Why Energy Transfer (ET) Is Getting Attention Again

Energy Transfer (ET) is back in the spotlight after a fresh round of debate over its high distribution yield and management’s track record, including the 2020 payout cut that still weighs on some income investors.

Recent headlines around Energy Transfer’s distribution policy and its planned move to the Texas Stock Exchange come against a backdrop of a 27.4% year to date share price return to US$21.14 and a 31.3% 1 year total shareholder return. This suggests momentum has been building over the medium term, even as the 7 day share price performance has eased slightly.

Scan beyond Energy Transfer and stress test your income ideas against high-yield peers using our curated list of 7 dividend fortresses

Energy Transfer has already delivered strong returns, yet the unit price still trades below some estimated value measures. Is most of the easy upside gone, or is the market still pricing this partnership too cautiously?

Most Popular Narrative: 12% Undervalued

The most followed narrative on Energy Transfer pegs fair value at about $24.10 per unit, compared with the recent close at $21.14. This frames today’s debate around how much of the long term story is already reflected in the price.

Analysts are assuming Energy Transfer's revenue will grow by 2.6% annually over the next 3 years.

Analysts assume that profit margins will increase from 4.7% today to 6.0% in 3 years time.

See why 172 investors see Energy Transfer as 12% undervalued.

Result: Fair Value of $24.10 (UNDERVALUED)

Still, the Energy Transfer story can change quickly if large multibillion-dollar projects face delays or if data center driven gas demand contracts fall short of expectations.

Find out about the key risks to this Energy Transfer narrative.

Next Steps

Energy Transfer has both cheerleaders and skeptics, which is exactly why you should press into the numbers yourself and decide where you land. If you want a clear snapshot of what the crowd sees on both sides of the ledger, start with these 3 key rewards and 2 important warning signs.

Looking for more ideas beyond Energy Transfer?

If you stop with Energy Transfer, you risk missing other opportunities that could fit your goals just as well or even better.

• Target dependable cash flows by checking income plays screened for payout strength and consistency through 7 dividend fortresses.
• Hunt for mispriced opportunities where quality and valuation work together using our curated pool of 35 high quality undervalued stocks.
• Prioritise resilience first and focus on businesses with conservative financial profiles highlighted in the 30 resilient stocks with low risk scores.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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