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Why Is Enbridge (ENB) Up 3.8% Since Last Earnings Report?
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It has been about a month since the last earnings report for Enbridge (ENB - Free Report) . Shares have added about 3.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Enbridge due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Enbridge Misses Q4 Earnings Estimates, Line 3 Cost to Rise
Enbridge reported fourth-quarter 2020 adjusted earnings per share of 43 cents, missing the Zacks Consensus Estimate of 46 cents. The bottom line also deteriorated from 46 cents per share a year ago.
Total revenues for the quarter declined 17.9% year over year to $7,680 million.
The weak quarterly results were owing to a decrease in contributions from the U.S. and Canadian Gas Transmission businesses, as well as higher loss on the Energy Services front. The negatives were partially offset by higher contributions from Mainline System and Regional Oil Sands System.
Segment Analysis
Enbridge conducts business through five segments — Liquids Pipelines, Gas Transmission and Midstream, Gas Distribution and Storage, Renewable Power Generation, and Energy Services.
Liquids Pipelines: The segment’s adjusted earnings before interest, income taxes, and depreciation and amortization (EBITDA) amounted to C$1,787 million, up from C$1,720 million in the year-earlier quarter. Higher contributions from Mainline System and Regional Oil Sands System primarily led to the improvement. This was partially offset by lower contributions from Gulf Coast and Mid-Continent System.
Gas Transmission and Midstream: The segment’s adjusted earnings totaled C$878 million, down from C$948 million in fourth-quarter 2019. Lower contributions from the U.S. and Canadian Gas Transmission businesses affected the segment performance.
Gas Distribution and Storage: The unit generated a profit of C$492 million compared with C$481 million in the prior-year quarter. Increase in distribution charges and growth in the customer portfolio primarily led to the outperformance.
Renewable Power Generation: The segment recorded earnings of C$146 million, up from C$119 million in the prior-year quarter, thanks to the Hohe See offshore wind project’s Albatros expansion.
Energy Services: The segment incurred a loss of C$82 million compared with a loss of C$22 million in fourth-quarter 2019.
Distributable Cash Flow (DCF)
For fourth-quarter 2020, the company reported DCF of C$2,209 million, representing an increase from C$2,051 million a year ago.
Balance Sheet
At the end of fourth-quarter 2020, the company reported long-term debt of C$62,819 million, and cash and cash equivalents of C$452 million. The current portion of long-term debt was C$2,957 million. Its debt to capitalization was 49.4% at fourth quarter-end.
Guidance
For 2021, the company estimates its guidance for DCF per share in the band of C$4.70-C$5.00, indicating a rise from the 2020 level of $4.67. It expects 2021 EBITDA within C$13.9-C$14.3 million, indicating an increase from the 2020 level of C$13.3 million. It hiked 2021 dividend to 83.5 Canadian cents, reflecting a rise of 3% from a year ago. This marked the 26th consecutive yearly increase.
Notably, the company has C$30 billion of organic growth projects under development. The Line 3 replacement is expected to come online in the fourth quarter of this year. Moreover, it boosted capital cost of the project by C$1.1 billion to C$9.3 billion.
Enbridge is optimistic that there will be a gradual recovery in energy demand supported by Asian markets. Vaccine rollouts will play a crucial role in the recovery process.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
VGM Scores
At this time, Enbridge has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Enbridge has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Enbridge (ENB) Up 3.8% Since Last Earnings Report?
It has been about a month since the last earnings report for Enbridge (ENB - Free Report) . Shares have added about 3.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Enbridge due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Enbridge Misses Q4 Earnings Estimates, Line 3 Cost to Rise
Enbridge reported fourth-quarter 2020 adjusted earnings per share of 43 cents, missing the Zacks Consensus Estimate of 46 cents. The bottom line also deteriorated from 46 cents per share a year ago.
Total revenues for the quarter declined 17.9% year over year to $7,680 million.
The weak quarterly results were owing to a decrease in contributions from the U.S. and Canadian Gas Transmission businesses, as well as higher loss on the Energy Services front. The negatives were partially offset by higher contributions from Mainline System and Regional Oil Sands System.
Segment Analysis
Enbridge conducts business through five segments — Liquids Pipelines, Gas Transmission and Midstream, Gas Distribution and Storage, Renewable Power Generation, and Energy Services.
Liquids Pipelines: The segment’s adjusted earnings before interest, income taxes, and depreciation and amortization (EBITDA) amounted to C$1,787 million, up from C$1,720 million in the year-earlier quarter. Higher contributions from Mainline System and Regional Oil Sands System primarily led to the improvement. This was partially offset by lower contributions from Gulf Coast and Mid-Continent System.
Gas Transmission and Midstream: The segment’s adjusted earnings totaled C$878 million, down from C$948 million in fourth-quarter 2019. Lower contributions from the U.S. and Canadian Gas Transmission businesses affected the segment performance.
Gas Distribution and Storage: The unit generated a profit of C$492 million compared with C$481 million in the prior-year quarter. Increase in distribution charges and growth in the customer portfolio primarily led to the outperformance.
Renewable Power Generation: The segment recorded earnings of C$146 million, up from C$119 million in the prior-year quarter, thanks to the Hohe See offshore wind project’s Albatros expansion.
Energy Services: The segment incurred a loss of C$82 million compared with a loss of C$22 million in fourth-quarter 2019.
Distributable Cash Flow (DCF)
For fourth-quarter 2020, the company reported DCF of C$2,209 million, representing an increase from C$2,051 million a year ago.
Balance Sheet
At the end of fourth-quarter 2020, the company reported long-term debt of C$62,819 million, and cash and cash equivalents of C$452 million. The current portion of long-term debt was C$2,957 million. Its debt to capitalization was 49.4% at fourth quarter-end.
Guidance
For 2021, the company estimates its guidance for DCF per share in the band of C$4.70-C$5.00, indicating a rise from the 2020 level of $4.67. It expects 2021 EBITDA within C$13.9-C$14.3 million, indicating an increase from the 2020 level of C$13.3 million. It hiked 2021 dividend to 83.5 Canadian cents, reflecting a rise of 3% from a year ago. This marked the 26th consecutive yearly increase.
Notably, the company has C$30 billion of organic growth projects under development. The Line 3 replacement is expected to come online in the fourth quarter of this year. Moreover, it boosted capital cost of the project by C$1.1 billion to C$9.3 billion.
Enbridge is optimistic that there will be a gradual recovery in energy demand supported by Asian markets. Vaccine rollouts will play a crucial role in the recovery process.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
VGM Scores
At this time, Enbridge has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Enbridge has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.