ET Stock Outperforms Its Industry in a Year: How to Play?

Units of Energy Transfer LP ET have rallied 7.9% in the past year against the Zacks Oil and Gas - Production Pipeline - MLB industry’s decline of 0.8%. Energy Transfer, 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 also outperformed the Zacks Oil-Energy sector in the same period.

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

Price Performance (One Year)

Another firm, Plains All American Pipeline PAA, operating in the same space, has lost 1.9% in the past year. PAA has extensive midstream assets in the United States.
 
Energy Transfer is trading above its 50-day simple moving averages (SMA), signaling a bullish trend.

ET's SMA Chart 50-day

The 50-day SMA is a widely followed indicator that helps traders and analysts spot potential support and resistance levels. It often serves as an early signal of whether a stock is entering an uptrend or a downtrend.
 
Should you consider adding Energy Transfer to your portfolio solely on the basis of recent positive price movements? Let’s examine the underlying factors that can provide better clarity on whether this is truly a good entry point for ET stock.

Factors Powering Energy Transfer’s Growth

Energy Transfer secures nearly 90% of its revenues from fee-based contracts tied to its transportation and storage services. These long-term agreements with creditworthy counterparties provide consistent cash flow and significantly reduce exposure to volatile commodity prices. With U.S. oil and gas production expanding, the company is well-positioned to capture growth through heightened demand for pipeline infrastructure.

Energy Transfer leverages its extensive midstream network of nearly 140,000 miles of pipelines across North America, covering natural gas, NGLs, crude oil, and refined products. This scale and integration create a strong competitive edge, enabling the company to efficiently move volumes from major basins like the Permian, Eagle Ford and Marcellus to key demand centers and export hubs.

Energy Transfer is well-positioned to capitalize on rising U.S. natural gas demand through its extensive intrastate and interstate storage network. Strategically located along major demand corridors, these assets enhance reliability, manage seasonal fluctuations, and support peak needs. Ongoing expansion further strengthens ET’s role in balancing U.S. gas markets, supporting long-term earnings stability and growth.

Energy Transfer has steadily grown through strategic acquisitions, adding complementary assets that enhance scale, diversify operations, and improve efficiency. Deals such as WTG Midstream, Lotus Midstream, and Crestwood Equity Partners have strengthened ET’s natural gas and NGL network while expanding its presence in high-growth basins like the Permian, Williston and Haynesville.

Energy Transfer continues to boost efficiency and expand services by investing in high-return midstream projects. The company allocated $2.4 billion in the first half of 2025 and expects full-year capital spending of about $5 billion to strengthen and grow its infrastructure.

ET’s Earnings Estimates Rising Year Over Year

The Zacks Consensus Estimate for Energy Transfer’s 2025 and 2026 earnings per unit indicates year-over-year growth of 8.59% and 10.91% respectively.

The Zacks Consensus Estimate for Plains All American Pipeline’s 2025 and 2026 earnings per unit indicates a year-over-year decline of 3.97% and 1.49%, respectively.

ET Shares More With Unitholders

ET’s current quarterly cash distribution rate is 33 cents per Energy Transfer common unit. Management has raised distribution rates 16 times in the past five years, and the current payout ratio is 102%. For more details on ET’s cash distribution per unit, click here.

Another firm, Delek Logistics Partner LP DKL, raised distribution rates 20 times in the past five years, and the current payout ratio is 151%. The firm operates crude and product transportation pipelines and crude oil gathering systems.

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 9.29X compared with the industry average of 10.65X. This indicates that the firm is presently undervalued compared with its industry.

Delek Logistics Partner is trading at 16.93X, a premium compared with its industry average.

ET Stock’s ROE is Lower Than the Industry

Energy Transfer’s trailing 12-month return on equity is 11.08%, lower than the industry average of 13.65%. Return on equity, a profitability measure, reflects how effectively a company utilizes its shareholders’ funds to generate income.

Wrapping Up

Energy Transfer, with over 140,000 miles of pipeline and related infrastructure, is well-positioned to benefit from rising U.S. oil, natural gas and NGL production. Supported by fee-based earnings and strategic acquisitions, the company is expected to generate sustained value for unitholders.
 
Those who have this Zacks Rank #3 (Hold) stock in their portfolio can stay invested and enjoy the regular cash distribution.

However, since the company’s return on equity (ROE) lags behind the industry average, investors may want to wait for a more attractive entry point before considering a position.

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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