Energy Transfer Analysis: U.S. Fuel Exports Hit Record High—Could Energy Transfer Be the Best Energy Stock of 2026?

TradingKey - Energy Transfer (ET) just delivered another strong earnings report, yet ET stock is up just about 16% year to date, roughly in line with the broader market. But that response was muted against a backdrop of soaring oil prices and record U.S. oil and gas exports. With winds of industry tailwinds gathering and the company’s operating momentum building, the question is, can Energy Transfer be the best oil and gas stock of 2026 — or at least a top risk-adjusted candidate.

What Is Energy Transfer?

Based in Dallas, Energy Transfer is a $100 billion diversified energy infrastructure & service company with a robust portfolio including one of the largest midstream systems in North America. Imagine a giant toll road for hydrocarbons, not a commodity trader. Its revenue base is largely backed by long-term, fixed-fee or ship-or-pay agreements, which softens the impact of short-term commodity price movements on cash flow. It is that stability which is so compelling to income investors, who want stable distributions, not the ability to choke on volatile producer earnings.

Energy Transfer’s defining advantage is scale. It includes approximately 140,000 miles of pipelines in 44 states; all the major U.S. basins, including the Permian and Appalachia, are connected by this network. The combined system comprises all services the midstream customer could dream of, from large-diameter natural gas lines and ~236 Bcf of gas storage to a top-tier Natural Gas Liquids (NGL) system anchored by the Mont Belvieu hub on the Gulf Coast. JVs like Florida Gas Transmission reduce balance sheet stresses, and general partner interests in Sunoco LP (SUN) and USA Compression Partners (USAC) increase reach and diversify income. The available set of options adds to the difficulty in beating the system and gives Energy Transfer pot-shuffle volumes and margins if regional or product-related dynamics dictate.

How Did Energy Transfer’s Latest Results Look?

Recent results were robust. In a quarter marked by record operating volumes, Adjusted EBITDA came in at around $4.9 billion, a 20% year-over-year increase, with Distributable Cash Flow (DCF) increasing approximately 17% to around $2.7 billion. That cash easily covered the distributions of approximately $1.16 billion and still had more than enough for reinvestment. Management also raised full-year Adjusted EBITDA guidance to a range of approximately $18.2 billion to $18.6 billion as compared to earlier guidance. Strength was also evident in previous periods: a recent fiscal Q4 recorded throughput record with Adjusted EBITDA around 8% higher to $4.18 billion.

The common thread is utilization. NGL and refined product terminal throughput, NGL exports, fractionation, crude, and midstream gathering volumes all reached new highs. Export optionality came into play as U.S. barrels and molecules were competing to satisfy increasing global demand. The company said that periodic optimization opportunities—capturing spreads in time and space—contributed to results, a benefit that tends to re-emerge in times of market volatility due to the depth of its pipeline and storage grid.

Why Energy Transfer’s Upside Case Is Attractive

The near-term growth engine is a disciplined but sizable capital program that translates into high returns for sustained cash flow. For this year, Energy Transfer raised its growth capital spending plan to between $5.5 billion and $5.9 billion from an original estimate of $5 billion to $5.5 billion, after approximately $4.5 billion last year. Returns on these investments, backed by long-term agreements, are expected to be in the mid-teens, according to management. The priorities are capacity that counts for a decade, not just for the next year.

One of the biggest potential plays is in the intersection of energy infrastructure with Artificial Intelligence (AI) and data center power demand. As power grids buck under the load of hyperscale server clusters, Energy Transfer is advancing its gas network as a critical reliability partner. This company has mentioned deals that would send large amounts to data center operators, like an agreement to supply as much as 0.9 Bcf/d of natural gas to facilities linked with Oracle (ORCL). Contracts associated with high-availability needs can feature premium economics over traditional industrial transport, which should potentially bring a new, even more resilient layer to ET’s fee-based model.

