Energy Transfer to Report Q2 Earnings: What's in Store for the Stock?

Energy Transfer LP (ET) is forecast to report a 21.87% year-over-year revenue increase to $25.26 billion for Q2 2025, alongside an 8.57% decline in earnings per unit to 32 cents. Performance is anticipated to be supported by stable fee-based contracts and robust NGL export volumes, leveraging its extensive pipeline network and export capabilities, though dependence on key natural gas producers presents a supply risk. Despite the Zacks model not conclusively predicting an earnings beat, ET's units trade at a relative discount, with a positive long-term outlook driven by its asset base and strategic expansion.

Analysis

Energy Transfer LP (ET) presents a mixed outlook ahead of its Q2 2025 earnings release, with consensus estimates projecting a significant 21.87% year-over-year revenue increase to $25.26 billion, but an 8.57% decline in earnings per unit to 32 cents. The probability of an earnings beat is considered low, as indicated by a negative Earnings ESP of -2.11% and a track record of missing estimates in two of the last four quarters. The company's fundamental strengths are rooted in its vast infrastructure and stable cash flow model, with fee-based contracts contributing approximately 90% of its earnings. This stability is further supported by strong natural gas liquids (NGL) export volumes, leveraging an export capacity of 1.1 million barrels per day. Despite these operational strengths and a stock performance that has outpaced its industry over the past year by 14.3% to 10.9%, a key risk remains its dependence on a limited number of key natural gas producers. From a valuation perspective, ET units trade at a discount to the industry, with an EV/EBITDA multiple of 10.22x compared to the industry average of 11.46x, suggesting some risks may already be priced in.

Key Decisions for Investors

• Investors should note the divergence between strong projected revenue growth and declining earnings per unit, coupled with a model that does not predict an earnings beat, warranting a cautious stance entering the Q2 report.
• For those with a long-term horizon, the current valuation discount relative to the industry may offer a strategic entry or holding opportunity, given the company's robust asset base and strong NGL export position.
• It is crucial to monitor key operational metrics in the upcoming report, specifically throughput volumes and NGL exports, as well as any management commentary regarding its supply contracts with key producers.
• Considering the Zacks Rank #3 (Hold) and the positive long-term outlook, existing shareholders may find it prudent to retain their positions through the short-term earnings uncertainty.