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Enbridge (ENB) Q2 Earnings In Line, Revenues Miss Estimates

Enbridge Inc. ENB reported second-quarter 2020 earnings per share of 41 cents, in line with the Zacks Consensus Estimate, aided by higher contributions from the US Gas Transmission business and Hohe See offshore wind project. The bottom line, however, deteriorated from the year-ago quarter’s 50 cents per share owing to lower contributions from Gulf Coast and Mid-Continent liquid pipeline System.

Total revenues in the quarter declined 42% year over year to $5,779 million. Also, the top line missed the Zacks Consensus Estimate of $8,541 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 second-quarter 2020, the company reported DCF of C$2,437 million compared with C$2,310 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$1,744 million, down from C$1,766 million in the year-earlier quarter. Lower contributions from Gulf Coast and Mid-Continent System primarily led to the underperformance.

Gas Transmission and Midstream: The segment’s adjusted earnings totaled C$975 million, up from C$936 million in second-quarter 2019. Higher contributions from the US Gas Transmission business drove the upside.

Gas Distribution and Storage: The unit generated profit of C$406 million compared with C$390 million in the prior-year quarter. Colder weather conditions drove the segment’s profits.

Renewable Power Generation: The segment recorded earnings of C$150 million, up from C$100 million in the prior-year quarter, thanks to Hohe See offshore wind project’s contributions.

Energy Services: The segment generated a profit of C$86 million, down from C$88 million in second-quarter 2019.

Balance Sheet

At the end of second-quarter 2020, the company reported total debt of C$67,132 million, and cash and cash equivalents of C$462 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. Enbridge added that it foresees annual growth of 5% to 7% through 2020 for DCF per share. 

Notably, the midstream energy player expects some unique headwinds in the second half of 2020, such as the drop in Texas Eastern system revenues, to offset the outperformance in the first half of this year.

Zacks Rank & Stocks to Consider

The company currently has a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked players in the energy space include Concho Resources Inc. CXO, Cimarex Energy Co XEC and EOG Resources, Inc. EOG, each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Concho is likely to see earnings growth of 21.6% in 2020.

Cimarex Energy’ 2020 bottom-line estimates have moved up over the past 30 days.

EOG Resources’ 2020 bottom-line estimates have risen more than 200% over the past 30 days.

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