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Enbridge Energy (EEP) Up 6.9% Since Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Enbridge Energy Partners, L.P. (EEP - Free Report) . Shares have added about 6.9% in that time frame.

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

First-Quarter 2018 Results

Enbridge Energy reported first-quarter 2018 adjusted earnings of 25 cents per unit, which surpassed the Zacks Consensus Estimate of 20 cents. The bottom line improved from the year-earlier quarter’s level of 16 cents. The uptick was mainly driven by higher deliveries on the Lakehead pipeline system, North Dakota system and Mid Continent system.

Total revenues in the quarter declined to $592 million from the year-ago quarter’s tally of $1,178.7 million. The downside was led by loss in the Other segment.

FERC’s decision restricts entities organized as MLPs from recovering an income tax allowance in their cost of service rates impacted the partnership’s distributable cash flow by $125 million.

Distribution

Enbridge Energy announced a quarterly cash distribution to 35 cents per unit or $1.40 on an annualized basis. The distribution will be paid on May 15, to unitholders on record at the close of business as of May 8.

Segment Performance

The partnership manages its business under one head — Liquids. All other businesses are reported under the head — Other.

Liquids: Adjusted operating income in the Liquids segment increased to $432 million from $396 million in the first quarter of 2018. The upside was driven by higher average rates and strong transportation volumes in the Lakehead pipeline system, North Dakota system and Mid Continent system.

Other: The unit reported operating loss of $2 million against an operating income of $18 million in the year-ago quarter.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter.

VGM Scores

At this time, EEP has a nice Growth Score of B, though it is lagging a lot on the momentum front with a D. The stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

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

Our style scores indicate that the stock is more suitable for value investors than growth investors.

Outlook

Estimates have been trending upward for the stock and the magnitude of this revision looks promising. Notably, EEP has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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