Energy Transfer LP ET is trading above its 50-day and 200-day simple moving average (SMA), signaling a bullish trend. The oil and gas midstream firm owns a wide network of pipelines across the United States and is pursuing opportunities to serve growing power loads from new demand centers across its network.

The firm is also a top exporter of liquefied petroleum gas and is working to expand natural gas liquids (NGL) export facilities to meet the rising demand for NGL globally.

ET's SMA Chart 50 and 200-day

Image Source: Zacks Investment Research

The 50-day and 200-day SMA is a key indicator for traders and analysts to identify support and resistance levels. It is considered particularly important as this is the first marker of a stock’s uptrend or downtrend.

The ET stock closed at $19.81 on Jan. 27. In the past year, the company’s shares have gained 36.4% compared with the industry’s 30.1% rally. ET has also outperformed the S&P 500’s growth of 22.8% and the Zacks Oil-Energy sector’s return of 6.8%.

Price Performance (One Year)

Image Source: Zacks Investment Research

Should you consider adding ET to your portfolio only based on positive price movements? Let’s delve deeper and find out factors that can help investors decide whether it is a good entry point to add ET stock to their portfolio.

Contributing Factors to ET Stock’s Performance

Energy Transfer owns more than 130,000 miles of pipelines across the United States and is expanding its operations through organic initiatives and acquisitions. ET’s operations are spread across 44 states. The firm has been making one large accretive acquisition each year since 2021. ET expanded its natural gas pipeline and processing network in the Permian Basin last year through the WTG acquisition.

The majority of Energy Transfer’s revenues are generated from fee-based contracts and are anchored by strong customers. The firm generates nearly 90% of its revenues by charging fees for transportation and storage services it provides to its strong customer base, which significantly lowers its commodity price fluctuation risks. As oil and gas production volumes are rising across the United States, ET will have enough producers to utilize its pipelines for transportation.

Energy Transfer has a well-balanced asset mix that provides strong earnings support. ET’s oil and gas pipelines, gathering and processing, and storage assets are spread in major U.S. basins and growing demand markets.

Energy Transfer has an NGL and Crude oil export capacity of more than 1.1 million barrels per day and 1.9 million barrels, respectively. The firm is planning to increase its export capabilities through the expansion of Marcus Hook and Nederland export terminals. The company’s market share of worldwide NGL exports is around 20%.

Management Ownership in ET Rises

ET’s management and insiders own a sizeable chunk of its units. Management members and independent board members continue to purchase units of the firm. Energy Transfer insiders bought more than 44 million units worth $468 million since January 2021.

Insider ownership in the ET stock is nearly 10%, which is more than its peers in the same industry. The increasing ownership of insiders indicates bright prospects and sustainable growth amid the rising demand in the midstream space.

ET Shares More With Unitholders

Energy Transfer recently announced an increase in its quarterly cash distribution to 32.50 cents per Energy Transfer common unit for the fourth quarter ended Dec. 31, 2024. The new cash distribution rate reflects an increase of 3.2% compared with the fourth quarter of 2023.

ET’s management has raised distribution rates 12 times in the past five years, and the current payout ratio is 94%.

ET’s Estimates Moving North

The Zacks Consensus Estimate for Energy Transfer’s 2025 earnings per unit and revenue indicates year-over-year growth of 6.1% and 12.76%, respectively.

ET's Earnings Estimates

Image Source: Zacks Investment Research

ET's Sales Estimates

Image Source: Zacks Investment Research

ET’s Units are Trading at a Discount

Energy Transfer units are somewhat inexpensive relative to its industry. ET’s current trailing 12-month Enterprise Value/Earnings before Interest Tax Depreciation and Amortization (EV/EBITDA) is 10.69X compared with the industry average of 12.37X. This indicates that the firm is presently undervalued compared with its industry.

Another firm operating in this space, Plains All American Pipeline PAA, is trading at EV/EBITDA of 9.6X, at a discount compared with its industry.

Image Source: Zacks Investment Research

Summing Up

Entergy Transfer, with more than 130,000 miles of pipeline and related infrastructure in 44 states, is poised well to benefit from the improving oil, natural gas and natural gas liquid production volumes in the United States.

This can be a favorable entry point for investors, given the positive movement in earnings estimates and the firm trading at a discount. Energy Transfer currently has a VGM Score of B, which indicates a strong performance. ET is also trading above its 50-day and 200-day SMA.

Those who already own this Zacks Rank #3 (Hold) stock would do well to retain it in their portfolio.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Plains All American Pipeline, L.P. (PAA) : Free Stock Analysis Report

Energy Transfer LP (ET) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research