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Enbridge's (ENB) Earnings Beat Estimates in Q2, Decline Y/Y

Enbridge Inc. ENB reported second-quarter 2019 earnings per share of 50 cents, which beat the Zacks Consensus Estimate of 42 cents but declined from the year-ago period’s 62 cents.

Total revenues in the quarter increased 24% year over year to $9,915 million.

The better-than-expected earnings were supported by higher throughput in the Mainline System and increased volumes of distributed gas. The positives were partially offset by lower contributions from Canadian Gas Transmission activities and the US Midstream business.

Enbridge Inc Price, Consensus and EPS Surprise

Enbridge Inc price-consensus-eps-surprise-chart | Enbridge Inc Quote

Distributable Cash Flow (DCF)

Through second-quarter 2019, the company raised its DCF to C$2,310 million from C$1,858 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. The midstream energy provider stated that the Green Power and Transmission business unit has been renamed as Renewable Power Generation and Transmission. Notably, the new segment came into being on Jan 1, 2019.

Liquids Pipelines: Adjusted earnings before interest, income taxes and depreciation and amortization (EBITDA) at the segment amounted to C$1,766 million, up from C$1,629 million in the year-earlier quarter. Higher throughput in the Mainline System, and increased volumes from the Gulf Coast and Mid-Continent System primarily resulted in the upside.

Gas Transmission and Midstream: Adjusted EBITDA at the segment totaled C$936 million, down from C$1,032 million in second-quarter 2018. Lower contributions from Canadian Gas Transmission activities and the US Midstream business — owing to divestments — caused this downside. Moreover, higher planned integrity expenditure in US Gas Transmission affected the segment.

Gas Distribution: The unit generated adjusted profit of C$390 million compared with C$369 million in the June quarter of 2018. Higher distribution rates and expanding customer base, attributed to colder weather, aided the segment in the second quarter.

Renewable Power Generation and Transmission: This segment recorded adjusted earnings of C$100 million, down from C$125 million in the prior-year quarter. The wind farms in the United States, which had limited resources, mainly caused the decline. Weaker solar radiance at Enbridge's solar facilities also affected the segment.

Energy Services: This segment generated adjusted income of C$88 million, up from C$62 million in second-quarter 2018 on the back of higher transportation margins.

Balance Sheet

At the end of second-quarter 2019, the company reported total debt of C$65,577 million, and cash and cash equivalents of C$708 million.

Guidance

The company continues to expect 2019 DCF in the band of $4.30-$4.60 per share.

Zacks Rank and Stocks to Consider

Currently, Enbridge has a Zacks Rank #3 (Hold). Some better-ranked stocks in the energy sector are given below:

Transportadora de Gas del Sur S.A. TGS is a midstream energy firm. In the trailing four quarters, the company delivered average positive earnings surprise of 114%. The company has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

MPLX LP MPLX provides midstream infrastructures to upstream companies. Its bottom line in 2019 is expected to improve 23.6% from a year ago. The company has a Zacks Rank #2 (Buy).

Montage Resources Corporation MR is an upstream energy company. Its top line in 2019 is expected to improve nearly 22.2% from a year ago. The company has a Zacks Rank #2.

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