Estimates have been rising for
) following the company's solid fourth quarter results. It is a
Zacks #2 Rank (Buy).
Enbridge offers investors both strong earnings growth and solid
income. Management believes that the company can achieve average
annual EPS growth of 10% through 2015. On top of this, the company
pays a dividend that yields a solid 2.9%.
Enbridge Inc. operates one of the largest crude oil and liquids
pipeline system in the world and is a leader in natural gas
It is headquartered in Calgary, Alberta, Canada and has a market
cap of $29 billion.
Fourth Quarter Results
Adjusted earnings per share came in at 37 cents, a solid 16%
increase over the same quarter in 2010. It was 2 cents shy of the
Zacks Consensus Estimate, however.
Earnings growth was driven in large part by a 63% increase in
adjusted earnings in the Sponsored Investments segment and a 32%
increase in the Gas Pipelines, Processing and Energy Services
division. Earnings in the Liquids Pipelines segment grew by 8%
while Gas Distribution declined 15%.
Meanwhile, operating cash flow increased 21% year-over-year to $452
Despite the miss, analysts revised their estimates
for both 2012 and 2013, sending the stock to a Zacks #2 Rank (Buy).
As you can see below, consensus estimates have been rising steadily
over the last several months:
The Zacks Consensus Estimate for 2012 is now $1.65, representing
26% growth over 2011, and within management's guidance of
$1.58-$1.74. The 2013 consensus estimate is currently $1.89,
corresponding with 14% EPS growth.
In the Q4 press release, CEO Patrick Daniel stated that the company
remains confident that it "can achieve an average annual growth
rate in adjusted earnings per share of 10% through 2015, based on
conservative assumptions for mainline throughput and future growth
In addition to strong earnings growth, the company pays a dividend
that yields a solid 2.9%. Enbridge increased its payout by 15% in
December and has raised its dividend by an average of 13% per year
over the last five years.
Shares of ENB trade at 23x forward earnings, a premium to the
industry median of 20x, but certainly not unreasonable given the
company's above-average growth rate.
The Bottom Line
With rising earnings estimates, strong earnings growth, a solid
2.9% dividend yield and reasonable valuation, Enbridge offers
investors a lot to like.
Todd Bunton is the Growth & Income Stock Strategist for
and Co-Editor of the
Reitmeister Value Investor
ENBRIDGE INC (
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