I last wrote on Energy Transfer LP (NYSE: ET ) stock on May 3, 2025. That article was titled “Energy Transfer Q1 Preview: Dividend Raise Foreshadows Growth”. It served as a preview for the company’s 2025 FQ1 As you can tell, our core style is to provide actionable and unambiguous ideas from our independent research. If your share this investment style, check out Envision Early Retirement. It provides at least 1x in-depth articles per week on such ideas.We have helped our members not only to beat S&P 500 but ...

Core Insights - Energy Transfer LP (ET) benefits from a fee-based contract model that provides consistent cash flows and shields the company from commodity price volatility [1][2][4][5] Company Overview - Energy Transfer generates nearly 90% of its earnings from fee-based contracts, with only 10% from commodity and spread exposure, indicating a well-balanced asset mix that supports strong earnings [2][9] - The company operates 130,000 miles of pipelines across 44 states, facilitating the transportation of oil and gas products from major basins such as the Permian, Eagle Ford, and Marcellus [3] Financial Performance - The stable cash flow from fee-based contracts supports Energy Transfer's strong distribution policy and debt reduction efforts, maintaining a solid credit profile and lowering financing costs [4] - The Zacks Consensus Estimate for Energy Transfer's earnings per unit for 2025 and 2026 has increased by 2.86% and 4.26%, respectively, over the past 60 days [8] Market Position - Energy Transfer's units have appreciated by 10.2% over the past year, outperforming the Zacks Oil and Gas - Production Pipeline - MLB industry's growth of 6% [10] - The company's units are currently trading at a trailing 12-month EV/EBITDA of 10.17X, which is below the industry average of 11.39X, suggesting that the firm is undervalued compared to its peers [9][12] Industry Context - Midstream operators like Energy Transfer leverage fee-based contracts to generate stable revenues, allowing them to focus on operational efficiency and capital discipline [6] - Other companies in the sector, such as Enterprise Products Partners and Kinder Morgan, also rely heavily on fee-based income to maintain strong cash flows and support infrastructure expansions [7]

Core Viewpoint - Energy midstream companies like Energy Transfer, Kinder Morgan, and Williams are generating stable cash flows and are ideal for investors seeking passive income due to their minimal direct exposure to commodity price volatility [1][13]. Group 1: Energy Transfer - Energy Transfer operates a vast network of over 130,000 miles of pipelines, moving oil, natural gas, and other commodities, with 90% of its earnings supported by fee-based contracts and government-regulated rate structures [3][4]. - In the first quarter, Energy Transfer generated over $2.3 billion in distributable cash flow and distributed approximately $1.1 billion to investors, while investing $945 million in growth capital spending [4][5]. - The company plans to invest $5 billion in growth projects this year, expected to enhance stable cash flows significantly by 2026 and 2027, with an aim to increase its more than 7% yielding payout by 3% to 5% annually [5]. Group 2: Kinder Morgan - Kinder Morgan possesses a significant energy infrastructure portfolio, operating one of the largest natural gas pipeline networks in the U.S., with 64% of its cash flow backed by take-or-pay contracts [6][7]. - The company generated $1.2 billion in cash flow from operations in the first quarter, covering its dividend outlay of $642 million by roughly 2 times, allowing for excess free cash flow to fund expansion projects [8]. - Currently, Kinder Morgan has $8.8 billion worth of expansion projects under construction, expected to enhance stable cash flow sources and support continued dividend increases [8]. Group 3: Williams - Williams operates one of the largest natural gas infrastructure platforms in the U.S., with key interstate pipelines and gathering and processing operations [9]. - The company generated nearly $1.5 billion in available funds from operations in the first quarter, covering its more than 3% yielding dividend by 2.4 times, allowing for significant cash retention for expansion projects [11]. - Williams is engaged in multiple growth projects, including expanding its Transco pipeline and building a natural gas power plant to meet rising demand, which will drive cash-flow growth through 2030 [12].

