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Enbridge (ENB) Down 4.2% Since Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Enbridge Inc (ENB - Free Report) . Shares have lost about 4.2% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Second-Quarter 2017 Results

Enbridge reported lower-than-expected results in second-quarter 2017 results owing to higher operating expenses and accelerated maintenance works at the upstream operations of customers. Lower contribution from the Energy Services business segment also led to the discouraging numbers. The negatives were partially offset by higher throughput volumes from the Canadian Mainline and Lakehead System.

Earnings per share came in at U.S.$0.30, lagging the Zacks Consensus Estimate of U.S.$0.35. The bottom line also declined from the year-ago quarter’s U.S.$0.38.

Total revenue in the quarter rose 35% year over year to US$8,261 million. The top line, however, failed to beat the Zacks Consensus Estimate of US$8,810 million.

Segment Analysis

Liquids Pipelines: Adjusted operating income at this segment was C$938 million, up almost 2% from C$922 million a year ago. Higher throughput volume from the Canadian Mainline and Lakehead System led to the improvement. This was offset partially by accelerated maintenance work at the upstream operations of customers.

Gas Pipelines and Processing: The segment reported earnings of C$667 million, skyrocketing from C$90 million recorded in second-quarter 2016. Significantly high volumes of processed natural gas contributed to the growth.

Gas Distribution: This business unit reported profit of C$153 million, up almost 110% from C$73 million recorded in the April–June 2016 quarter. Increased demand supported the improvement.

Green Power and Transmission: This segment saw earnings of C$51 million, more than 24% higher than C$40 million recorded in the prior-year quarter.

Energy Services: The segment reported loss of C$3 million, against a profit of C$47 million reported during second-quarter 2016.

Total Expenses

During the second quarter, the company reported total expenses of C$9,432 million, up 33% from C$7,145 million recorded in the April-to-June quarter of 2016.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend in  fresh estimates. There has been one revision higher for the current quarter compared to two lower.

Enbridge Inc Price and Consensus

VGM Scores

At this time, Enbridge's stock has a subpar Growth Score of D, however its Momentum is doing a lot better with an A. The stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for momentum investors based on our style scores.

Outlook

Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.




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