ET Stock Trading at a Discount to Industry at 8.96X: How to Play?

Core Insights - Energy Transfer LP (ET) is currently undervalued compared to its industry peers, with a trailing 12-month EV/EBITDA of 8.96X versus the industry average of 10.47X, indicating a potential investment opportunity [1][7]. Company Overview - Energy Transfer operates an extensive network of over 140,000 miles of pipelines across 44 states in the U.S., focusing on expanding its infrastructure to meet growing power demands and increasing its export capabilities for liquefied petroleum gas and natural gas liquids (NGL) [2][10][12]. - The company plans to invest $4.6 billion for growth in 2025, which will further enhance its asset base and operational capacity [10]. Financial Performance - ET's revenue structure is predominantly fee-based, with nearly 90% of revenues derived from transportation and storage services, which mitigates risks associated with commodity price fluctuations [7][13]. - The Zacks Consensus Estimate indicates a year-over-year earnings growth of 7.03% for 2025 and 15.82% for 2026, reflecting positive financial momentum [18][19]. Market Position - ET's NGL export capacity exceeds 1.4 million barrels per day, maintaining a market share of around 20% in global NGL exports [12]. - The company has consistently raised its cash distribution rates, with a current quarterly rate of 33.25 cents per common unit, demonstrating a commitment to returning value to unitholders [21]. Management and Insider Activity - Insider ownership at Energy Transfer is approximately 10%, with management and board members actively purchasing units, indicating strong confidence in the company's future performance [16][17]. Comparative Analysis - Another midstream operator, Plains All American Pipeline (PAA), is trading at an EV/EBITDA of 9.94X, also reflecting a discount compared to the industry average [3]. - Energy Transfer's trailing 12-month return on equity (ROE) stands at 10.71%, which is lower than the industry average of 13.28%, suggesting room for improvement in profitability [22]. Summary - Energy Transfer is well-positioned to capitalize on the growth in U.S. oil, natural gas, and NGL production, supported by its fee-based revenue model and strategic acquisitions [23].