Energy Transfer LP (ET) is Attracting Investor Attention: Here is What You Should Know

Energy Transfer LP (ET) is trending on Zacks.com, with a Zacks Rank #2 (Buy) suggesting near-term outperformance. Current quarter earnings are projected at $0.32 per share, a year-over-year decrease of 8.6%, while revenue is expected to increase 19.3% to $24.73 billion; full fiscal year estimates show EPS increasing 12.5% and revenue increasing 18.2%. Despite recent revenue misses, positive revisions to earnings estimates and a Value Style Score of A indicate the stock may be undervalued relative to peers.

Analysis

Energy Transfer LP (ET) has recently attracted significant investor attention, evidenced by its high search volume on Zacks.com. The company's stock performance, with a +2.3% return over the past month, has underperformed the Zacks S&P 500 composite's +8.2% gain, yet moderately outpaced its Zacks Oil and Gas - Production Pipeline - MLB industry peers, which rose 0.6%. Analyst sentiment is reflected in upward revisions to earnings estimates: the current fiscal year EPS is projected at $1.44 (+12.5% Y/Y), an estimate that increased +2.6% in the last 30 days, while the next fiscal year EPS is forecasted at $1.47 (+1.9% Y/Y from current year's expected), with a +4.1% upward revision in the past month. These positive revisions underpin ET's Zacks Rank #2 (Buy). Revenue growth expectations are also strong, with consensus sales for the current quarter at $24.73 billion (+19.3% Y/Y), and for the current and next fiscal years at $97.68 billion (+18.2% Y/Y) and $102.18 billion (+4.6% Y/Y) respectively. However, a point of caution is the current quarter's expected EPS of $0.32, representing an -8.6% year-over-year decline, despite a +4.1% upward revision to this specific estimate in the last 30 days. ET's last reported results showed mixed performance: EPS of $0.36 (up from $0.32 Y/Y) surpassed estimates by +9.09%, but revenues of $21.02 billion (-2.8% Y/Y) missed consensus by -11.03%. Over the past four quarters, ET has beaten EPS estimates only once and failed to meet revenue consensus in any of these periods. From a valuation perspective, ET scores an 'A' on the Zacks Value Style Score, suggesting it is trading at a discount compared to its peers.

Key Decisions for Investors

• Investors may consider the Zacks Rank #2 (Buy) and positive earnings estimate revisions as supportive of a near-term bullish outlook, particularly given the stock's 'A' grade for value.
• Close attention should be paid to the upcoming earnings report, specifically to ascertain if the company can meet or exceed revenue expectations, given its historical pattern of misses, and to monitor the actual year-over-year EPS change for the current quarter.
• The divergence between strong projected revenue growth and the anticipated decline in current-quarter EPS year-over-year warrants careful scrutiny of margin performance and cost management in subsequent financial disclosures.