Enbridge (ENB) Meets Q3 Earnings Estimates, Reaffirms DCF View
Enbridge Inc. ENB reported third-quarter 2019 earnings per share of 42 cents, meeting the Zacks Consensus Estimate and flat year over year.
Total revenues in the quarter increased 1.2% year over year to $8,785 million.
The third-quarter results were primarily supported by higher throughput in the Mainline System. This was partially offset by lower contributions from the Canadian Gas Transmission business.
Enbridge Inc Price, Consensus and EPS Surprise
Enbridge Inc price-consensus-eps-surprise-chart | Enbridge Inc Quote
Distributable Cash Flow (DCF)
In third-quarter 2019, the company raised DCF to C$2,105 million from C$1,585 million a year ago.
Segment Analysis
Enbridge conducts business through five segments — Liquids Pipelines, Gas Transmission and Midstream, Gas Distribution, Renewable Power Generation and Transmission, and Energy Services.
Liquids Pipelines: The segment’s adjusted earnings before interest, income taxes, and depreciation and amortization (EBITDA) amounted to C$1,826 million, up from C$1,633 million in the year-earlier quarter. Higher throughput in the Mainline System, and increased contributions from the Gulf Coast and Mid-Continent System primarily resulted in the upside.
Gas Transmission and Midstream: The segment’s adjusted EBITDA totaled C$944 million, down from C$1,038 million in third-quarter 2018. Lower contributions from the Canadian Gas Transmission business caused the downside.
Gas Distribution: The unit generated adjusted profit of C$255 million compared with C$259 million in the prior-year quarter. Lower distributed natural gas volume resulted in the underperformance.
Renewable Power Generation and Transmission: The segment recorded adjusted earnings of C$82 million, up from C$73 million in the prior-year quarter. Wind farms in North America, which had stronger resources, mainly caused the improvement.
Energy Services: The segment generated adjusted income of C$27 million, up from C$10 million in third-quarter 2018 on higher transportation margins.
Balance Sheet
At the end of third-quarter 2019, the company reported total debt of C$66,684 million, and cash and cash equivalents of C$815 million. Its debt-to-capitalization ratio was 49%.
Guidance
For 2019, the energy infrastructure company continues to expect DCF of C$4.30-C$4.60 per share. Notably, it expects annual DCF to surpass the mid-point of the projected band.
Zacks Rank & Stocks to Consider
Enbridge currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy space include CNX Resources Corporation CNX, Contango Oil & Gas Company MCF and Noble Midstream Partners LP NBLX. All the stocks currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CNX Resources beat the Zacks Consensus Estimate in two of the prior four quarters, the average positive earnings surprise being 34.8%.
Contango Oil & Gas is likely to witness bottom-line growth of 87% in 2019.
Noble Midstream has witnessed upward revisions in its 2019 earnings estimates over the past 30 days.
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