ZACKS·2025-12-31 15:31Industry Overview - Companies in the Zacks Oil and Gas – Production Pipeline sector are crucial for meeting increasing global energy demand by supplying crude oil and natural gas, which are essential for transportation, industrial activities, and households [1] - Their operations enhance energy security, support economic growth, and provide necessary feedstocks for petrochemicals and fertilizers, while also advancing cleaner technologies and carbon-reduction initiatives [1] Company Profiles Energy Transfer LP (ET) - Energy Transfer has a diversified midstream network across natural gas, natural gas liquids (NGLs), crude oil, and refined products, benefiting from stable, fee-based cash flows and strategic access to export terminals [3] - The company is positioned to capture growth from rising U.S. energy production and global demand, with an attractive distribution yield and ongoing balance sheet strengthening through deleveraging [3] - The Zacks Consensus Estimate for ET's earnings per unit indicates year-over-year growth of 3.91% in 2025 and 15.25% in 2026, with long-term earnings growth per share projected at 12.45% [6] ONEOK Inc. (OKE) - ONEOK has a strong investment case due to its extensive NGL infrastructure and strategically positioned pipeline network across major U.S. energy basins, supported by stable, fee-based cash flows and limited commodity exposure [4] - The company is expected to achieve earnings visibility and offers an attractive dividend, with long-term growth driven by reliable income and moderate growth in the midstream energy sector [4] - The Zacks Consensus Estimate for OKE's earnings per unit implies year-over-year growth of 3.48% in 2025 and 9.48% in 2026, with long-term earnings growth per share pegged at 3.06% [9] Financial Metrics - OKE's sales are projected to rise 17.97% in 2026, while ET's sales growth is forecasted at 26.64% for the same period [7][11] - OKE has a higher return on equity (ROE) of 15.12%, surpassing ET's 10.71% and the industry average of 13.28% [13] - ET's current long-term debt-to-capital ratio is 58.87%, slightly lower than OKE's 59.08% [16] Valuation and Price Performance - Energy Transfer is currently trading at a forward 12-month Price/Earnings (P/E) ratio of 10.77X, while ONEOK is at 12.61X, compared to the industry average of 12.23X, indicating ET is trading at a discount [17] - In the past three months, ET's units have declined by 0.7%, while OKE has gained 2.7%, outperforming the sector's overall gain of 1.4% [18] Conclusion - ONEOK's stronger projected sales growth, higher return on equity, and superior price performance, despite a marginally higher reliance on debt compared to ET, suggest it has a competitive advantage [20]