Energy Transfer(ET) The Motley Fool·2025-02-19 12:45Core 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 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 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 16.5 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]