunities driven by rising natural gas demand [2] - Energy Transfer is highlighted as a solid investment option within this sector, particularly for investors looking to invest a few thousand dollars [2] Company Summary - Energy Transfer operates one of the largest integrated midstream systems in the U.S., focusing on the transportation, storage, and processing of hydrocarbons, with a strategic position in the Permian Basin, known for its favorable drilling economics [3] - The company is well-positioned to benefit from growing energy needs related to artificial intelligence and natural gas exports, with access to low-cost natural gas [4] - Energy Transfer plans to increase its growth capital expenditure (capex) to $5 billion in 2025, up from $3 billion in the previous year, focusing on projects in the Permian region [5] - The company has signed an agreement to supply natural gas to data center developer CloudBurst and has received requests to connect to approximately 70 data centers across 12 states [6] - Energy Transfer anticipates mid-teens returns on its growth projects, with a significant impact on earnings before interest, taxes, depreciation, and amortization (EBITDA) expected in 2026 and 2027 [7] - The company increased its distribution by 3.2% year-over-year to $0.325, resulting in a forward yield of about 6.5%, with plans to grow distributions by 3% to 5% annually [8] - The distribution is well-supported by its distributable cash flow (DCF), which was $1.98 billion last quarter, with a distribution coverage ratio of 1.8 [9] - With the increase in capex to $5 billion, Energy Transfer is projected to pay out around $4.5 billion in distributions, which should be covered by its growing DCF [10] - Despite strong performance and growth opportunities, Energy Transfer trades at a relative and historical discount, with an enterprise value (EV) to EBITDA multiple of 8.5 based on 2025 estimates [11][12] - The stock is trading below pre-pandemic levels, where it often had an EV/EBITDA multiple above 15, and the midstream MLP group averaged 13.7 between 2011 and 2016 [13] - Overall, Energy Transfer is considered an inexpensive stock with attractive yield and growth potential, making it a suitable option for investors entering the sector [14]
3 Reasons to Buy Energy Transfer and Hold Through the End of the Decade
The Motley Fool· 2025-02-20 09:38
Core Viewpoint - Energy Transfer is positioned as both an income investment with a distribution yield around 6.5% and a growth opportunity, expecting solid growth through at least the end of the decade [1] Financial Performance - In the previous year, Energy Transfer achieved a 13% increase in adjusted EBITDA and a 10% rise in distributable cash flow, primarily driven by acquisitions, including the merger with Crestwood Equity Partners and the acquisition of WTG Midstream [2] Growth Projections - For the current year, adjusted EBITDA growth is expected to moderate to about 5%, influenced by the WTG Midstream deal and organic expansion projects, with a reacceleration of earnings growth anticipated in 2026 [3] Growth Drivers - The company identifies three main growth areas: strong volume growth from the Permian Basin, increasing demand for natural gas, and robust global demand for U.S. NGL production [4][6][7] Permian Basin Expansion - Energy Transfer has approved several expansion projects in the Permian Basin, including the Hugh Brinson Pipeline, which will transport 1.5 billion cubic feet per day, with potential expansion to 2.2 Bcf/d at a cost of $2.7 billion [4][5] Natural Gas Demand - The company is capitalizing on the anticipated significant increase in natural gas demand, evidenced by a new partnership with CloudBurst to support gas-fired power needs for data centers and electric utilities [6] NGL Infrastructure Development - Energy Transfer is investing $1.1 billion in various NGL-related projects to enhance its capacity for production, transportation, storage, and export of NGLs [7] Future Opportunities - The company is exploring additional expansion opportunities, including potential projects to supply gas to over 70 prospective data center projects across multiple states, which could further enhance its long-term growth outlook [8] Investment Appeal - Energy Transfer presents a compelling long-term investment opportunity by offering high-yield cash distributions alongside significant expected earnings growth driven by its strategic initiatives [9]
Energy Transfer: The King Of MLPs Is Still Undervalued, Yielding Over 6%
Seeking Alpha· 2025-02-19 13:00
Group 1 - Energy Transfer (NYSE: ET) has seen a significant increase in its unit price, rising from $16 in September 2024 to over $20 [1] - The company had previously struggled to maintain a price above $15, indicating a potential turnaround in its market performance [1] - The focus on growth and dividend income is emphasized, with a strategy aimed at creating a portfolio that supports retirement through compounding dividend income and growth [1] Group 2 - The article reflects a personal investment strategy that prioritizes monthly dividend income and reinvestment, which may appeal to income-focused investors [1] - The author holds long positions in several companies, including ET, EPD, KMI, AMZN, GOOGL, and META, indicating a diversified investment approach [1]
Energy Transfer Looks to Turbocharge Growth Spending. Is Now the Time to Buy the Stock?
The Motley Fool· 2025-02-19 12:45
Core Viewpoint - Energy Transfer is anticipating significant growth opportunities in 2025, driven by increasing energy demands, particularly from artificial intelligence (AI) applications [1] Group 1: Growth Spending - Energy Transfer plans to increase its capital expenditures (capex) to $5 billion in 2025, up from $3 billion in 2024, focusing on projects in the Permian Basin [2] - Key projects include the Hugh Brinson pipeline, which will enhance natural gas takeaway capacity from the Permian Basin [2] Group 2: Strategic Agreements - The company has entered a long-term agreement with CloudBurst Data Centers to supply 450,000 MMBtu per day of natural gas for AI-focused data centers in central Texas, with the facility expected to be operational by Q3 2026 [3][4] - Energy Transfer has received requests from over 70 prospective data centers and 62 power plants across 13 states, indicating strong demand for its natural gas infrastructure [4] Group 3: Financial Performance - In Q4, Energy Transfer reported an adjusted EBITDA of $3.88 billion, reflecting an 8% increase [5] - The company raised its quarterly distribution by 3% year-over-year to $0.325 per share, translating to a forward yield of approximately 6.5% [6] Group 4: Future Outlook - Energy Transfer forecasts full-year EBITDA between $16.1 billion and $16.5 billion, indicating around 5% growth, with expectations for significant growth in 2026 and 2027 as current projects come online [7] - The company aims for mid-teen returns on its projects, potentially generating an additional $750 million in EBITDA once fully operational [8] Group 5: Valuation and Positioning - The stock trades at an enterprise value (EV)-to-EBITDA multiple of about 8.5 times the high end of its 2025 guidance, which remains below pre-pandemic levels [10] - Energy Transfer is well-positioned to capitalize on the growing natural gas demand, with a favorable balance sheet and leverage, suggesting solid upside potential for both price appreciation and distribution [9][11]
Energy Transfer: The Power Story Starting To Play Out
Seeking Alpha· 2025-02-18 17:56
Group 1 - Energy Transfer LP (NYSE: ET) reported earnings that were largely in line with expectations, with EBITDA at $3.88 billion, which is an 8% increase compared to the same quarter last year [1] - The company finished the year with a total EBITDA of $15.5 billion [1] Group 2 - The article highlights the expertise of Cashflow Hunter, who has over 25 years of market experience, including nearly 20 years as a hedge fund portfolio manager [2] - Cashflow Hunter successfully predicted the collapse of Silicon Valley Bank, showcasing his market insight [2]