It has been about a month since the las t earnings report for Enbridge (ENB). Shares have added about 2.3% in that time frame, underperforming 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 recen t earnings report in order to get a better handle on the important catalysts.
Enbridge Q4 Earnings Beat Estimates, Increase Y/Y
Enbridge delivered fourth-quarter 2018 earnings per share (EPS) of 49 cents, which beat the Zacks Consensus Estimate of 45 cents and improved from the year-ago quarter's figure of 48 cents. Higher liquid delivery volumes from the Canadian Mainline and Wood Buffalo Extension Pipeline as well as contributions from new projects drove the quarterly numbers.
Total revenues in the quarter fell 13.8% year over year to $8,749 million. The sale of assets, particularly the Canadian natural gas gathering and processing business as well as the US Midstream assets, affected the top-line.
Distributable Cash Flow (DCF)
Through the fourth quarter of 2018, the company managed to raise its DCF to C$1,863 million from C$1,741 million in the year-ago quarter.
Liquids Pipelines: Adjusted operating income in the segment amounted to C$1,728 million, up 16.6% from C$1,482 million in the year-ago quarter. Higher delivery of liquids from the Canadian Mainline and Wood Buffalo Extension Pipeline led to the improvement.
Gas Transmission and Midstream: Earnings in the segment amounted to C$952 million, down from C$1,020 million in fourth-quarter 2017. The sale of assets particularly the Canadian natural gas gathering and processing business as well as the US Midstream assets caused the downside.
Gas Distribution: The unit generated profit of C$452 million compared with C$450 million in the October-December 2017 quarter. Higher contributions from expansion projects commissioned as well as distribution charges drove the upside.
Green Power and Transmission: This segment delivered earnings of C$98 million, which fell from C$109 million in the prior-year quarter.
Energy Services: This segment generated income of C$73 million, against a loss of C$21 million in fourth-quarter 2017.
The company expects to initiate online secured growth projects worth $22 billion through 2020. Enbridge raised dividend by 10% for 2019 and expects annual dividend to increase by another 10% in 2020. Considering the growth projects backlog, Enbridge expects to achieve DCF growth in the range of 5-7% beyond 2020.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
At this time, Enbridge has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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.
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Enbridge has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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