ET Stock Outperforms its Industry in Nine Months: How to Play?

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]