How the New $3B Natural Gas Deal Impacts Energy Transfer’s Stock Value in 2025
Are you on the fence about what to do with Energy Transfer stock? You are definitely not alone. Like many investors, you are probably watching recent price swings and wondering if this is finally the right moment to buy, hold, or take some profits. Over the past year, Energy Transfer has delivered an impressive total return of nearly 16%. If you zoom out to the last five years, that figure climbs to almost 300%. There have also been plenty of shorter-term twists, such as a slide over the past quarter and year-to-date. Still, the longer-term gains show this company is more than just a passing trend.
Investors are especially interested in where Energy Transfer’s valuation stands right now. With oil and energy markets evolving, risk perceptions have shifted, and so has analyst sentiment. The current price reflects some skepticism, perhaps, but there are hints of growth potential that just cannot be ignored, particularly with a sizable discount to consensus analyst targets. According to our valuation scoring system, where one point is added for each major test of undervaluation passed out of six total, Energy Transfer racks up an impressive 5 out of 6. That’s a sign the market might be overlooking some real value here.
Let’s break down exactly which valuation approaches show Energy Transfer as undervalued, and where there might be room for debate. In the end, we will explore a method that goes beyond the numbers for an even deeper look at the true worth of the stock.
A Discounted Cash Flow (DCF) model estimates what a company is truly worth by projecting its future cash flows and then discounting those amounts to today’s dollars. This approach helps investors look past market fluctuations and anchors valuation in the real money a business is expected to generate over time.
Energy Transfer currently produces Free Cash Flow of about $7.16 billion. Analysts expect steady growth, and by 2029, annual FCF is projected to reach roughly $8.04 billion. This represents a notable increase over the next decade. Recent ten-year projections suggest incremental gains, with numbers staying solidly in the multi-billion range each year, which highlights a robust cash-generative business.
Based on these forecasts, the DCF calculation estimates Energy Transfer’s intrinsic fair value at $37.64 per share. Today’s market price is well below this level. The implied discount is a notable 53.5% undervalued, indicating the shares are trading for nearly half of what cash flow fundamentals might justify.
Result: UNDERVALUED
Our DCF analysis suggests Energy Transfer is undervalued by 53.5%. Track this in your watchlist or portfolio, or discover more undervalued stocks based on DCF analysis.
The Price-to-Earnings (PE) ratio is a go-to metric for evaluating profitable companies, as it tells you how much investors are willing to pay for each dollar of earnings. For steady-cash generators like Energy Transfer, the PE ratio shines a light on both current value and market expectations for future growth.
What is considered a “normal” or “fair” PE ratio can vary depending on investor sentiment, anticipated earnings growth, and overall risk in the sector. Higher growth prospects or reduced risks generally support a higher PE, while sectors facing headwinds might see lower multiples.
Currently, Energy Transfer trades at a PE ratio of 13.45x. This is closely in line with the oil and gas industry average of 13.16x, but it is below the average of its direct peers at 18.64x. Simply Wall St’s proprietary “Fair Ratio,” which weighs factors including earnings quality, industry trends, company-specific growth, and risks, is 17.47x for Energy Transfer. Compared to its actual PE, the stock trades at a clear discount to what the underlying fundamentals could justify.
Result: UNDERVALUED
PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.
Narratives offer a smarter way to invest by letting you add your own story or perspective about a company, connecting what you believe about its future to concrete financial forecasts and an estimate of fair value.
Think of a Narrative as the bridge between what makes a company unique, the numbers behind its financials, and what you believe the stock is really worth. Within the Simply Wall St platform, which is used by millions, creating and comparing Narratives is quick and accessible so any investor can align their investing decisions with their personal view of Energy Transfer’s potential.
Narratives help you make better decisions by putting your assumptions and expectations in one place, then automatically showing you if your fair value suggests a buy or a sell at the current price. Best of all, Narratives stay up to date; when new information arrives, like fresh earnings or sector news, your financial story and valuation are dynamically refreshed so you always have the latest view.
For example, one investor’s Narrative projects Energy Transfer’s fair value as high as $25 based on strong export and infrastructure growth, while another might see just $20, focusing more on execution or regulatory risks. This shows how your own outlook can directly shape your investment decision.
Do you think there’s more to the story for Energy Transfer? Create your own Narrative to let the Community know!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include ET.
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