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Enbridge (ENB) Down 0.5% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Enbridge (ENB - Free Report) . Shares have lost about 0.5% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Enbridge due for a breakout? 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.

Enbridge's Earnings Beat Estimates in Q2, Decline Y/Y

Enbridge reported second-quarter 2019 earnings per share of 50 cents, which beat the Zacks Consensus Estimate of 42 cents but declined from the year-ago period’s 62 cents.

Total revenues in the quarter increased 24% year over year to $9,915 million.

The better-than-expected earnings were supported by higher throughput in the Mainline System and increased volumes of distributed gas. The positives were partially offset by lower contributions from Canadian Gas Transmission activities and the US Midstream business.

Distributable Cash Flow (DCF)

Through second-quarter 2019, the company raised its DCF to C$2,310 million from C$1,858 million a year ago.

Segment Analysis

Enbridge conducts business through five segments: Liquids Pipelines, Gas Transmission and Midstream, Gas Distribution, Renewable Power Generation and Transmission, and Energy Services. The midstream energy provider stated that the Green Power and Transmission business unit has been renamed as Renewable Power Generation and Transmission. Notably, the new segment came into being on Jan 1, 2019.

Liquids Pipelines: Adjusted earnings before interest, income taxes and depreciation and amortization (EBITDA) at the segment amounted to C$1,766 million, up from C$1,629 million in the year-earlier quarter. Higher throughput in the Mainline System, and increased volumes from the Gulf Coast and Mid-Continent System primarily resulted in the upside.

Gas Transmission and Midstream: Adjusted EBITDA at the segment totaled C$936 million, down from C$1,032 million in second-quarter 2018. Lower contributions from Canadian Gas Transmission activities and the US Midstream business — owing to divestments — caused this downside. Moreover, higher planned integrity expenditure in US Gas Transmission affected the segment.

Gas Distribution: The unit generated adjusted profit of C$390 million compared with C$369 million in the June quarter of 2018. Higher distribution rates and expanding customer base, attributed to colder weather, aided the segment in the second quarter.

 

Renewable Power Generation and Transmission: This segment recorded adjusted earnings of C$100 million, down from C$125 million in the prior-year quarter. The wind farms in the United States, which had limited resources, mainly caused the decline. Weaker solar radiance at Enbridge's solar facilities also affected the segment.

Energy Services: This segment generated adjusted income of C$88 million, up from C$62 million in second-quarter 2018 on the back of higher transportation margins.

Balance Sheet

At the end of second-quarter 2019, the company reported total debt of C$65,577 million, and cash and cash equivalents of C$708 million.

Guidance

The company continues to expect 2019 DCF in the band of $4.30-$4.60 per share.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

Currently, Enbridge has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. 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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