Enbridge Inc ENB is set to report first-quarter 2025 results on May 9, before the opening bell.
The Zacks Consensus Estimate for first-quarter earnings is pegged at 68 cents per share, almost in line with the year-ago reported number. Four analysts revised the estimates upward in the past 30 days. The Zacks Consensus Estimate for quarterly revenues is currently pegged at $9.5 billion, suggesting an improvement of 16.4% from the year-ago actuals.
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ENB beat the consensus estimate for earnings in two of the trailing four quarters, met once and missed the same once, with the average surprise being 2.6%.
Q1 Earnings Whispers
Our proven model doesn't predict an earnings beat for ENB this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an earnings beat. That is not the case here.
The leading midstream energy player has an Earnings ESP of -1.38%. EPD currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Factors Shaping Q1 Results
Enbridge is a leading midstream energy player in North America, operating an extensive crude oil and liquids transportation network spanning 18,085 miles — the world's longest and most complex system. ENB’s gas transportation pipeline network spans 71,308 miles, covering 31 U.S. states, four Canadian provinces and offshore areas in the Gulf of Mexico.
Notably, Enbridge’s pipelines transport 20% of the total natural gas consumed in the United States. The company is likely to have generated stable, fee-based revenues from these midstream assets in the quarter, as they are booked by shippers on a long-term basis, minimizing commodity price volatility and volume risks.
Price Performance & Valuation
ENB's stock has gained 33.9% over the past year compared with a 35.6% improvement of the industry’s composite stocks.
One-Year Price Chart
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Although the stock has underperformed the composite stocks, it appears relatively overvalued. The company's current trailing 12-month enterprise value/earnings before interest, tax, depreciation and amortization (EV/EBITDA) ratio is 15.75, which is trading at a premium compared to the industry average of 14.08 and is higher than other major midstream companies such as Kinder Morgan Inc. KMI and Enterprise Products Partners LP EPD, which are trading at 14.10x and 9.85x EV/EBITDA, respectively.
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ENB’s Investment Thesis
The midstream energy major secured incremental cash flows from its C$29 billion backlog of secured capital projects, which include liquids pipelines, gas transmission, gas distribution and storage, and renewables. The maximum in-service date is 2029. Considering its substantial backlog of midstream growth projects, it is expected that Enbridge will continue rewarding shareholders with attractive dividend payments.
However, ENB operates under significant regulatory scrutiny due to its extensive fossil fuel infrastructure, which faces increasing environmental regulations???. Also, Enbridge, a major player in the midstream energy sector, carries a high level of debt, with exposure to debt capital considerably higher than the industry average. This situation presents considerable financial risks.
How the Midstream Energy Majors EPD, KMI Fared in Q1
Both Kinder Morgan and Enterprise Products’ first-quarter 2025 earnings missed the Zacks Consensus Estimate.
Notably, Kinder Morgan reported adjusted earnings per share of 34 cents, which missed the Zacks Consensus Estimate of 35 cents. The bottom line remained flat year over year. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Total quarterly revenues of $4.24 billion beat the Zacks Consensus Estimate of $4.14 billion. The top line increased from $3.84 billion in the prior-year quarter.
The lower-than-expected quarterly earnings were primarily due a planned turnaround at its condensate processing facility and increased operating costs. However, strong operational performance and higher contributions from its Natural Gas Pipelines, CO2 and Terminals segments helped offset the impact. For more details, read our article: Kinder Morgan Q1 Earnings Miss Estimates, Revenues Increase Y/Y.
On the other hand, Enterprise Products Partners’ adjusted earnings per limited partner unit of 64 cents missed the Zacks Consensus Estimate of 69 cents. The bottom line also declined from the year-ago level of 66 cents.
However, total quarterly revenues of $15.4 billion beat the Zacks Consensus Estimate of $14.1 billion. The top line improved from $14.8 billion in the prior-year quarter.
The weak quarterly earnings can be primarily attributed to weak petrochemical margins and lower crude oil marine terminal volumes despite record natural gas processing and pipeline volumes. For more details, read our article: Enterprise Q1 Earnings Miss Estimates, Revenues Increase Y/Y.
Last Word
While ENB offers promising long-term potential with incremental fee-based revenues, investors may benefit from waiting for a better entry point due to its current overvaluation. Those already holding the stock are advised to maintain their position.
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