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Here's Why Hold Strategy is Apt for Enbridge (ENB) Stock Now
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Enbridge Inc. (ENB - Free Report) has witnessed upward earnings estimate revisions for 2021 and 2022 in the past 30 days. This midstream energy company is likely to see earnings growth of 23.2% and 12.1%, respectively, in 2021 and 2022.
Factors Favoring the Stock
Currently carrying a Zacks Rank #3 (Hold), the company has an extensive network of pipeline assets responsible for transporting roughly 25% of North American crude oil production. The midstream properties are also responsible for carrying as much as 20% of the natural gas Americans consume. In Ontario and Quebec, the company is dedicatedly serving 3.8 million retail customers through its Gas Distribution and Storage operations.
With a significant portion of its assets being contracted by shippers for the long term, its business model is less exposed to volatility in oil and gas prices due to the coronavirus pandemic. Underpinned by long-term contracts, Enbridge’s business model also has considerably lower volume risk exposure.
The company has estimated roughly C$10-billion growth capital projects to be placed into service in 2021. From 2021 to 2023, the midstream player expects C$17 billion in growth capital projects to be executed. The company expects significant growth in visible cashflow through 2023 from these secured midstream developments.
Enbridge recently announced the signing of a definitive purchase agreement with EnCap Flatrock Midstream. Per the accord, Enbridge will be buying Moda Midstream Operating, LLC (Moda) for a cash consideration of $3 billion. Once completed, the midstream energy major expects the acquisition to prove highly and immediately accretive to distributable cash flow and earnings per share.
As compared to composite stocks belonging to the industry, Enbridge’s balance sheet has more debt exposure. The midstream company’s dividend yield picture is also not healthier than the industry’s composite stocks. In the past two years, Enbridge’s dividend yield has mostly been lower than the composite stocks.
Line 5 is a critical infrastructure responsible for supplying 55% of the propane demand of Michigan. A few years back, the company entered into agreements with the state to construct a tunnel that would encase a replacement section of Line 5 oil pipeline to enhance safety. However, repeated protests for shutting down the line on safety concerns could affect the company.
Stocks to Consider
Meanwhile, a few better-ranked players in the energy space include Whiting Petroleum Corporation , Continental Resources, Inc. and Range Resources Corporation (RRC - Free Report) . All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Whiting Petroleum has witnessed upward earnings estimate revisions for 2021 in the past 30 days.
Continental is expected to witness earnings growth of 428.2% in 2021.
Range Resources has seen upward earnings estimate revisions for 2021 in the past 30 days.
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Here's Why Hold Strategy is Apt for Enbridge (ENB) Stock Now
Enbridge Inc. (ENB - Free Report) has witnessed upward earnings estimate revisions for 2021 and 2022 in the past 30 days. This midstream energy company is likely to see earnings growth of 23.2% and 12.1%, respectively, in 2021 and 2022.
Factors Favoring the Stock
Currently carrying a Zacks Rank #3 (Hold), the company has an extensive network of pipeline assets responsible for transporting roughly 25% of North American crude oil production. The midstream properties are also responsible for carrying as much as 20% of the natural gas Americans consume. In Ontario and Quebec, the company is dedicatedly serving 3.8 million retail customers through its Gas Distribution and Storage operations.
With a significant portion of its assets being contracted by shippers for the long term, its business model is less exposed to volatility in oil and gas prices due to the coronavirus pandemic. Underpinned by long-term contracts, Enbridge’s business model also has considerably lower volume risk exposure.
The company has estimated roughly C$10-billion growth capital projects to be placed into service in 2021. From 2021 to 2023, the midstream player expects C$17 billion in growth capital projects to be executed. The company expects significant growth in visible cashflow through 2023 from these secured midstream developments.
Enbridge recently announced the signing of a definitive purchase agreement with EnCap Flatrock Midstream. Per the accord, Enbridge will be buying Moda Midstream Operating, LLC (Moda) for a cash consideration of $3 billion. Once completed, the midstream energy major expects the acquisition to prove highly and immediately accretive to distributable cash flow and earnings per share.
Enbridge Inc Price
Enbridge Inc price | Enbridge Inc Quote
Risks
As compared to composite stocks belonging to the industry, Enbridge’s balance sheet has more debt exposure. The midstream company’s dividend yield picture is also not healthier than the industry’s composite stocks. In the past two years, Enbridge’s dividend yield has mostly been lower than the composite stocks.
Line 5 is a critical infrastructure responsible for supplying 55% of the propane demand of Michigan. A few years back, the company entered into agreements with the state to construct a tunnel that would encase a replacement section of Line 5 oil pipeline to enhance safety. However, repeated protests for shutting down the line on safety concerns could affect the company.
Stocks to Consider
Meanwhile, a few better-ranked players in the energy space include Whiting Petroleum Corporation , Continental Resources, Inc. and Range Resources Corporation (RRC - Free Report) . All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Whiting Petroleum has witnessed upward earnings estimate revisions for 2021 in the past 30 days.
Continental is expected to witness earnings growth of 428.2% in 2021.
Range Resources has seen upward earnings estimate revisions for 2021 in the past 30 days.