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Is Enbridge's Business Vulnerable to Volatility in Oil & Gas Prices?
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Key Takeaways
Enbridge transports 30% of North American crude and 20% of U.S. natural gas consumption.
ENB's long-term contracts shield it from oil and gas price volatility, ensuring stable cash flows.
Shares of ENB rose 27.8% in a year, outpacing the industrys 24.5% growth, with EV/EBITDA above peers.
Enbridge Inc. (ENB - Free Report) is a leading midstream energy company transporting crude oil and natural gas. Unlike exploration and production companies and refining or downstream players, Enbridge's business model is not highly exposed to volatility in oil and natural gas prices. Let’s analyze the company’s business model.
The company stated that its pipeline network, which transports crude oil and liquids, is the longest in North America, spanning roughly 18,085 miles. Enbridge claimed that its pipeline network is responsible for transporting a significant 30% of the total North American crude oil production. Moreover, Enbridge’s massive midstream assets are involved in transporting a considerable 20% of total natural gas consumed by the people of the United States.
Since the midstream assets are usually booked by shippers for transporting crude oil and natural gas for a long term, the company’s overall operations are not significantly exposed to the extreme volatility of oil and gas prices. Thus, Enbridge usually generates stable cash flows for shareholders.
WMB & KMI Also Have Stable Business Models
Like ENB, Williams (WMB - Free Report) , and Kinder Morgan Inc. (KMI - Free Report) also have a stable business model.
As a midstream energy major, Williams' pipeline network, which spans 33,000 miles, transports about 33% of the total natural gas consumed domestically.
Kinder Morgan is a major midstream player in North America as well. KMI also generated stable fee-based revenues from its vast oil and gas transportation network.
ENB’s Price Performance, Valuation & Estimates
Shares of ENB have gained 27.8% over the past year compared with the 24.5% improvement of the industry.
Image Source: Zacks Investment Research
From a valuation standpoint, ENB trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 15.51X. This is above the broader industry average of 13.91X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for ENB’s 2025 earnings hasn’t seen any revisions over the past seven days.
Image: Bigstock
Is Enbridge's Business Vulnerable to Volatility in Oil & Gas Prices?
Key Takeaways
Enbridge Inc. (ENB - Free Report) is a leading midstream energy company transporting crude oil and natural gas. Unlike exploration and production companies and refining or downstream players, Enbridge's business model is not highly exposed to volatility in oil and natural gas prices. Let’s analyze the company’s business model.
The company stated that its pipeline network, which transports crude oil and liquids, is the longest in North America, spanning roughly 18,085 miles. Enbridge claimed that its pipeline network is responsible for transporting a significant 30% of the total North American crude oil production. Moreover, Enbridge’s massive midstream assets are involved in transporting a considerable 20% of total natural gas consumed by the people of the United States.
Since the midstream assets are usually booked by shippers for transporting crude oil and natural gas for a long term, the company’s overall operations are not significantly exposed to the extreme volatility of oil and gas prices. Thus, Enbridge usually generates stable cash flows for shareholders.
WMB & KMI Also Have Stable Business Models
Like ENB, Williams (WMB - Free Report) , and Kinder Morgan Inc. (KMI - Free Report) also have a stable business model.
As a midstream energy major, Williams' pipeline network, which spans 33,000 miles, transports about 33% of the total natural gas consumed domestically.
Kinder Morgan is a major midstream player in North America as well. KMI also generated stable fee-based revenues from its vast oil and gas transportation network.
ENB’s Price Performance, Valuation & Estimates
Shares of ENB have gained 27.8% over the past year compared with the 24.5% improvement of the industry.
From a valuation standpoint, ENB trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 15.51X. This is above the broader industry average of 13.91X.
The Zacks Consensus Estimate for ENB’s 2025 earnings hasn’t seen any revisions over the past seven days.
Enbridge stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.