SUMMARY
- Midstream/MLP equities have only rebounded modestly since April’s sell-off, while 2026 EBITDA estimates have been stable. As a result, valuations have come down noticeably since the end of March.
- MLPs and broader midstream are trading at forward EV/EBITDA multiples below their 10-year averages and far below the high-watermarks seen in 2013.
- MLPs have typically traded at a discount to corporations, with the discount becoming more pronounced over the last year or so as corporations focused on natural gas pipelines have seen strong performance.
Given years of strong performance and a pullback in April, investors may be wondering where midstream/MLP valuations stand. Although equities have weakened in 2Q, estimates for next year are little changed, leading to a more attractive entry point. Forward EV/EBITDA provides interesting insights about current valuations relative to history and valuation differences between MLPs and corporations.
Energy infrastructure has outperformed the S&P 500 in recent years.
With strong performance in recent years, investors may be wondering if midstream/MLP valuations have become overextended. MLPs and midstream have handily outperformed the S&P 500 since the end of 2020. The chart below shows relative price performance for the Alerian Midstream Energy Select Index (AMEI) and Alerian MLP Infrastructure Index (AMZI) compared to the broader market. AMEI is 75% U.S. and Canadian midstream corporations and 25% MLPs, while AMZI is focused on MLPs. For context, MLPs outperformed corporations in 2022 and 2023, but corporations outperformed MLPs in 2024.
Keep in mind the performance advantage from a total return perspective would be even more stark. As of June 10, AMZI and AMEI were yielding 7.5% and 5.4%, respectively, compared to just 1.4% for the S&P 500.
Steady estimates and equity weakness have led to lower valuations.
While performance has been strong in recent years, the midstream/MLP space has not become expensive relative to historical averages. Performance strength has aligned with solid EBITDA growth, and multiple expansion has been limited, particularly for MLPs.
In April, energy infrastructure came under pressure amid oil volatility and market uncertainty surrounding tariffs (read more). On a price-return basis, AMZI fell almost 9% for the month, while AMEI was down 6% in April.
Equities have only rebounded modestly since then, while forward estimates have been stable. Since the end of March, 2026 EBITDA estimates for most names in AMZI and AMEI have moved by 2% or less in either direction. The largest downward revision was a 3.6% cut to 2026 estimates for a name in AMEI with a weight below 1%. Compared to multiples from the end of March, AMZI is trading about half a turn lower, while AMEI is trading about a third of a turn lower, as shown below.
While valuations have come down since March, they also remain below the 10-year average. MLP valuations are in line with the five-year average, while AMEI is trading above its five-year average. For even more historical context, valuations are nowhere near the highs seen in 2013, when oil prices were largely trading between $90 and $100 per barrel, and the shale revolution was in full swing.
Discount in MLPs is more pronounced.
Setting aside the high-watermarks in 2013, the other data points show a clear discount for MLPs compared to the index dominated by U.S. and Canadian C-Corps (again, AMEI is only 25% MLPs). There are different rationales for the discount in MLPs. One argument points to a broader audience of investors for corporations, given their simpler tax structure and inclusion in broad market indexes. As a reminder, MLPs are not in the S&P 500.
Different asset bases can also help explain valuation differences. Corporations have a bias toward long-haul natural gas pipelines, which tend to command higher multiples than other midstream businesses like gathering and processing.
To be fair, the discount in MLPs is not new. As shown in the chart below, AMZI has largely traded at a discount to AMEI over the last decade. While the spread has fluctuated, valuations have become more disconnected since 2024, when the natural gas demand growth theme and potential upside from power demand and data centers started to gain more traction. C-Corps focused on natural gas infrastructure have seen particularly strong performance over the last 12 months. Admittedly, companies are likely being rewarded for growth that is not reflected in 2026 estimates (i.e., projects coming online in 2027+), which can also skew valuations higher.
Bottom Line:
Equity weakness in April has led to lower valuations for midstream/MLPs, even as estimates for 2026 have remained largely steady. Energy infrastructure broadly continues to trade below 10-year average multiples, with MLPs trading at a noticeable discount to their C-Corp counterparts.
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AMZI is the underlying index for the Alerian MLP ETF (AMLP) and the ETRACS Alerian MLP Infrastructure Index ETN Series B (MLPB). AMEI is the underlying index for the Alerian Energy Infrastructure ETF (ENFR) and the ALPS Alerian Energy Infrastructure Portfolio (ALEFX).
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vettafi.com is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for AMLP, MLPB, ENFR, and ALEFX, for which it receives an index licensing fee. However, AMLP, MLPB, ENFR, and ALEFX are not issued, sponsored, endorsed, or sold by VettaFi. VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of AMLP, MLPB, ENFR, and ALEFX.
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