Group 1 - Samuel Smith has extensive experience in dividend stock research and investment, having served as lead analyst and Vice President at various firms [1] - He is a Professional Engineer and Project Management Professional, holding degrees in Civil Engineering & Mathematics and a Masters in Engineering with a focus on applied mathematics and machine learning [1] - Samuel leads the High Yield Investor investing group, collaborating with Jussi Askola and Paul R. Drake to balance safety, growth, yield, and value [2] Group 2 - High Yield Investor provides real-money core, retirement, and international portfolios, along with regular trade alerts and educational content [2] - The service includes an active chat room for investors to share insights and strategies [2]

Core Viewpoint - Energy Transfer LP (ET) is positioned to benefit from increasing global demand for U.S. natural gas liquids (NGL) through strategic expansion of its export infrastructure, particularly at key terminals like Nederland and Marcus Hook [1][9]. Group 1: Export Capacity and Market Position - Energy Transfer has significant export capacity, capable of shipping over 1.1 million barrels per day of NGLs and 1.9 million barrels per day of crude oil, with nearly a 20% share of the global NGL export market [2][9]. - The expansion of NGL export capabilities allows Energy Transfer to capture higher-margin international volumes, which are generally more profitable than domestic sales [3][9]. Group 2: Financial Stability and Growth - The company benefits from long-term, fee-based contracts with global customers, providing stable cash flows amid volatile commodity price cycles [3]. - Energy Transfer's integrated pipeline and storage network enhances supply-chain connectivity, allowing for increased throughput without a proportional rise in fixed costs, thereby improving margins [4]. Group 3: Industry Context and Competitors - Other Master Limited Partnerships (MLPs) like Enterprise Products Partners LP and Plains All American Pipeline LP are also capitalizing on rising NGL demand, with Enterprise aiming to export over 100 million barrels per month by 2027 [6][7]. - The overall demand for NGL is increasing globally, supported by regulatory tailwinds favoring energy exports, positioning Energy Transfer for sustainable cash flow growth and robust returns to unitholders [5]. Group 4: Earnings and Valuation - The Zacks Consensus Estimate indicates an increase in Energy Transfer's earnings per unit for 2025 and 2026 by 2.13% and 4.26%, respectively, over the past 60 days [8]. - Energy Transfer units are currently trading at a discount relative to the industry, with a trailing 12-month EV/EBITDA of 10.24X compared to the industry average of 11.48X, suggesting undervaluation [10]. Group 5: Price Performance - Energy Transfer units have appreciated by 13.8% over the past year, outperforming the Zacks Oil and Gas - Production Pipeline - MLB industry's growth of 9.2% [12].

Core Viewpoint - Energy Transfer has significantly improved its financial position over the past five years, transitioning from a weakened state in 2020 to its best financial shape in history, with reduced debt and over 50% increase in earnings, enabling higher cash distributions [1][2]. Financial Performance - The company reduced its debt and increased earnings by more than 50% over the past five years [2]. - Energy Transfer's cash distribution has surpassed its previous peak due to improved financial flexibility [2][7]. Growth Strategy - Energy Transfer plans to invest $5 billion in capital projects this year, up from $3 billion last year, driven by a wave of approved expansion projects [4]. - The Hugh Brinson Pipeline project, with a capacity of 1.5 billion cubic feet per day, is a key initiative, with a total cost of $2.7 billion for both phases [5]. Project Pipeline - The company is expanding its natural gas processing plants and enhancing its Nederland Flexport terminal, with projects expected to ramp up earnings growth significantly in 2026 and 2027 [6][7]. - Energy Transfer has a backlog of expansion projects that are set to enter service by the end of next year, with additional projects under development [8]. Future Catalysts - The Lake Charles LNG export terminal is a major project nearing a final investment decision, supported by commercial contracts and a joint development partnership [9][10]. - The company anticipates significant demand for natural gas from new and existing customers, including contracts to supply gas to over 60 power plants and 200 data centers [10]. Strategic Acquisitions - Energy Transfer has a history of making strategic acquisitions, with recent deals including Enable Midstream (2021), Crestwood Equity Partners (2023), and WTG Midstream (2024), providing flexibility for future acquisitions [11]. Long-term Outlook - The company aims to increase its distribution payout by 3% to 5% annually, positioning itself for substantial growth and attractive total returns in the coming years [12][13]. - Key growth drivers include continued strong volume growth from the Permian Basin, increasing natural gas power demand, and strong global demand for U.S. NGL production [14].

