Energy Transfer LP (NYSE: ET) delivered an as-expected earnings report on May 6. The midstream energy company delivered earnings per share of 36 cents on revenue of $21.02 billion.
The bottom line number came in three cents above analysts’ forecasts and was 12.5% higher year-over-year (YOY). On the top line, however, the number was lighter than the $22.28 billion expected and was 2.8% lower YOY.
Those numbers, however, say more about the macroeconomic situation with oil prices than they do about Energy Transfer’s business. But should investors view ET stock as a solid choice at a time when they are hunting for value?
Energy Transfer Is a Silent Partner for Many Investors
A core argument for investing in Energy Transfer is that the company operates as a Master Limited Partnership (MLP). The headline for investors is that MLPs can avoid paying corporate taxes by passing on much of their free cash flow (FCF) to investors in the form of distributions, which are like dividends but taxed differently.
Investors typically won’t be taxed on the distributions in the year they are received. By contrast, investors get a lower cost basis and pay tax on a larger capital gain when they sell. However, as long as they hold their shares, they are collecting tax-deferred income.
That’s a win-win and a key reason investors have earned a total return of over 240% in the last five years. But critics will cite that ET stock is still well below its all-time high (ATH) set in 2015. In fact, over the last 10 years, the total return has been just 14%.
Can You Trust the Distribution?
One issue investors have had with Energy Transfer is that it cut its distribution in half in 2020. Of course, many companies were doing that at a time of tremendous uncertainty surrounding a public health crisis.
To be fair, Energy Transfer has been increasing its distribution at an average annualized rate of around 27% in the last three years. That should be enough to give investors confidence, particularly since the company has a new chief executive officer (CEO) since that decision was made.
However, when it comes to the benefits of MLPs, investors have other options. Companies such as Enbridge Inc. (NYSE: ENB) and Enterprise Product Partners L.P. (NYSE: EPD) also have attractive distributions and a longer history of increasing their dividends.
Is ET Stock a Value Trap?
In 2025, ET stock's total return was -12.3%. That reflects the pressure on oil prices, which has accelerated with the announcement that the OPEC+ nations will increase production. That return could be even more alarming when you consider the high-yield dividend of over 7%. That's why some investors may hesitate to invest in energy stocks, even ones that pay a juicy dividend like Energy Transfer.
[content-module:Forecast|NYSE: ET]However, energy prices are cyclical, and Energy Transfer does much of its business as a midstream company, which makes it agnostic to the price of oil.
Plus, if the economy begins to grow as expected in the second half of 2025, oil will lead that charge.
One reason to believe that Energy Transfer will benefit is that it has several major projects under construction. This includes its Lenorah II processing plant in the Permian Basin. That is scheduled to go online by the end of this quarter.
So no, Energy Transfer looks undervalued, not a value trap. Investors looking for reassurance can look at the Energy Transfer analyst forecasts on MarketBeat.
They have a consensus Moderate Buy rating on ET stock with a price target of $22.09. That suggests 30% upside in the next 12 months.
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