Energy Transfer Earnings: Solid Quarter, 2024 Guidance Looks Conservative

Key Morningstar Metrics for Energy Transfer

• Fair Value Estimate: $17.50
• Morningstar Rating: 4 stars
• Morningstar Economic Moat Rating: None
• Morningstar Uncertainty Rating: Medium

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.