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Here's Why Hold Strategy is Apt for Enbridge (ENB) Stock Now
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Enbridge Inc. (ENB - Free Report) has witnessed upward estimate revisions for 2024 and 2025 earnings in the past 30 days.
The Zacks Consensus Estimate for the company’s 2024 and 2025 earnings per share is pegged at $2.12 and $2.22, respectively.
Factors Favoring the Stock
Enbridge operates the world's most extensive and advanced crude and liquids pipeline system, spanning 17,809 miles, and is known for its low-risk business model. In Canada, it is the largest natural gas distributor, with transportation operations forming a significant part of its earnings. These operations are supported by long-term contracts, with Enbridge handling approximately 30% of the crude oil produced in North America. This extensive contractual base is expected to provide stable future cash flows.
In 2023, Enbridge reported a strong financial performance with a 6% year-over-year increase in adjusted EBITDA to $16.5 billion and a 1% increase in distributable cash flow per share to $5.48. The company's debt-to-EBITDA ratio stood at 4.1X, well within the target of 4.5X to 5X, indicating robust financial health and efficient operations.
Enbridge also marked its 29th consecutive year of dividend increases, announcing a 3.1% rise in its quarterly dividend to 91.50 cents per share ($3.66 annually). This consistent growth in dividends, supported by strong cash flow, is a positive indicator for income-focused investors.
Strategically, ENB has expanded its asset portfolio with a $14-billion bid to acquire three utilities, securing more than 75% of the funding needed. This acquisition would significantly enhance its gas distribution business, positioning it as North America's largest natural gas provider. Enbridge has completed its acquisition of The East Ohio Gas Company, strengthening its presence in the U.S. utility sector.
The company also reported high utilization of its pipeline systems, such as the Mainline and Gray Oak, reflecting efficient asset management and potential for revenue growth. With an expected 8% increase in drilling activities by Canadian oil and gas producers in 2024, pipeline utilization is likely to increase.
Enbridge has committed to $10 billion in new projects, including investments in renewable energy, and has put $2 billion of secured organic growth into service. These initiatives highlight ENB's forward-thinking approach and its commitment to long-term value creation.
Risks
The company concluded 2023 with a substantial long-term debt totaling C$81.2 billion and a relatively modest cash reserve of C$5.9 billion. Additionally, the current portion of the long-term debt amounted to C$6.1 billion. These figures highlight potential vulnerabilities in the company's balance sheet, which may raise concerns regarding its financial health and its capacity to effectively handle its debt obligations.
Global Partners (GLP - Free Report) is a leading operator of gasoline stations and convenience stores. Over the past 60 days, GLP has witnessed upward earnings estimate revisions for 2024 and 2025, respectively.
The Zacks Consensus Estimate for Global Partners’ 2024 and 2025 EPS is pegged at $3.90 and $4.47, respectively. GLP currently has a Value Score of A.
SM Energy Company (SM - Free Report) is an independent oil and gas company engaged in the exploration, exploitation, development, acquisition and production of oil and gas in North America. SM currently has a Momentum Score of B and a Value Score of B.
The Zacks Consensus Estimate for SM’s 2024 and 2025 EPS is pegged at $6.15 and $6.73, respectively. The stock has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.
Enerplus Corporation is an independent oil and gas production company with resources across Western Canada and the United States. ERF currently has a Momentum Score of B.
Enerplus has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days. The consensus estimate for ERF’s 2024 and 2025 earnings per share is pegged at $2.06 and $2.36, respectively.
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Here's Why Hold Strategy is Apt for Enbridge (ENB) Stock Now
Enbridge Inc. (ENB - Free Report) has witnessed upward estimate revisions for 2024 and 2025 earnings in the past 30 days.
The Zacks Consensus Estimate for the company’s 2024 and 2025 earnings per share is pegged at $2.12 and $2.22, respectively.
Factors Favoring the Stock
Enbridge operates the world's most extensive and advanced crude and liquids pipeline system, spanning 17,809 miles, and is known for its low-risk business model. In Canada, it is the largest natural gas distributor, with transportation operations forming a significant part of its earnings. These operations are supported by long-term contracts, with Enbridge handling approximately 30% of the crude oil produced in North America. This extensive contractual base is expected to provide stable future cash flows.
In 2023, Enbridge reported a strong financial performance with a 6% year-over-year increase in adjusted EBITDA to $16.5 billion and a 1% increase in distributable cash flow per share to $5.48. The company's debt-to-EBITDA ratio stood at 4.1X, well within the target of 4.5X to 5X, indicating robust financial health and efficient operations.
Enbridge also marked its 29th consecutive year of dividend increases, announcing a 3.1% rise in its quarterly dividend to 91.50 cents per share ($3.66 annually). This consistent growth in dividends, supported by strong cash flow, is a positive indicator for income-focused investors.
Strategically, ENB has expanded its asset portfolio with a $14-billion bid to acquire three utilities, securing more than 75% of the funding needed. This acquisition would significantly enhance its gas distribution business, positioning it as North America's largest natural gas provider. Enbridge has completed its acquisition of The East Ohio Gas Company, strengthening its presence in the U.S. utility sector.
The company also reported high utilization of its pipeline systems, such as the Mainline and Gray Oak, reflecting efficient asset management and potential for revenue growth. With an expected 8% increase in drilling activities by Canadian oil and gas producers in 2024, pipeline utilization is likely to increase.
Enbridge has committed to $10 billion in new projects, including investments in renewable energy, and has put $2 billion of secured organic growth into service. These initiatives highlight ENB's forward-thinking approach and its commitment to long-term value creation.
Risks
The company concluded 2023 with a substantial long-term debt totaling C$81.2 billion and a relatively modest cash reserve of C$5.9 billion. Additionally, the current portion of the long-term debt amounted to C$6.1 billion. These figures highlight potential vulnerabilities in the company's balance sheet, which may raise concerns regarding its financial health and its capacity to effectively handle its debt obligations.
Zacks Rank & Stocks to Consider
Currently, ENB carries a Zacks Rank #3 (Hold).
Investors interested in the energy sector might look at the following companies, each presently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Global Partners (GLP - Free Report) is a leading operator of gasoline stations and convenience stores. Over the past 60 days, GLP has witnessed upward earnings estimate revisions for 2024 and 2025, respectively.
The Zacks Consensus Estimate for Global Partners’ 2024 and 2025 EPS is pegged at $3.90 and $4.47, respectively. GLP currently has a Value Score of A.
SM Energy Company (SM - Free Report) is an independent oil and gas company engaged in the exploration, exploitation, development, acquisition and production of oil and gas in North America. SM currently has a Momentum Score of B and a Value Score of B.
The Zacks Consensus Estimate for SM’s 2024 and 2025 EPS is pegged at $6.15 and $6.73, respectively. The stock has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.
Enerplus Corporation is an independent oil and gas production company with resources across Western Canada and the United States. ERF currently has a Momentum Score of B.
Enerplus has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days. The consensus estimate for ERF’s 2024 and 2025 earnings per share is pegged at $2.06 and $2.36, respectively.