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Enbridge (ENB) Up 3.4% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Enbridge (ENB - Free Report) . Shares have added about 3.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Enbridge due for a pullback? Before we dive into how investors and analysts have reacted as 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.

Enbridge Q3 Earnings Meet Estimates, Revenues Fall Y/Y

Enbridge Inc. reported third-quarter 2018 earnings per share of 42 cents, in line with the Zacks Consensus Estimate. The bottom line improved from the year-ago quarter’s 39 cents.

Total revenues, however, fell to $8,681 million from $9,227 million a year ago.

Higher throughput volumes and key developments, that have recently started operating, supported the third quarter results. The surge in expenses and operational complications in some wind units partially negated the positives.  

Distributable Cash Flow (DCF)

Through the July-to-September quarter of 2018, the company managed to raise its DCF from C$1,334 million a year ago to C$1,585 million.

Segment Analysis

Liquids Pipelines: Adjusted operating income at this segment was C$1,633 million, up almost 21% from C$1,353 million a year ago. Higher throughput volumes from the Canadian Mainline and Lakehead System led to the improvement.  

Gas Transmission and Midstream: The segment reported earnings of C$1,038 million, up from C$941 million in third-quarter 2017. New developments that were online either last year or through the first nine months of 2018 aided the segment.

Gas Distribution: This business unit reported profit of C$259 million, up more than 8% from C$238 million in the July-September 2017 quarter. Improved distribution charges and an expanded customer base attributed to the growth.

Green Power and Transmission: This segment saw earnings of C$73 million, higher than C$68 million in the prior-year quarter. The increase in wind resources helped the segment. However, a drop in production from the company’s prior expectations, following operational complications in certain wind units, partially offset the positives.

Energy Services: The segment reported earnings of C$10 million against a loss of C$24 million in third-quarter 2017.  

Total Expenses

During the third quarter, the company reported total operating expenses of C$10,491 million, up 35.6% from C$7,737 million in the July-September quarter of 2017.

Dividend Reinvestment Plan Suspension

The company has agreed to stop its dividend reinvestment plan, reflecting its strengthening financials. The stockholders are expected to start getting dividends only in the form of cash effective Dec 1.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, Enbridge has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

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

Outlook

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




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