Should You Buy Energy Transfer Ahead of Q4 Earnings Report?

Energy Transfer LP  ET is expected to report an improvement in its top and bottom line when it reports fourth-quarter 2024 results on Feb. 11, after market close.Find the latest earnings estimates and surprises on Zacks Earnings Calendar.The Zacks Consensus Estimate for ET’s fourth-quarter revenues is pegged at $24.22 billion, indicating a 17.95% increase from the year-ago reported figure.The consensus estimate for earnings is pegged at 36 cents per unit. The Zacks Consensus Estimate for ET’s fourth-quarter earnings has increased by 5.9% in the past 90 days.Image Source: Zacks Investment ResearchEarnings Surprise HistoryEnergy Transfer’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters while lagging in the other two, the average surprise being 3.43%.Image Source: Zacks Investment ResearchWhat the Zacks Model UnveilsOur model does not conclusively predict an earnings beat for Energy Transfer this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you can see below. Energy Transfer LP Price and EPS Surprise Energy Transfer LP price-eps-surprise | Energy Transfer LP QuoteYou can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.Earnings ESP: Energy Transfer has an Earnings ESP of 0.00%.Zacks Rank: Energy Transfer currently carries a Zacks Rank #3.You can see the complete list of today’s Zacks #1 Rank stocks here.Factors Likely to Have Shaped ET’s Q4 EarningsEnergy Transfer’s quarterly earnings are likely to have benefited from its organic expansion projects and strategic acquisitions of assets. ET expanded its natural gas pipeline and processing network in the Permian Basin last year through the WTG acquisition. The well-baland organic and inorganic asset mix of the firm is expected to have contributed strong earnings in the fourth quarter.Energy Transfer’s Interstate Natural Gas Pipeline segment has access to multiple shale plays, storage facilities and markets. It is well-positioned to capitalize on changing supply and demand dynamics. ET’s Intrastate Natural Gas Pipeline segment is also well-positioned to capture additional revenues from positive changes in natural gas supply and demand in the fourth quarter.The quarter’s earnings are also expected to have gained from the strong export volumes of liquefied petroleum gas to different countries across the globe. The firm is expanding its natural gas liquids (NGL) export facilities, and the capacity to export nearly 1.1 million barrels per day is likely to have boosted its performance.Energy Transfer’s pipelines are spread across every major production basin in the United States, ensuring diverse earnings sources that are likely to have contributed to its fourth-quarter earnings. Fee-based contracts are expected to have generated nearly 90% of its earnings and the same is expected to be repeated in the yet to reported quarter. The predominantly fee-based contracts of the firm ensure a consistent and probable stream of revenue.Price Performance and ValuationET’s units have gained 44.3% in the past year compared with its industry’s rally of 33.8%. Image Source: Zacks Investment ResearchEnergy Transfer units are somewhat inexpensive on a relative basis, with its current trailing 12-month Enterprise Value/Earnings before Interest Tax Depreciation and Amortization (EV/EBITDA TTM) being 10.85X compared with the industry average of 12.19X. Image Source: Zacks Investment ResearchOther operators in the space, like Plains All American Pipeline, L.P. PAA and Enterprise Products Partners L.P. EPD, are currently trading at a discount compared with the industry. EV/EBITDA TTM multiple of PAA and EPD are currently pegged at 9.56 and 10.52, respectively.Investment ThesisEntergy 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 company is pursuing opportunities to serve growing power loads from new demand centers across its pipeline network. As of Sept. 30, 2024, the firm had signed agreements to provide gas loads to gas-fired power plants with nearly 550,000 MMBtu/d. This will definitely boost its long-term growth prospects.Energy Transfer depends on some key producers to supply natural gas. The loss of any of these key producers is likely to have adversely impacted its financial results unless the firm is able to acquire comparable supplies of natural gas from other producers.Wrapping UpEnergy Transfer continues to gain from rising demand and making proper utilization of its widespread assets across the United States. The strategic acquisitions continue to supplement organic assets and boost the performance of the company.Despite some headwinds, it is advisable to accumulate this stock for the long term, given its well-spread assets in the United States, cash distribution ability and focus on expanding operations through organic or inorganic methods.Those who already own this Zacks Rank #3 stock would do well to retain it in their portfolio.Free Today: Profiting from The Future’s Brightest Energy SourceThe demand for electricity is growing exponentially. At the same time, we’re working to reduce our dependence on fossil fuels like oil and natural gas. 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(EPD): Free Stock Analysis Report Energy Transfer LP (ET): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks