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Enbridge's Take-or-Pay Contracts Support Stable Earnings Growth
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Key Takeaways
Enbridge's business is highly stable, with 98% of EBITDA supported by long-term take-or-pay contracts.
ENB's U.S. gas utility acquisitions add predictable earnings through regulated rates and long-term agreements.
Enbridge reached positive rate settlements in North Carolina and Utah, supporting future earnings growth.
Enbridge Inc. (ENB - Free Report) is a leading Canada-based midstream company with an extensive crude oil, liquids and gas transportation pipeline network across North America. The midstream company’s business is highly stable, owing to its contractual nature. In fact, 98% of its EBITDA is supported by long-term “take-or-pay” contracts, which shield it from commodity price volatility.
Furthermore, Enbridge’s acquisition of U.S. gas utilities is contributing positively to its EBITDA. The utility business adds another layer of stability to its operations, resulting in predictable earnings supported by regulated rates and long-term agreements. In the third quarter, the company announced that it had reached positive rate settlements for Enbridge Gas North Carolina and Enbridge Gas Utah, effective from November 2025 and January 2026, respectively. This is expected to positively impact ENB’s earnings. Moreover, the growth in data center investments is opening more opportunities for its gas utility business than originally anticipated.
Enbridge’s earnings remain highly stable, mainly due to the “take-or-pay” contracts with its customer base, a significant part of which comprises investment-grade customers, further reducing risks for ENB. The company is well-positioned to deliver predictable earnings and sustainable EBITDA growth with minimal exposure to commodity price volatility.
KMI & WMB Have Stable Business Models
Kinder Morgan Inc. (KMI - Free Report) is a leading midstream energy company that operates the biggest natural-gas pipeline system in the United States. It has about 58,500 miles of major pipelines, 7,500 miles of gathering lines and over 700 bcf of gas storage.
The Williams Companies, Inc. (WMB - Free Report) is another leading player in the midstream energy sector, which operates a widespread pipeline system of more than 33,000 miles, including the Transco and Northwest Pipeline systems. These pipeline systems are among the largest natural gas transportation networks in the United States and are anticipated to benefit from the rising natural gas demand.
Both companies generate stable fee-based earnings, resulting in stable cash flows.
ENB’s Price Performance, Valuation & Estimates
Shares of ENB have jumped 5% over the past year compared with the 3.8% improvement of the composite stocks belonging to 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 14.89X. This is above the broader industry average of 13.81X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for ENB’s 2025 earnings hasn’t seen any revisions over the past 30 days.
Image: Bigstock
Enbridge's Take-or-Pay Contracts Support Stable Earnings Growth
Key Takeaways
Enbridge Inc. (ENB - Free Report) is a leading Canada-based midstream company with an extensive crude oil, liquids and gas transportation pipeline network across North America. The midstream company’s business is highly stable, owing to its contractual nature. In fact, 98% of its EBITDA is supported by long-term “take-or-pay” contracts, which shield it from commodity price volatility.
Furthermore, Enbridge’s acquisition of U.S. gas utilities is contributing positively to its EBITDA. The utility business adds another layer of stability to its operations, resulting in predictable earnings supported by regulated rates and long-term agreements. In the third quarter, the company announced that it had reached positive rate settlements for Enbridge Gas North Carolina and Enbridge Gas Utah, effective from November 2025 and January 2026, respectively. This is expected to positively impact ENB’s earnings. Moreover, the growth in data center investments is opening more opportunities for its gas utility business than originally anticipated.
Enbridge’s earnings remain highly stable, mainly due to the “take-or-pay” contracts with its customer base, a significant part of which comprises investment-grade customers, further reducing risks for ENB. The company is well-positioned to deliver predictable earnings and sustainable EBITDA growth with minimal exposure to commodity price volatility.
KMI & WMB Have Stable Business Models
Kinder Morgan Inc. (KMI - Free Report) is a leading midstream energy company that operates the biggest natural-gas pipeline system in the United States. It has about 58,500 miles of major pipelines, 7,500 miles of gathering lines and over 700 bcf of gas storage.
The Williams Companies, Inc. (WMB - Free Report) is another leading player in the midstream energy sector, which operates a widespread pipeline system of more than 33,000 miles, including the Transco and Northwest Pipeline systems. These pipeline systems are among the largest natural gas transportation networks in the United States and are anticipated to benefit from the rising natural gas demand.
Both companies generate stable fee-based earnings, resulting in stable cash flows.
ENB’s Price Performance, Valuation & Estimates
Shares of ENB have jumped 5% over the past year compared with the 3.8% improvement of the composite stocks belonging to the industry.
From a valuation standpoint, ENB trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 14.89X. This is above the broader industry average of 13.81X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for ENB’s 2025 earnings hasn’t seen any revisions over the past 30 days.
Image Source: Zacks Investment Research
ENB, KMI and WMB currently carry a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.