Energy Transfer vs. ONEOK: Which Stock Has More Upside Now?

An analysis comparing midstream energy companies Energy Transfer (ET) and ONEOK (OKE) suggests ET presents a more compelling investment case. Energy Transfer projects higher long-term EPS growth at 13.67% versus ONEOK's 7.68%, plans significantly larger 2025 capital expenditures of $6.1 billion compared to ONEOK's $2.8-$3.2 billion, and trades at a lower forward P/E of 11.85x against ONEOK's 12.53x. Despite ONEOK's higher Return on Equity, Energy Transfer's superior earnings growth outlook, greater infrastructure investment, and discounted valuation, coupled with better recent price performance, position it as the preferred choice in the oil and energy midstream sector.

Analysis

A comparative analysis of midstream energy firms Energy Transfer (ET) and ONEOK (OKE) highlights differing investment profiles despite their similar roles in North American energy infrastructure. Energy Transfer presents a more compelling long-term growth narrative, with a projected long-term EPS growth rate of 13.67% versus ONEOK's 7.68%. This growth ambition is supported by a significantly larger planned capital expenditure of $6.1 billion in 2025, nearly double OKE’s $2.8-$3.2 billion target. However, this forward-looking strength is contrasted by a projected near-term EPS decline of 3.47% for ET in 2025, while OKE is expected to grow earnings by 4.78%. From a valuation standpoint, ET trades at a discount to its peer, with a forward P/E of 11.85x compared to OKE's 12.53x. In terms of profitability, OKE demonstrates superior capital efficiency, boasting a Return on Equity (ROE) of 14.90%, which surpasses both ET's 11.08% and the industry average. Recent price performance also favors ET, which remained flat (+0.1%) over the past three months while OKE declined 5.9%, though both underperformed the sector's 9.1% gain. Both firms maintain nearly identical high leverage, with debt-to-capital ratios just over 57%.

Key Decisions for Investors

• Investors seeking long-term growth and value may favor Energy Transfer for its superior 13.67% EPS growth forecast and lower 11.85x forward P/E, but should remain cognizant of the projected 3.47% earnings dip in 2025.
• ONEOK's stronger current profitability, evidenced by its 14.90% ROE, could appeal to investors focused on capital efficiency, though its premium valuation and lower growth outlook might cap its relative upside.
• Given that both stocks have recently underperformed the broader sector's 9.1% gain and carry high leverage, investors should monitor sector-wide trends and each company's deleveraging execution as key performance drivers and risk factors.