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Here's Why You Should Watch Enbridge (ENB) Ahead of Q1 Earnings
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Investors are closely monitoring Enbridge Inc. (ENB - Free Report) as it prepares to announce first-quarter 2024 earnings on May 10, before the opening bell.
Despite possessing a stable and low-risk business model, the stock has been lagging behind the Zacks Oil & Gas Production & Pipeline industry since the start of 2024. Consequently, it is advisable to closely monitor the stock ahead of its earnings announcement.
Stock Price Underperforming
ENB has gained 4.3% year to date, underperforming the 10% rise of its industry. Excessive reliance on debt capital is a key concern. Over the past two years, the midstream company has primarily been witnessing higher debt to capitalization than the composite stocks belonging to the industry.
Image Source: Zacks Investment Research
Additionally, given its intricate energy infrastructure, Enbridge faces potential operational and environmental risks. Having encountered numerous such incidents, the company foresees ongoing substantial expenses in both readiness and management of adverse occurrences.
Despite the negatives, the company’s low-risk business model, which could continue to generate stable cashflows, is likely to have backed its earnings in the March quarter.
The Zacks Consensus Estimate for first-quarter earnings per share stands at 59 cents, with revenues estimated at $9 billion. Our proven model predicts an earnings beat for ENB this time around because the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. ENB has an Earnings ESP of +0.85% and a Zacks Rank #3.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Keep a Close Watch
Enbridge's low-risk business model is characterized by the majority of its assets being supported by long-term contracts, resulting in minimal exposure to commodity price volatility. This structure allows the company to generate substantial cash flows.
It possesses a substantial backlog of midstream projects that have secured additional cash flows for the upcoming years. Valued at up to C$25 billion, these projects are anticipated to be completed and operational through 2024 and beyond.
Enbridge is seizing opportunities in the renewable power sector as well. With the growing demand for renewable energy, the company anticipates up to C$1.5 billion in annual growth opportunities.
Building upon all the positive developments, the company is anticipated to keep rewarding shareholders with higher dividends than the composite stocks of the industry in the forthcoming years.
However, the stock is not cheap now on a relative basis, with the current 14.20X trailing 12-month Enterprise Value/Earnings before Interest Tax Depreciation and Amortization above the Zacks Oil & Gas Production & Pipeline industry average of 12.52X.
Image Source: Zacks Investment Research
Final Words
Given the factors mentioned earlier, we think it's advisable for investors to be cautious ahead of the firm’s first-quarter earnings announcement.
Performance of Other Energy Giants
Exxon Mobil Corporation (XOM - Free Report) and Chevron Corporation (CVX - Free Report) are the two other integrated energy giants that have already reported first-quarter earnings. While ExxonMobil missed the Zacks Consensus Estimate for earnings in the first quarter, Chevron beat the consensus mark for the same.
One of the largest integrated energy firms, Shell plc (SHEL - Free Report) , has also reported earnings. It said that it has once again achieved a quarter marked by robust financial and operational performance. Apart from reducing emissions, Shell is showcasing its strong commitment to generating handsome value for shareholders.
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Here's Why You Should Watch Enbridge (ENB) Ahead of Q1 Earnings
Investors are closely monitoring Enbridge Inc. (ENB - Free Report) as it prepares to announce first-quarter 2024 earnings on May 10, before the opening bell.
Despite possessing a stable and low-risk business model, the stock has been lagging behind the Zacks Oil & Gas Production & Pipeline industry since the start of 2024. Consequently, it is advisable to closely monitor the stock ahead of its earnings announcement.
Stock Price Underperforming
ENB has gained 4.3% year to date, underperforming the 10% rise of its industry. Excessive reliance on debt capital is a key concern. Over the past two years, the midstream company has primarily been witnessing higher debt to capitalization than the composite stocks belonging to the industry.
Image Source: Zacks Investment Research
Additionally, given its intricate energy infrastructure, Enbridge faces potential operational and environmental risks. Having encountered numerous such incidents, the company foresees ongoing substantial expenses in both readiness and management of adverse occurrences.
Despite the negatives, the company’s low-risk business model, which could continue to generate stable cashflows, is likely to have backed its earnings in the March quarter.
The Zacks Consensus Estimate for first-quarter earnings per share stands at 59 cents, with revenues estimated at $9 billion. Our proven model predicts an earnings beat for ENB this time around because the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. ENB has an Earnings ESP of +0.85% and a Zacks Rank #3.
You can see the complete list of today’s Zacks #1 Rank stocks here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Keep a Close Watch
Enbridge's low-risk business model is characterized by the majority of its assets being supported by long-term contracts, resulting in minimal exposure to commodity price volatility. This structure allows the company to generate substantial cash flows.
It possesses a substantial backlog of midstream projects that have secured additional cash flows for the upcoming years. Valued at up to C$25 billion, these projects are anticipated to be completed and operational through 2024 and beyond.
Enbridge is seizing opportunities in the renewable power sector as well. With the growing demand for renewable energy, the company anticipates up to C$1.5 billion in annual growth opportunities.
Building upon all the positive developments, the company is anticipated to keep rewarding shareholders with higher dividends than the composite stocks of the industry in the forthcoming years.
However, the stock is not cheap now on a relative basis, with the current 14.20X trailing 12-month Enterprise Value/Earnings before Interest Tax Depreciation and Amortization above the Zacks Oil & Gas Production & Pipeline industry average of 12.52X.
Image Source: Zacks Investment Research
Final Words
Given the factors mentioned earlier, we think it's advisable for investors to be cautious ahead of the firm’s first-quarter earnings announcement.
Performance of Other Energy Giants
Exxon Mobil Corporation (XOM - Free Report) and Chevron Corporation (CVX - Free Report) are the two other integrated energy giants that have already reported first-quarter earnings. While ExxonMobil missed the Zacks Consensus Estimate for earnings in the first quarter, Chevron beat the consensus mark for the same.
One of the largest integrated energy firms, Shell plc (SHEL - Free Report) , has also reported earnings. It said that it has once again achieved a quarter marked by robust financial and operational performance. Apart from reducing emissions, Shell is showcasing its strong commitment to generating handsome value for shareholders.