ET Stock Outperforms its Industry in a Month: Time to Buy or Hold?

Units of Energy Transfer LP ET have rallied 6% in the last month compared with the Zacks Oil and Gas - Production Pipeline - MLB industry’s growth of 3.4%. The oil and gas midstream firm owns a wide network of pipelines across the United States and is pursuing opportunities to serve the 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 cater to the rising demand for NGL globally.

The ET stock has also outperformed its sector in the last month.

Price Performance (One Month)

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

Factors Acting as a Tailwind for ET Stock

Energy Transfer LP operates a vast pipeline network exceeding 130,000 miles across 44 U.S. states. The company continues to expand its reach through a combination of strategic acquisitions and organic growth initiatives. Since 2021, Energy Transfer has completed at least one major accretive acquisition each year, including the acquisition of WTG in the previous year, which strengthened its natural gas pipeline and processing capabilities in the Permian Basin.

Energy Transfer’s assets are strategically located across major U.S. production basins and high-demand regions, providing a solid foundation for earnings. Its diversified portfolio — including oil and gas pipelines, gathering and processing systems, and storage facilities — enables the company to efficiently serve a wide array of markets.

The company also has substantial export capabilities, with the capacity to export over 1.1 million barrels per day of NGLs and 1.9 million barrels per day of crude oil. Ongoing expansion efforts at the Marcus Hook and Nederland terminals are enhancing these capabilities. Notably, Energy Transfer holds an estimated 20% share of the global NGL export market, reinforcing its strong presence in international energy trade.

Energy Transfer is actively exploring opportunities to meet the rising power demand from emerging load centers along its pipeline network. The company has finalized multiple agreements with electric utilities in the Midwest to supply natural gas for new gas-fired power plants that are replacing retiring coal-fired facilities. In February 2025, Energy Transfer entered into an agreement with CloudBurst to deliver up to 450,000 MMBtu per day of natural gas to support a data center development in Central Texas. Additionally, the company has received connection requests from nearly 200 data centers across 14 states, reflecting strong and growing demand from the digital infrastructure sector.

Nearly 90% of Energy Transfer’s revenues are derived from fee-based contracts tied to transportation and storage services. These long-term agreements with a stable and creditworthy customer base provide reliable cash flow and significantly reduce exposure to commodity price volatility. With oil and gas production on the rise in the United States, the company is well-positioned to capitalize on the increasing demand for transportation infrastructure.

ET Shares More With Unitholders

Energy Transfer’s current quarterly cash distribution rate is 32.75 cents per Energy Transfer common unit. ET’s management has raised distribution rates 14 times in the past five years, and the current payout ratio is 98%.

ET’s Estimates Moving North

The Zacks Consensus Estimate for Energy Transfer’s 2025 and 2026 earnings per unit indicates year-over-year growth of 12.5% and 0.49%, respectively.

Another firm, Plains All American Pipeline PAA, operating in the midstream space, has extensive assets in the United States. The Zacks Consensus Estimate for Plains All American’s 2025 and 2026 earnings per unit indicates a year-over-year decline of 1.32% in 2025 and 0.34% growth in 2026.

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 10.32X compared with the industry average of 11.6X. This indicates that the firm is presently undervalued compared with its industry.

Firms operating in this space, like ONEOK Inc. OKE, are trading at an EV/EBITDA of 13.39X, at a premium compared with its industry, while Plains All American Pipeline is trading at a discount of 9.46X.

ET Stock Returns Lower Than its Industry

Energy Transfer’s trailing 12-month return on equity is 11.47%, lower than the industry average of 13.95%. Return on equity, a profitability measure, reflects how effectively a company utilizes its shareholders’ funds to generate income.

ONEOK’s ROE is better than its industry ROE and currently stands at 15.58%

Wrapping 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. The firm is presently trading at a discount, and those who have this Zacks Rank #3 (Hold) stock in their portfolio can stay invested and enjoy the regular cash distribution.

Yet, as the firm’s ROE is lower than the industry, it will be better for the investors to wait a little longer and find a better entry point.

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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