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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 estimate revisions for 2024 and 2025 earnings in the past 30 days.
The Zacks Consensus Estimate for the company’s 2024 and 2025 earnings per share is pegged at $2.15 and $2.25, respectively.
Factors Favoring the Stock
Enbridge has the longest and most advanced crude and liquids pipeline system in the world, spreading across 17,809 miles, supported by a predominantly low-risk business model. In Canada, the company is touted to be the largest natural gas distributor. Hence, a significant portion of its earnings is generated from transportation operations, driven by a string of long-term contracts. Enbridge transports around 30% of crude oil produced in the North America region. This substantial contract base will likely provide the company with stable cash flows in the future.
In 2023, Enbridge demonstrated a consistent financial performance, with a 6% year-over-year increase in adjusted EBITDA to $16.5 billion and a 1% increase in the distributable cash flow per share to $5.48. For 2023, its debt-to-EBITDA ratio of 4.1X is comfortably within its target of 4.5X to 5.0X. This stable financial performance is a strong indicator of the company's efficient operations and financial health.
The company has increased its dividend for the 29th consecutive year, showcasing its commitment to returning value to shareholders. For 2024, Enbridge announced a 3.1% hike in its quarterly dividend, raising it to 91.50 cents per share ($3.66 annually). Consistent dividend growth is supported by a robust cash flow quality and is a positive sign for income-focused investors.
Enbridge has strategically expanded its asset portfolio, having proposed a $14-billion bid to acquire three utilities. The company has confirmed securing funding for more than 75% of the total purchase price. The deal would not only double ENB’s gas distribution business but also establish North America’s largest natural gas provider.
High utilization of ENB’s pipeline systems like the Mainline and Gray Oak indicates efficient asset management and potential for revenue growth. The company foresees an 8% increase in drilling activities by Canada oil and gas producers in 2024, a development expected to drive the utilization of pipelines.
Enbridge announced $10 billion in new secured projects, including renewable power investments, and placed $2 billion of secured organic growth into service. These investments in growth projects, particularly in renewables, demonstrate the company's forward-looking strategy and potential for long-term value creation.
Vaalco Energy (EGY - Free Report) is an independent energy company principally engaged in the acquisition, exploration, development and production of crude oil and natural gas.
The Zacks Consensus Estimate for EGY’s 2024 EPS is pegged at $1.49. It has witnessed upward earnings estimate revisions for 2024 in the past 60 days. EGY’s 2024 earnings are expected to soar 325.7% year over year.
Energy Transfer (ET - Free Report) is a publicly traded limited partnership focused on diverse energy assets in the United States. Its core operations involve natural gas midstream services, transportation, storage, crude oil facilities and marketing assets.
The Zacks Consensus Estimate for ET’s 2024 EPS is pegged at $1.22. It has witnessed upward earnings estimate revisions for 2024 in the past 30 days. ET’s 2024 earnings are expected to rise 18% year over year.
Subsea 7 S.A. (SUBCY - Free Report) helps build underwater oil and gas fields. It is a top player in the Oil and Gas Equipment and Services market, which is expected to grow as oil and gas production moves further offshore.
The Zacks Consensus Estimate for SUBCY’s 2024 EPS is pegged at 91 cents. It has witnessed upward earnings estimate revisions for 2024 in the past 30 days. SUBCY’s 2024 earnings are expected to soar 277% year over year.
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Here's Why Hold Strategy is Apt for Enbridge (ENB) Stock Now
Enbridge Inc. (ENB - Free Report) has witnessed upward estimate revisions for 2024 and 2025 earnings in the past 30 days.
The Zacks Consensus Estimate for the company’s 2024 and 2025 earnings per share is pegged at $2.15 and $2.25, respectively.
Factors Favoring the Stock
Enbridge has the longest and most advanced crude and liquids pipeline system in the world, spreading across 17,809 miles, supported by a predominantly low-risk business model. In Canada, the company is touted to be the largest natural gas distributor. Hence, a significant portion of its earnings is generated from transportation operations, driven by a string of long-term contracts. Enbridge transports around 30% of crude oil produced in the North America region. This substantial contract base will likely provide the company with stable cash flows in the future.
In 2023, Enbridge demonstrated a consistent financial performance, with a 6% year-over-year increase in adjusted EBITDA to $16.5 billion and a 1% increase in the distributable cash flow per share to $5.48. For 2023, its debt-to-EBITDA ratio of 4.1X is comfortably within its target of 4.5X to 5.0X. This stable financial performance is a strong indicator of the company's efficient operations and financial health.
The company has increased its dividend for the 29th consecutive year, showcasing its commitment to returning value to shareholders. For 2024, Enbridge announced a 3.1% hike in its quarterly dividend, raising it to 91.50 cents per share ($3.66 annually). Consistent dividend growth is supported by a robust cash flow quality and is a positive sign for income-focused investors.
Enbridge has strategically expanded its asset portfolio, having proposed a $14-billion bid to acquire three utilities. The company has confirmed securing funding for more than 75% of the total purchase price. The deal would not only double ENB’s gas distribution business but also establish North America’s largest natural gas provider.
High utilization of ENB’s pipeline systems like the Mainline and Gray Oak indicates efficient asset management and potential for revenue growth. The company foresees an 8% increase in drilling activities by Canada oil and gas producers in 2024, a development expected to drive the utilization of pipelines.
Enbridge announced $10 billion in new secured projects, including renewable power investments, and placed $2 billion of secured organic growth into service. These investments in growth projects, particularly in renewables, demonstrate the company's forward-looking strategy and potential for long-term value creation.
Zacks Rank & Stocks to Consider
Currently, ENB carries a Zacks Rank #3 (Hold).
Investors interested in the energy sector might look at the following companies, each presently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Vaalco Energy (EGY - Free Report) is an independent energy company principally engaged in the acquisition, exploration, development and production of crude oil and natural gas.
The Zacks Consensus Estimate for EGY’s 2024 EPS is pegged at $1.49. It has witnessed upward earnings estimate revisions for 2024 in the past 60 days. EGY’s 2024 earnings are expected to soar 325.7% year over year.
Energy Transfer (ET - Free Report) is a publicly traded limited partnership focused on diverse energy assets in the United States. Its core operations involve natural gas midstream services, transportation, storage, crude oil facilities and marketing assets.
The Zacks Consensus Estimate for ET’s 2024 EPS is pegged at $1.22. It has witnessed upward earnings estimate revisions for 2024 in the past 30 days. ET’s 2024 earnings are expected to rise 18% year over year.
Subsea 7 S.A. (SUBCY - Free Report) helps build underwater oil and gas fields. It is a top player in the Oil and Gas Equipment and Services market, which is expected to grow as oil and gas production moves further offshore.
The Zacks Consensus Estimate for SUBCY’s 2024 EPS is pegged at 91 cents. It has witnessed upward earnings estimate revisions for 2024 in the past 30 days. SUBCY’s 2024 earnings are expected to soar 277% year over year.