ET Stock Outpaces Its Industry in the Past Month: Time to Buy or Hold?

Core Insights - Energy Transfer LP (ET) has seen a 6.4% increase in its units over the past month, outperforming the Zacks Oil and Gas - Production Pipeline - MLB industry's growth of 4.1% and the Zacks Oil-Energy sector's rally of 5.8% [1][9] - The company benefits from fee-based contracts, making it a leading exporter of liquefied petroleum gas and expanding its natural gas liquids export facilities to meet rising global demand [2] Performance Overview - ET's units rose 6.4% in a month, surpassing industry and sector performance [9] - The firm is currently trading below its 50 and 200-day simple moving averages, indicating a short-term bearish trend [6] Operational Expansion - Energy Transfer operates over 140,000 miles of pipelines across 44 U.S. states, with a diversified asset portfolio that supports stable earnings [11] - The company plans to invest approximately $5.0-$5.5 billion in growth capital expenditures by 2026 to enhance operations [11] - Recent expansions include a 1.5 Bcf/d increase to the Transwestern Pipeline and new processing plants expected to come online in 2026 [12] Market Positioning - Energy Transfer is strategically positioned to benefit from increasing U.S. natural gas demand through its extensive storage network [13] - The firm derives nearly 90% of its earnings from fee-based contracts, which mitigates exposure to commodity price fluctuations [14] Financial Estimates - The Zacks Consensus Estimate for ET's 2026 earnings per unit indicates a year-over-year growth of 16.76% alongside a 26.64% increase in sales estimates [15] - Current quarterly cash distribution rate is 33.25 cents per common unit, with a yield of 7.7%, outperforming the industry average of 6.08% [23] Valuation Metrics - ET's trailing 12-month EV/EBITDA is 9.15X, lower than the industry average of 10.76X, suggesting the firm is undervalued [24] - The trailing 12-month return on equity (ROE) for ET is 10.71%, which is below the industry's 13.28% [26] Conclusion - Energy Transfer's extensive infrastructure and ongoing expansions position it favorably in the midstream sector as U.S. hydrocarbon production increases [27]