Energy Transfer LP (NYSE: ET) closed Friday at $20.36, essentially flat for the week and about 1.6% below its 52-week high of $20.70. The lackluster price action comes despite the partnership extending its distribution growth streak to 19 consecutive quarters, a sign that investors may be looking for more tangible earnings support.
The company's annualized distribution of $1.36 per unit translates to a yield of 6.68%, a figure that remains attractive in a low-rate environment but is now under scrutiny as the market awaits second-quarter results. To hit its full-year 2026 adjusted EBITDA target of $18.2 billion to $18.6 billion, Energy Transfer must deliver an average quarterly adjusted EBITDA of approximately $4.49 billion through the end of the year, according to calculations based on the company's midpoint guidance.
Energy Transfer outperformed its direct MLP peers last week. While ET held steady, Enterprise Products Partners (NYSE: EPD) slipped 1.76% and MPLX LP (NYSE: MPLX) fell 0.34%. The relative strength was notable given the broader market's jitters, including a 2.2% drop in ET units on Monday, which was followed by a partial recovery after the distribution announcement.
Oil prices provided a supportive backdrop, with West Texas Intermediate crude closing July at $84.67, up 22% for the month. However, the income comparison across the three midstream giants presents a mixed picture. Energy Transfer's 6.68% yield sits between Enterprise's 5.89% and MPLX's 7.37%, yet ET trades at a higher trailing price-to-earnings multiple of 17.0x, compared to 14.1x for EPD and 12.7x for MPLX. That premium, roughly 21% over EPD and 34% over MPLX, may be justified if the company delivers on its EBITDA promise.
Tuesday morning will provide a critical test. Energy Transfer is scheduled to report second-quarter results before the opening bell, followed by a conference call at 9 a.m. EDT. Consensus estimates, as tracked by Google Finance, call for earnings of $0.38 per unit on revenue of $28.86 billion, a significant jump from the year-ago quarter's $0.32 per unit and $19.24 billion in revenue—implying a 19% earnings increase and a 50% revenue surge.
The bigger challenge lies in adjusted EBITDA. In the first quarter, Energy Transfer generated $4.94 billion in adjusted EBITDA, which represented 26.8% of the full-year midpoint. To bridge the gap, the partnership needs between $13.26 billion and $13.66 billion in EBITDA over the remaining three quarters, or an average of $4.42 billion to $4.55 billion per quarter. The midpoint of that range, $4.49 billion, stands 15.9% above the second-quarter 2025 actual of $3.87 billion. While seasonal factors limit direct comparability, the scale of the required improvement underscores the valuation premium.
Coverage metrics offer some reassurance. Distributable cash flow rose to $2.70 billion in the first quarter, up from $2.31 billion a year earlier, while growth capital expenditures totaled $1.53 billion. Operational momentum was also evident: NGL exports climbed 19%, NGL transportation volumes increased 12%, and crude transportation advanced 8% in the first quarter.
Management has emphasized the long-term nature of its growth projects. Co-CEO Tom Long noted in May that "our projects are supported by long-term contracts," with many agreements extending beyond 20 years. The Nederland facility expansion, which adds 240,000 barrels per day of ethane capacity and 55,000 barrels per day of LPG, is fully contracted into the 2040s, providing visibility into future cash flows.
Looking ahead, the coming week is packed with catalysts. Energy Transfer and MPLX both report on Tuesday, and ET's distribution record date is set for Friday, August 7. Risks remain, however, including potential slowdowns in Permian volume growth, project delays, softer basis spreads, or rising costs. The company's recent $1.75 billion junior-note offering, which carried opening coupons of 6.55% and 6.70%, will refinance preferred units and existing debt, but financing expenses are still a factor.
For now, Energy Transfer's units reflect income support rather than confirmed earnings growth. Tuesday's report will be pivotal in determining whether the stock can maintain its premium valuation. If EBITDA comes in near the required run rate, the yield may hold; if it disappoints, the market could reassess the partnership's premium.
