Can ET's Gas Storage Assets Unlock Growth Opportunity for the Stock?

Energy Transfer LP ET is well-positioned to capture rising U.S. natural gas demand through its extensive network of intrastate and interstate storage facilities. With strategically located capacity across major demand corridors, the company offers flexibility, reliability and the ability to manage seasonal shifts and peak usage requirements.

At its Bethel storage facility, ET is constructing a new cavern that will more than double its working gas storage capacity to over 12 billion cubic feet (Bcf). This expansion of Bethel storage and the capacity of other storage assets strengthens its pipeline operations while supporting long-term commercial contracts with utilities, LNG exporters and power generators, ensuring recurring fee-based revenues.

Within Texas, ET’s intrastate storage assets connect directly to key production basins such as the Permian and Eagle Ford. These assets not only generate storage fee income but also allow for price optimization, providing stable returns insulated from commodity price swings. The firm is also efficiently utilizing its two natural gas storage facilities located in Oklahoma.

On the interstate side, ET’s storage integrates seamlessly with pipelines delivering natural gas to high-demand markets across the Midwest and Gulf Coast regions of the United States. With LNG exports growing and industrial demand accelerating, these facilities are increasingly vital as shippers seek a dependable supply during global market fluctuations. 

Collectively, ET’s storage capabilities reinforce its role as a critical balancing force in U.S. natural gas flows, supporting long-term earnings stability and growth.

How Storage Facilities Assist the Midstream Companies?

Storage facilities help midstream companies balance supply and demand, guarantee reliable deliveries and capitalize on seasonal price shifts. They enhance operational flexibility, secure long-term contracts with utilities and LNG exporters and deliver steady fee-based revenues, shielding earnings from commodity price swings.

Kinder Morgan KMI and The Williams Companies WMB benefit significantly from their natural gas storage assets. Kinder Morgan leverages its storage capacity to ensure reliable deliveries and optimize seasonal pricing, supporting steady fee-based income. Similarly, Williams integrates storage with its pipeline network, enhancing supply security for utilities and LNG exporters. Both companies gain operational flexibility, stable cash flows and resilience against commodity price volatility.

ET’s Price Performance

Units of Energy Transfer have risen 10.1% in the past year compared with the Zacks Oil and Gas - Production Pipeline - MLB industry’s growth of 2.6%.

ET’s Earnings Estimates Moving Up Y/Y

The Zacks Consensus Estimate for Energy Transfer’s 2025 and 2026 earnings per unit indicates a year-over-year increase of 9.38% and 10.71%, respectively.

ET’s Units Are Trading at a Discount

Energy Transfer units are somewhat inexpensive relative to the industry. ET’s current trailing 12-month Enterprise Value/Earnings before Interest, Tax, Depreciation and Amortization (EV/EBITDA) is 9.26X compared with the industry average of 10.65X. This indicates that the firm is presently undervalued compared with its industry.

ET’s Zacks Rank

Energy Transfer currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

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This article originally published on Zacks Investment Research (zacks.com).

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