Core Insights - Energy Transfer LP (ET) has experienced a 12.2% increase in its units over the past nine months, outperforming the Zacks Oil and Gas - Production Pipeline - MLB industry's growth of 4.8% [1][2][7] - The company is a significant exporter of liquefied petroleum gas and is expanding its natural gas liquids (NGL) export infrastructure to meet rising global demand, although new U.S. licensing rules may introduce uncertainties regarding shipments to China [2][14] Performance Metrics - ET is currently trading above its 50-day and 200-day simple moving averages (SMA), indicating a bullish trend [5] - The stock has shown strong momentum, benefiting from long-term, fee-based contracts that account for nearly 90% of its revenues [9][10] Strategic Positioning - Energy Transfer operates an extensive pipeline network exceeding 130,000 miles across 44 U.S. states, positioning itself to capitalize on the growing demand for pipeline infrastructure as oil and gas production increases [12][26] - The company has secured agreements with electric utilities to supply natural gas for new gas-fired power plants, and it has received connection requests from nearly 200 data centers, reflecting robust demand from the digital infrastructure sector [10][11] Export Capacity - Energy Transfer has significant export capabilities, able to ship over 1.1 million barrels per day of NGLs and 1.9 million barrels per day of crude oil, with ongoing expansions at its terminals enhancing these capabilities [13] Financial Performance - The Zacks Consensus Estimate for Energy Transfer's earnings per unit for 2025 and 2026 indicates increases of 2.13% and 4.26%, respectively, over the past 60 days [17] - The current quarterly cash distribution rate is 32.75 cents per common unit, with management having raised distribution rates 14 times in the past five years [19] Valuation Metrics - Energy Transfer units are trading at a trailing 12-month Enterprise Value/Earnings before Interest, Tax, Depreciation and Amortization (EV/EBITDA) of 10.37X, which is lower than the industry average of 11.85X, suggesting the company is undervalued [20] - The trailing 12-month return on equity (ROE) for Energy Transfer is 11.47%, which is below the industry average of 13.95% [24]

Core Viewpoint - The article discusses three standout oil stocks for income investors, particularly in the midstream sector, highlighting their attractive dividend yields and resilience in the face of fluctuating oil prices [2][4][14]. Group 1: Company Analysis - **Enterprise Products Partners**: This limited partnership operates over 50,000 miles of pipeline and has a forward distribution yield of 6.67%. It has increased its distribution for 26 consecutive years, demonstrating strong resilience and delivering double-digit percentage returns on invested capital [3][4][6]. - **Energy Transfer**: Another midstream limited partnership, Energy Transfer operates over 130,000 miles of pipelines and offers a higher forward distribution yield of 7.29%. Despite a past distribution cut in 2020, it is expected to grow distributions by 3% to 5% annually and is well-positioned to benefit from the increasing demand for natural gas due to AI data centers [7][8][10]. - **Enbridge**: This company owns over 18,000 miles of crude pipelines and nearly 19,000 miles of natural gas pipelines. It is the largest natural gas utility in North America and has a forward dividend yield of 5.91%. Enbridge has increased its dividend for 30 consecutive years and is investing in renewable energy, expecting to generate over 500 megawatts from solar power by 2025 [12][13][14]. Group 2: Industry Insights - The midstream sector is highlighted as a resilient area within the oil industry, as companies like Enterprise Products Partners and Energy Transfer can maintain their transportation fees regardless of commodity price fluctuations, providing stability in revenue [5][6]. - The demand for natural gas is expected to grow, particularly with the rise of AI technologies that require significant electricity, positioning midstream companies favorably for future growth opportunities [10].

Core Viewpoint - Energy Transfer LP (ET) is expected to report financial results soon, with projected earnings per share (EPS) of $0.32, indicating an 8.57% decline year-over-year, while revenue is anticipated to reach $24.73 billion, reflecting a 19.31% increase from the previous year [2]. Financial Performance - For the annual period, the Zacks Consensus Estimates predict earnings of $1.44 per share and revenue of $97.68 billion, representing increases of +12.5% and +18.15% respectively compared to last year [3]. - The consensus EPS projection has increased by 0.42% in the past 30 days, and Energy Transfer LP currently holds a Zacks Rank of 3 (Hold) [5]. Valuation Metrics - Energy Transfer LP has a Forward P/E ratio of 12.69, which is higher than the industry average Forward P/E of 12.28 [5]. - The company has a PEG ratio of 0.59, compared to the industry average PEG ratio of 1.15 [6]. Industry Context - The Oil and Gas - Production Pipeline - MLB industry, which includes Energy Transfer LP, ranks in the bottom 18% of all industries according to the Zacks Industry Rank [7].

Group 1 - Energy Transfer (NYSE: ET) is considered one of the most attractive investment opportunities in the market due to its cheap shares on an absolute basis [1] - The focus of Crude Value Insights is on cash flow and companies that generate it, highlighting value and growth prospects with real potential in the oil and natural gas sector [1] Group 2 - Subscribers have access to a 50+ stock model account, in-depth cash flow analyses of exploration and production (E&P) firms, and live chat discussions about the sector [2] - A two-week free trial is available for new subscribers to explore the oil and gas investment opportunities [3]