ET

Energy Transfer is a scaled US midstream MLP whose value rests on durable, fee-based cash flows rather than per-unit earnings growth. FY2025 revenue rose 3.5% to $85.5B with $9.03B of operating income (10.6% margin) and $10.1B of operating cash flow. On a $64.5B market cap that is just 0.8x sales and roughly 14.6x net income ($4.43B); adding the $68.3B of long-term debt, enterprise value sits near 9x estimated EBITDA (operating income $9.03B + D&A $5.68B = ~$14.7B) — a reasonable-to-cheap multiple for diversified gas/NGL/crude transportation and storage infrastructure. The MD&A confirms the model: management's stated objective is to grow distributable cash flow to unitholders, funded by subsidiary distributions (Sunoco LP, USAC) and selective expansion.

The quality caveats are real and keep conviction moderate. Net income fell 7.9% YoY and, at $4.43B, is below FY2021's $5.47B despite revenue being ~$18B higher — earnings have stagnated as the business scaled, and ROE is a pedestrian 9.0%. Operating cash flow dropped 11.8% to $10.1B even as capital expenditures jumped 51.4% to $6.30B, compressing the free-cash cushion that funds distributions. Leverage is the central risk: long-term debt grew 14.3% to $68.3B against only $1.27B of cash and $49.0B of equity, so this is an interest-rate- and refinancing-sensitive balance sheet by design.