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Energy Transfer Earnings: Solid Quarter, 2024 Guidance Looks Conservative

There’s little doubt that Energy Transfer is performing well; its stock remains undervalued.

A logo sign outside of the headquarters of Energy Transfer Equity

Key Morningstar Metrics for Energy Transfer

What We Thought of Energy Transfer’s Earnings

Energy Transfer’s ET fourth-quarter earnings and full-year results were solid. 2023 EBITDA was $13.7 billion, up 5% over 2022 and a touch higher than our $13.6 billion forecast, largely due to incremental marketing contributions. 2024 guidance is initially lower than our forecast, but we expect to maintain our $17.50 fair value estimate and no-moat rating.

There’s little doubt that Energy Transfer is performing well. Natural gas liquids volumes across fractionation, transportation, and exports are up 16%, 10%, and 13% over last year’s levels, respectively. The increases are being driven by healthy international demand for natural gas liquids. Energy Transfer continues to emphasize its industry leadership in exports here with a 20% market share, and we expect competition with Enterprise Products Partners EPD to continue to be somewhat fierce.

Energy Transfer is already expanding the natural gas liquids export capacity of its Nederland facility, due online in mid-2025, and the firm is pursuing more expansion at its Marcus Hook export terminal as well. Further, the early signs from the Crestwood deal completed in November 2023 seem positive, as Energy Transfer has already boosted expected cost synergies to $80 million from $65 million, and it is working on identifying commercial synergies.

Energy Transfer Stock Price

Data as of Source: Morningstar Direct.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Author

Stephen Ellis

Strategist
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Stephen Ellis is an energy and utilities strategist for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc., covering midstream companies. Ellis is a former member of Morningstar’s China Economic Committee, which provides research on the long-term outlook for the Chinese economy.

Before assuming his current role in 2017, he was director of equity research for financial services and a senior equity analyst. He is also a former editor of the Morningstar Opportunistic Investor newsletter and a former member of the Economic Moat Committee, a group of senior members of the equity research team responsible for reviewing all Economic MoatTM and Moat TrendTM ratings issued by Morningstar.

Prior to joining Morningstar in 2007, he worked as a freelance analyst for The Motley Fool and spent three years working in project and financial analysis for Environmental Systems Research Institute (ESRI), a supplier of geographic information system software and geodatabase management applications.

He holds a bachelor’s degree in business administration and a master’s degree in business administration from the University of Redlands.

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