Walking the financial tightrope, Energy Transfer LP has sprinted ahead, showcasing a stunning 21.8% surge year to date, outpacing its industry’s growth by a whisker. This oil and gas midstream maverick boasts an extensive web of pipelines slithering across the United States, tapping into burgeoning power needs from fresh demand hubs mushrooming throughout its network.
Beyond that, the company stands tall as a premier exporter of liquefied petroleum gas, gearing up its infrastructure for the upsurge in global demand for natural gas liquids.
In a David versus Goliath saga, Energy Transfer’s stock has not only eclipsed its sector counterparts but has also left the S&P 500 by the wayside in the ongoing year.
The Spectacular Price Odyssey YTD
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Unleashing the Forces Driving ET Stock Forward
With a sprawling empire encompassing over 130,000 miles of pipelines traversing the United States, Energy Transfer is amplifying its footprint through organic ventures and strategic buyouts. The company’s tentacles stretch across 44 states, with a blockbuster acquisition occurring annually since 2021. The recent WTG purchase, sealed earlier this year, consolidated Energy Transfer’s natural gas pipeline and processing network in the Permian Basin.
Energy Transfer boasts a well-rounded portfolio of assets, furnishing solid earnings bedrock. Its oil and gas pipelines, gathering and processing units, and storage facilities are strategically situated in major U.S. basins and burgeoning demand hotspots. Come 2024, a hefty $3-3.2 billion injection is earmarked to fortify and expand its asset portfolio further.
The company’s NGL and Crude oil export prowess, exceeding 1.1 million and 1.9 million barrels a day, respectively, is the envy of the town. Energy Transfer is on a warpath to enhance its NGL export capabilities via the expansion of Marcus Hook and Nederland export terminals. Hovering around 20%, the company nabs a generous market slice of worldwide NGL exports.
Ownership Stakes Surge in Energy Transfer’s C-Suite
The power corridors of Energy Transfer are pulsating with an uptick in ownership as management honchos and insiders stack up hefty stakes. Seasoned execs and independent board honchos have been onboard the buying spree, devouring over 44 million units worth a cool $468 million since the dawn of 2021. This soaring insider ownership underscores a rosy outlook and sustainable momentum in the midstream sphere.
Riding the Earnings Wave – A Y/Y Lift Beckons for ET
The Zacks Consensus Estimate for Energy Transfer’s 2024 and 2025 earnings per unit prophesies a 28.4% and 12.6% uptick from yesteryears, respectively.
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Deep Dive into the Undervalued Realm of ET’s Units
Energy Transfer’s units flaunt a modest price tag relative to peers, with its prevailing trailing 12-month EV/EBITDA clocking at 10.32 versus the industry’s average of 11.62. In a parallel narrative, another player treading this lane, Plains All American Pipeline, is trading at a bargain on an EV/EBITDA spectrum vis-à-vis its industry.
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Closing Thoughts
Brimming with over 130,000 miles of pipelines and a labyrinth of related infrastructure sprinkled across 44 states, Energy Transfer stands at the precipice of a renaissance. The glistening backdrop of ascending oil, natural gas, and NGL production volumes across the United States could well be the golden ticket for investors eyeing an opportune moment. Anchored by promising earnings trajectory and a discount zone valuation, the mounting insider dedication heralds a spectacle of sustainable growth.
For the proud owners of this Zacks Rank #3 (Hold) stock, the wise counsel would be to bask in its aura and hold firm in their investment portfolios.
