ET Stock Outperforms its Industry in 12 Months: How to Play

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]