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Enbridge (ENB) Beats Earnings and Revenue Estimates in Q1

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Enbridge Inc. (ENB - Free Report) reported first-quarter 2020 earnings per share of 62 cents, beating the Zacks Consensus Estimate of 51 cents and increasing from the year-ago quarter’s profit of 61 cents. The outperformances were owing to higher contributions from Mainline System. This was partly offset by lower contributions from gas distribution & storage business.

Total revenues in the quarter declined 7.4% year over year to $8,957 million. However, the top line beat the Zacks Consensus Estimate of $8,517 million.

Enbridge Inc Price, Consensus and EPS Surprise

 

Enbridge Inc Price, Consensus and EPS Surprise

Enbridge Inc price-consensus-eps-surprise-chart | Enbridge Inc Quote

Distributable Cash Flow (DCF)

In first-quarter 2020, the company reported DCF of C$2,706 million compared with C$2,758 million a year ago.

Segment Analysis

Enbridge conducts business through five segments — Liquids Pipelines, Gas Transmission and Midstream, Gas Distribution and Storage, Renewable Power Generation and Energy Services.

Liquids Pipelines: The segment’s adjusted earnings before interest, income taxes, and depreciation and amortization (EBITDA) amounted to C$1,919 million, up from C$1,729 million in the year-earlier quarter. Higher contributions from the Mainline System and Gulf Coast & Mid-Continent System primarily led to the outperformance.

Gas Transmission and Midstream: The segment’s adjusted earnings totaled C$1,097 million, up from C$1,040 million in first-quarter 2019. Higher contributions from the US Gas Transmission business drove the upside.

Gas Distribution and Storage: The unit generated profit of C$609 million compared with C$693 million in the prior-year quarter. Warmer weather conditions hurt the segment’s profit.

Renewable Power Generation: The segment recorded earnings of C$118 million, down from C$123 million in the prior-year quarter. A decline in wind resources at Canadian wind facilities primarily led to the segment’s underperformance.

Energy Services: The segment generated a loss of C$13 million against a profit of only C$176 million in first-quarter 2019.

Balance Sheet

At the end of first-quarter 2020, the company reported total debt of C$68,627 million, and cash and cash equivalents of C$799 million.  Its debt-to-capitalization ratio was almost 0.50.

Guidance

For 2020, the company has reaffirmed its guidance for DCF per share at the band of C$4.50 to C$4.80. Notably, in the wake of coronavirus pandemic, Enbridge decided on the deferral of roughly C$1 billion of planned secured growth capital budget for 2020. Also, the disruption in energy business owing to the virus outbreak led the midstream service provider to slash operating expense expectation for 2020 by C$300 million.

The company added that the pandemic, which is denting global energy demand, resulted in a throughput cut of 400,000 barrels per day (Bbl/D) from the Mainline pipeline system in April. The firm expects throughput to reduce by an average of 400,000 to 600,000 Bbl/D in the June quarter of 2020.

Zacks Rank & Stocks to Consider

Enbridge currently carries a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked stocks in the energy sector are Murphy USA Inc (MUSA - Free Report) , Key Energy Services, Inc. (KEGX - Free Report) and CNX Resources Corporation (CNX - Free Report) . While Key Energy and Murphy sport a Zacks Rank #1 (Strong Buy), CNX Resources carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Murphy USA is likely to see earnings growth of 7% in the next five years.

Key Energy is expected to witness bottom-line growth of 97.2% in 2020.

CNX Resources has witnessed upward estimate revisions for 2020 bottom line in the past 60 days.

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