Energy Transfer Units Testing Support Levels: Is This the Right Moment for Equity Investors?

Energy Transfer LP (ET) has recently fallen below its critical 50-day SMA, a development that warrants careful examination for investors tracking this midstream energy firm. Trading at $16.39 as of late December 2025, the stock reflects a significant 23.6% retreat from its 52-week peak of $21.45. For many market participants, the 50-day SMA remains one of the most reliable technical benchmarks for gauging whether SMA stocks are building momentum or facing headwinds.

How ET Compares to Its Peer Group

Over the past six months, Energy Transfer’s units have experienced a 6.4% downturn, which outpaces the broader Oil and Gas - Production Pipeline industry’s 1.7% decline. This underperformance raises questions about whether current valuations present a compelling entry point or whether additional weakness may emerge.

Plains All American Pipeline (PAA), another major player in U.S. midstream infrastructure, has gained 1.5% during the same period, demonstrating that sector strength varies considerably among operators. This divergence underscores the importance of conducting thorough fundamental analysis before committing capital to any single energy infrastructure name.

The Operating Fundamentals Behind the Numbers

Energy Transfer’s business model centers on operating more than 140,000 miles of integrated pipeline systems spanning 44 U.S. states. The company manages oil and gas conduits, gathering and processing infrastructure, and storage facilities—all strategically positioned to capture volumes from major production basins and high-demand consumption regions.

The company’s revenue generation largely depends on fee-based transportation and storage contracts, with approximately 90% of revenues derived through these services. This structure provides meaningful insulation from commodity price fluctuations, a critical consideration when evaluating long-term cash flow stability.

Management’s planned $4.6 billion capital investment program for 2025 reflects confidence in future growth opportunities. Additionally, the firm has contracted more than 6 billion cubic feet per day of pipeline capacity under 18-year weighted-average agreements, expected to generate over $25 billion in firm transportation revenues.

Distribution Strength and Insider Activity

Energy Transfer’s current quarterly cash distribution rate stands at 33.25 cents per unit, with an 8.11% yield substantially exceeding the industry average of 6.21%. The company has raised distributions 16 times over the past five years, demonstrating consistent commitment to unitholders.

Insider ownership at approximately 10%—higher than many industry peers—reflects management confidence in the enterprise’s trajectory. This indicator often serves as a meaningful gauge of long-term financial health.

Valuation and Earnings Dynamics

When measured on a trailing 12-month EV/EBITDA basis, ET trades at 8.9X compared to the industry median of 10.53X. This discount suggests the market may be pricing in more pessimism than fundamentals justify.

Zacks consensus estimates project Energy Transfer will deliver 3.91% earnings-per-unit growth in 2025, accelerating to 15.25% in 2026. For comparison, peer Delek Logistics Partners shows consensus forecasts of 23.08% and 37.91% growth in those respective years, highlighting different growth trajectories across the sector.

Where Profitability Metrics Fall Short

Energy Transfer’s trailing 12-month return on equity (ROE) of 10.71% trails the industry’s 13.28% average. This profitability metric, which measures how efficiently management deploys shareholder capital, suggests there may be room for operational improvement relative to the broader peer set.

Risk Considerations

The firm’s revenue stream remains dependent on sustaining volumes from key natural gas suppliers. Any material reduction in supply contracts with major producers could pressure financial performance.

The Investment Takeaway for SMA Stocks and Energy Infrastructure

Energy Transfer presents a nuanced opportunity: a well-capitalized infrastructure operator with stable, contract-backed cash flows, expanding asset positioning, and attractive distribution yields. However, the company’s current ROE disadvantage and technical weakness below the 50-day SMA suggest new investors may benefit from awaiting a more favorable entry point.

Existing shareholders holding ET (Zacks Rank #3 Hold) can reasonably maintain positions to capture ongoing distributions. Those considering new positions should monitor whether the stock establishes support or continues testing lower levels before committing fresh capital.

The convergence of SMA stocks breaking technical support, modest valuation discounts, and mixed peer performance creates a wait-and-see environment for opportunistic investors.