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Why Is Enbridge (ENB) Up 4.9% Since Last Earnings Report?

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It has been about a month since the last earnings report for Enbridge (ENB - Free Report) . Shares have added about 4.9% 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 Rise

Enbridge reported third-quarter 2019 earnings per share of 42 cents, meeting the Zacks Consensus Estimate and flat year over year.

Total revenues in the quarter increased 1.2% year over year to $8,785 million.

The third-quarter results were primarily supported by higher throughput in the Mainline System. This was partially offset by lower contributions from the Canada Gas Transmission business.

Distributable Cash Flow (DCF)

In third-quarter 2019, the company raised DCF to C$2,105 million from C$1,585 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.

Liquids Pipelines: The segment’s adjusted earnings before interest, income taxes, and depreciation and amortization (EBITDA) amounted to C$1,826 million, up from C$1,633 million in the year-earlier quarter. Higher throughput in the Mainline System, and increased contributions from the Gulf Coast and Mid-Continent System primarily resulted in the upside.

Gas Transmission and Midstream: The segment’s adjusted EBITDA totaled C$944 million, down from C$1,038 million in third-quarter 2018. Lower contributions from the Canada gas transmission business caused the downside.

Gas Distribution: The unit generated adjusted profit of C$255 million compared with C$259 million in the prior-year quarter. Lower distributed natural gas volume resulted in the underperformance.

Renewable Power Generation and Transmission: The segment recorded adjusted earnings of C$82 million, up from C$73 million in the prior-year quarter. Wind farms in North America, which had stronger resources, mainly caused the improvement.

Energy Services: The segment generated adjusted income of C$27 million, up from C$10 million in third-quarter 2018 on higher transportation margins.

Balance Sheet

At the end of third-quarter 2019, the company reported total debt of C$66,684 million, and cash and cash equivalents of C$815 million.  Its debt-to-capitalization ratio was 49%.

Guidance

For 2019, the energy infrastructure company continues to expect DCF of $4.30-$4.60 per share. Notably, it expects annual DCF to surpass the mid-point of the projected band.

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month.

VGM Scores

At this time, Enbridge has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, 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

Enbridge has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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