The Permian Basin continues to be a regional hotspot. The Mustang Draw I and II gas processing facilities, anticipated to commence operations in 2026, with combined capacity of approximately 450 MMcf/d, enhance midstream capacity in a region where demand for infrastructure is outpacing supply. The Hugh Brinson pipeline (formerly the Warrior Pipeline) also provides relief for Permian gas with 1.5 Bcf/d to the Dallas–Fort Worth area and the Gulf Coast. These projects are expected to rapidly convert growth capital into EBITDA, supporting the company’s raised guidance and, over time, its distribution growth, "the cleanest risk-reward in the midstream sector in the company's view," said Stoltz in an enclosed statement.

Export adjacency is yet another structural tailwind. With U.S. oil and gas exports at all-time highs and geopolitical tension encouraging global buyers to seek reliability of supply, access to the Gulf Coast is now of strategic value. Energy Transfer’s NGL export facility has already established multiple volume records, and additional debottlenecking plus new projects approved—including expansions on the Bayou Bridge system and Florida Gas Transmission—further extend the growth runway well into the decade. Although one-time efficiency improvements can diminish, the size of the network means there will always be such opportunities as markets shift.

How Has ET Stock Been Valued Recently—Is It Attractive Now?

Valuation has remained modest, in spite of strong operating dynamics. ET stock is priced at an implied forward EV/EBITDA of around 8.7x, compared to about 11x for Enterprise Products Partners (EPD) and Global X MLP & Energy Infrastructure ETF (MLPX) based on most recent estimates. On earnings, consensus is ET at a forward P/E of around 12.5x on 2026 EPS of $1.52, dropping to around 11x on 2027 EPS of $1.69. Distribution yield is at or a bit above 6.6% to 7.0%, with management aiming for 3% to 5% annual growth.

This mix of below-peer multiples, visible project-driven growth, and a large, well-covered distribution supports a constructive base case. A 12-month base case share price target of $21.50 appears reasonable under a conservative scenario where management achieves an Adjusted EBITDA guidance range midpoint of the revised range and maintains modest distribution expansion. A re-rating path back to the $25 mark could be in the cards as well if investors increasingly think of ET as essential infrastructure in the digital era, with leverage moving down toward 4.0x and yield compressing on inflows. Still, the billion-dollar-plus annual capex is probably going to keep the multiple in check until more projects do turn cash generative, suggesting the more-full re-rate may be a 2027 tale.

What is the Biggest Risk to ET Stock?

Downside throughput risk is always lurking. If U.S. gas production is curtailed by prolonged low prices or regulatory restrictions, volumes can drop. Although many ET agreements have ship-or-pay minimums, persistent supply tightness can still impact realized economics and bargaining power. Another factor to keep in mind is basis risk, which is the risk that regional price differentials unexpectedly widen such that they can change flow patterns; in some cases, the widenings can lead to diminutions in netbacks or optimization gains.

Leverage remains elevated. Net debt approaching $68 billion and leverage in the vicinity of 4.4x means there’s less room for error if credit markets tighten or if a severe downturn materializes. Increasing interest rates would raise the cost of refinancing in the future. Capital is also very intensive. If some marquee projects stumble, Free Cash Flow (FCF) could lag and coverage of the distribution could weaken. Finally, execution risk is inherent with a large project backlog—permits, supply chain, and weather can move timelines and returns to the right. Joint ventures are good for spreading risk, but the backlog itself demands reliable performance.

Is Now a Good Time to Buy Energy Transfer?

The mechanics are simple enough. ET stock pays a 7% yield underpinned by a reliable and robust fee-based cash flow and a system that continuously records more volumes. The growth capex slate is substantial, contracted, and weighted toward high-return projects in core basins and the Gulf Coast, with a new vector emerging in AI data center reliability. Even following a good value YTD run, peer-to-peer comparison below confirms potential for further upside, and management has upgraded guidance as operations improve.

Will ET answer the call as the single best oil and gas stock of 2026? That depends on what you think best is. Best in terms of the largest absolute upside could also go to some other upstream producers in a continued commodity bull run. If you are looking for a balance of income, visibility, and potential for capital appreciation that is less sensitive to commodity prices, Energy Transfer is in the stratosphere. On a risk-adjusted basis, the combination of income, growth, and a discounted valuation is a strong argument.