Energy Transfer LP Common Units (ET)

On our desk, the narrative shifted immediately after the Q2 print. With sales hitting $34.33 billion and net income rising to $2.09 billion, the market is finally acknowledging ET's transition into a beat-and-raise machine. Management raising full-year EBITDA guidance to $18.8–$19.1 billion gives our portfolio managers immense confidence, especially with distribution coverage sitting safely above 2.2x and a payout ratio under 44%.

From a risk management standpoint, we are keeping a close eye on the elevated CapEx cycle peaking this year. While the fee-based, diversified asset base shields cash flows from direct commodity price shocks, broader oil price-driven unit volatility can trigger short-term consolidation. Investors must weigh the multi-year EBITDA visibility against ongoing macroeconomic cyclical pressures in the energy patch.

Watching the tape after billionaire co-founder Kelcy Warren scooped up $21.3 million in common units via Form 4 filings on August 18 and 19, retail and institutional sentiment solidified around a 'Strong Buy' thesis. Seeing insiders buy millions at the $21 handle reinforces our valuation target of $24–$25.30, mapping a clear path to a 7% yield on cost.

Our options desk is evaluating skew as the partnership lifted its quarterly cash distribution to $0.34 per common unit. With 19 consecutive quarterly increases and distribution coverage at 2.2x, implied volatility remains relatively muted compared to upstream peers. We view the recent 2.6% minor sell-off reported by MarketBeat merely as routine market digestion rather than a thesis-breaking structural change.

In our quantitative screening models, ET's fundamental metrics stand out due to record NGL transportation, exports, and crude oil volumes. Trading at roughly 8.47x 2026E EBITDA—and lower on annualized DCF multiples—the units remain undervalued relative to peers. The structural alignment of contracted natural gas demand for AI data centers and scalable NGL infrastructure creates a durable multi-year compounding setup.