Energy Transfer vs. ONEOK: Which Stock Has More Upside Now?

The companies operating in the Zacks Oil and gas – Production Pipeline MLB plays a very important role in fulfilling the world’s rising energy needs, delivering crude oil and natural gas that fuel transportation, manufacturing, and households. Their activities strengthen energy security, drive economic development, and supply feedstocks vital for petrochemicals and fertilizers. As global consumption grows, these companies remain essential in balancing conventional energy sources while advancing cleaner technologies and carbon-reduction strategies.Pipeline operators hold an equally critical position as the backbone of energy logistics, ensuring the safe and efficient movement of crude oil, natural gas, and refined fuels across large distances. Their infrastructure provides a reliable supply to refineries, power plants, and consumers, while lowering costs and minimizing risks compared to rail or truck transport. By enabling producers to explore new opportunities and guaranteeing uninterrupted energy availability, pipeline companies play a pivotal role in economic stability and remain fundamental in supporting both current energy needs and the transition toward a sustainable future. Amid such a backdrop, let’s compare Energy Transfer ET and ONEOK Inc. OKE, two prominent midstream energy companies in North America, operating vast networks of pipelines and storage facilities for natural gas, crude oil and natural gas liquids. Both firms operate critical infrastructure that transports, stores, and processes natural gas, natural gas liquids (NGLs), and crude oil. Both play a pivotal role in connecting producers in resource-rich basins like the Permian and Mid-Continent to end markets across the country.Energy Transfer offers a compelling investment case, backed by its broad and diversified midstream network spanning natural gas, NGLs, crude oil, and refined products. Its stable fee-based cash flows, strategic export terminal access, and prudent capital management enhance growth potential amid rising U.S. energy output and global demand. Coupled with a strong distribution yield, consistent EBITDA growth, and continued deleveraging, ET emerges as an attractive option for long-term investors looking for both income and growth in the energy sector.ONEOK offers a strong investment opportunity, courtesy of its extensive natural gas liquids infrastructure and strategically located pipeline network across key U.S. energy basins. The company generates stable, fee-based cash flows with limited commodity price exposure, ensuring earnings visibility. Its scale and integration provide a competitive advantage, enabling efficient transportation, processing, and fractionation of NGLs to meet growing domestic and export demand. With disciplined capital allocation, a focus on debt reduction, and an attractive dividend yield, OKE is well-positioned to deliver sustainable long-term shareholder value through income and steady growth in the energy midstream sector.Let’s focus on the fundamental factors of these midstream companies and try to find which one presently has a better possibility to provide higher returns to investors.ET & OKE’s Earnings Growth ProjectionsThe Zacks Consensus Estimate for ET’s earnings per unit in 2025 reflects a decline of 3.47% and an increase of 5.44% in 2026 in the past 60 days. Long-term (three to five years) earnings growth per share is pegged at 13.67%.Image Source: Zacks Investment ResearchThe Zacks Consensus Estimate for OKE’s earnings per share in 2025 and 2026 reflects a growth of 4.78% and 4.69%, respectively, in the past 60 days. Long-term (three to five years) earnings growth per share is pegged at 7.68%.Image Source: Zacks Investment ResearchReturn on Equity (ROE)ROE is an essential financial indicator that evaluates a company’s efficiency in generating profits from the equity invested by its shareholders. It demonstrates how well management is utilizing the capital provided to increase earnings and deliver value. ET’s current ROE is 11.08% compared with OKE’s ROE of 14.90%. OKE’s ROE is also better than the industry’s ROE of 11.55%.Debt to CapitalThe Oil-Energy sector is a capital-intensive one, and huge investments are required at regular intervals to upgrade, maintain and expand operations. The usage of new evolving technology also requires investments. Therefore, the companies operating in the sector borrow from the market and add it to their internal cash generation to fund their long-term investments.ET’s current debt-to-capital stands at 57.29% compared with OKE’s debt-to-capital of 57.49%. Both companies are using debt to fund their business.Capital Expenditure PlanCapital expenditure is crucial for oil and gas producers and pipeline companies, MLPs, as it funds exploration, drilling, infrastructure development, and system expansions. Capital investment enhances transportation capacity and supports long-term growth, ensuring reliable energy supply while strengthening competitiveness and cash flow stability in dynamic markets.ET plans to invest $6.1 billion in 2025 to further strengthen its infrastructure and operations, while OKE expects capital expenditures to be in the range of $2.8-$3.2 billion in 2025.ValuationEnergy Transfer currently appears to be trading at a discount compared with ONEOK on a forward 12-month Price/Earnings basis. ET is currently trading at 11.85X, while OKE is trading at 12.53X compared with the industry’s 12.26X.Price PerformanceET’s units have gained 0.1% in the past three months against OKE’s decline of 5.9%. The sector has gained 9.1% in the same time period.Price Performance (Three months)Image Source: Zacks Investment ResearchConclusionEnergy Transfer and ONEOK are strategically investing in their infrastructure to expand operations and successfully transfer hydrocarbons from the production region to their end users. ET’s higher earnings growth expectation, wider capital expenditure, discounted valuation and better price performance are making it a better choice than OKE in the oil and energy midstream space.Based on the above discussion, Energy Transfer has an edge over ONEOK, despite the stocks carrying a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Zacks Names #1 Semiconductor StockThis under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ONEOK, Inc. (OKE): Free Stock Analysis Report Energy Transfer LP (ET): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks