Last Friday, Enbridge Inc. (ENB Quick QuoteENB - Free Report) reported first-quarter 2025 earnings that exceeded expectations. This was driven by higher contributions from its major business segments like Liquids Pipelines, Gas Transmission, and Gas Distribution and Storage. Thus, the strong utilization of the asset base is contributing to a strong business outlook.

Before analyzing the factors driving this positive outlook, let’s review the first-quarter results.

ENB’s Q1 Earnings Snapshot

Enbridge reported first-quarter adjusted earnings per share (EPS) of 72 cents, which beat the Zacks Consensus Estimate of 68 cents. The bottom line increased from the year-ago quarter’s level of 68 cents.

Total quarterly revenues of $12.9 billion increased from $8.2 billion in the prior-year quarter. The top line also beat the Zacks Consensus Estimate of $9.5 billion. For more details, check our blog: Enbridge Q1 Earnings Beat Estimates, Revenues Increase Y/Y.

Enterprise Products Partners LP (EPD Quick QuoteEPD - Free Report) and Kinder Morgan, Inc. (KMI Quick QuoteKMI - Free Report) are two other midstream energy giants and have already reported results.

Incremental Cash Flows for ENB From its C$28B Project Backlog

Enbridge is a leading midstream energy player in North America, operating an extensive crude oil and liquids transportation network spanning 18,085 miles — the world's longest and most complex system. ENB’s gas transportation pipeline network spans 71,308 miles, covering 31 U.S. states, four Canadian provinces and offshore areas in the Gulf of Mexico.

Enbridge’s pipelines transport 20% of the total natural gas consumed in the United States. The company generates stable, fee-based revenues from these midstream assets, as they are booked by shippers on a long-term basis, minimizing commodity price volatility and volume risks.

The midstream energy major will generate incremental cash flows from its C$28 billion backlog of secured capital projects, which include liquids pipelines, gas transmission, gas distribution and storage, and renewables. The maximum in-service date is 2029.

Image Source: Enbridge Inc.

ENB’s Stable Business Model & Investment-Grade Credit Rating

The minimization of commodity price volatility and volume risks in ENB’s business model stems from the fact that 98% of its EBITDA is supported by regulated or take-or-pay contracts. Moreover, more than 80% of the midstream energy firm’s profits are generated from activities where the company can automatically raise prices or fees. Thus, ENB is keeping pace with rising costs, which in turn protects its earnings and dividend payments even in a high inflationary environment.

This stability in the business model is leading to its investment-grade credit rating while providing long-term visibility to cash flows.

How the Midstream Majors EPD, KMI Fared in Q1

Enterprise Products’ first-quarter 2025 adjusted earnings per limited partner unit of 64 cents missed the Zacks Consensus Estimate of 69 cents. The bottom line also declined from the year-ago level of 66 cents. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.) 

However, EPD’s total quarterly revenues of $15.4 billion beat the Zacks Consensus Estimate of $14.1 billion. The top line improved from $14.8 billion in the prior-year quarter.

The weak quarterly earnings of Enterprise Products can be primarily attributed to weak petrochemical margins and lower crude oil marine terminal volumes despite record natural gas processing and pipeline volumes. For more details, check our article: Enterprise Q1 Earnings Miss Estimates, Revenues Increase Y/Y.

Moreover, Kinder Morgan reported first-quarter adjusted earnings per share of 34 cents, which missed the Zacks Consensus Estimate of 35 cents. The bottom line remained flat year over year. 

KMI’s total quarterly revenues of $4.24 billion beat the Zacks Consensus Estimate of $4.14 billion. The top line increased from $3.84 billion in the prior-year quarter.

The lower-than-expected quarterly earnings of KMI were primarily due to a planned turnaround at its condensate processing facility and increased operating costs. However, strong operational performance and higher contributions from its Natural Gas Pipelines, CO2 and Terminals segments helped offset the impact. For more details, visit our article: Kinder Morgan Q1 Earnings Miss Estimates, Revenues Increase Y/Y.

Should Investors Bet on ENB?

In its first quarter transcript, ENB mentioned that the Orange Grove Solar facility has officially started operating on time and budget. This demonstrates that Enbridge can execute capital-efficient renewable projects. As data centers are increasingly demanding cleaner energy, this creates more opportunities for ENB to build and invest more in renewable projects, securing stable and long-term cash flows.

The positive developments have aided ENB to outpace the composite stocks belonging to the industry, as reflected in the six-month price chart. Over the period, the stock has gained 7.4%, surpassing the industry’s 4.9% jump.

Six-Month Price Chart

Image Source: Zacks Investment Research

However, there are some uncertainties engulfing the stock. In the United States, changes to environmental approval processes, called NEPA reforms, are still being worked out, and it’s not clear how fast or easily future approvals will be. In Canada, policies like the carbon tax and bans on oil tankers along the West Coast could slow or block new projects. While Enbridge’s leaders sound hopeful, these issues depend on politicians making decisions, which can take time or shift depending on elections. Because of this, there’s a risk that new projects may be delayed or become more expensive, which could slow down the company’s growth plans.

Also, the stock seems overvalued. ENB is trading at a 15.09x trailing 12-month Enterprise Value to Earnings Before Interest, Taxes, Depreciation and Amortization (EV/EBITDA), which is at a premium compared with the broader industry average of 13.79x.

Image Source: Zacks Investment Research

Thus, it might not be the right time to bet on the stock and wait for the uncertainties to subside. Those who have already invested may retain the stock, which carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.