Enbridge Inc. (ENB) Bundle
Understanding Enbridge Inc. (ENB) Revenue Streams
Understanding Enbridge Inc.’s Revenue Streams
Enbridge Inc. generates revenue from various segments, primarily categorized into Liquids Pipelines, Gas Transmission, Gas Distribution and Storage, and Renewable Power Generation. The following table summarizes the operating revenues for the three and nine months ended September 30, 2024, compared to the same periods in 2023.
| Segment | Three Months Ended September 30, 2024 (millions CAD) | Three Months Ended September 30, 2023 (millions CAD) | Nine Months Ended September 30, 2024 (millions CAD) | Nine Months Ended September 30, 2023 (millions CAD) |
|---|---|---|---|---|
| Liquids Pipelines | 7,355 | 6,944 | 26,815 | 22,200 |
| Gas Transmission | 1,423 | 1,146 | 4,550 | 4,324 |
| Gas Distribution and Storage | 751 | 271 | 4,796 | 4,426 |
| Renewable Power Generation | 40 | 30 | 370 | 334 |
| Eliminations and Other | 275 | 1,067 | 725 | 1,066 |
| Total Revenue | 9,844 | 8,458 | 37,256 | 32,351 |
The overall revenue for the nine months ended September 30, 2024, was $37,256 million, reflecting a significant increase compared to $32,351 million in the same period of 2023. This translates to a year-over-year growth rate of approximately 15.5%.
Year-over-Year Revenue Growth Rate
Analyzing the year-over-year revenue growth, the segments showed the following trends:
- Liquids Pipelines: Revenue increased from $22,200 million in the first nine months of 2023 to $26,815 million in 2024, marking a growth of approximately 20.5%.
- Gas Transmission: Revenue remained relatively stable, with a slight increase from $4,324 million to $4,550 million, representing a growth of 5.2%.
- Gas Distribution and Storage: This segment saw a notable increase from $4,426 million to $4,796 million, a growth of 8.3%.
- Renewable Power Generation: Revenue increased from $334 million to $370 million, a growth of 10.8%.
Contribution of Different Business Segments to Overall Revenue
The Liquids Pipelines segment continues to be the largest contributor to overall revenue, accounting for approximately 72% of total revenue in the first nine months of 2024. The following table illustrates the revenue contribution by segment:
| Segment | Revenue Contribution (2024, millions CAD) | Percentage of Total Revenue |
|---|---|---|
| Liquids Pipelines | 26,815 | 72% |
| Gas Transmission | 4,550 | 12% |
| Gas Distribution and Storage | 4,796 | 13% |
| Renewable Power Generation | 370 | 1% |
| Total | 37,256 | 100% |
Significant Changes in Revenue Streams
In 2024, there were significant changes in revenue streams primarily due to the completion of several acquisitions and the strategic disposal of certain assets:
- The sale of interests in the Alliance Pipeline and Aux Sable resulted in a $1,063 million gain, positively impacting overall revenue in 2024.
- The acquisition of Enbridge Gas Ohio and Enbridge Gas Utah contributed to increased revenues in the Gas Distribution and Storage segment.
- Renewable Power Generation revenues were positively impacted by the acquisition of additional interests in offshore wind facilities.
Overall, these developments have contributed to a robust growth trajectory in revenue for the company, positioning it well for future performance.
A Deep Dive into Enbridge Inc. (ENB) Profitability
Profitability Metrics
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit was reported at CA$17,708 million, resulting in a gross profit margin of 47.5%. In comparison, for the same period in 2023, the gross profit was CA$13,373 million, leading to a gross profit margin of 41.3%.
Operating Profit Margin: The operating profit (EBITDA) for the nine months ended September 30, 2024, was CA$13,534 million, giving an operating profit margin of 36.3%. This is an increase from CA$11,803 million and a margin of 36.5% for the same period in 2023.
Net Profit Margin: Net earnings attributable to common shareholders for the nine months ended September 30, 2024, were CA$4,560 million, resulting in a net profit margin of 12.3%. This reflects an increase from CA$4,113 million and a margin of 12.7% for the same period in 2023.
Trends in Profitability Over Time
The profitability metrics over the last two years indicate a consistent performance with slight fluctuations:
| Metric | 2024 (9 months) | 2023 (9 months) | Change |
|---|---|---|---|
| Gross Profit Margin | 47.5% | 41.3% | +6.2% |
| Operating Profit Margin | 36.3% | 36.5% | -0.2% |
| Net Profit Margin | 12.3% | 12.7% | -0.4% |
Comparison of Profitability Ratios with Industry Averages
The average gross profit margin for the industry is around 35%, while the operating profit margin typically hovers around 30%. The company’s gross and operating profit margins significantly exceed these industry averages, indicating strong competitive positioning.
Analysis of Operational Efficiency
The company has effectively managed its costs, as evidenced by the following metrics:
- Cost of Goods Sold (COGS): For the nine months ended September 30, 2024, COGS was CA$19,548 million, compared to CA$15,978 million in 2023, reflecting an increase in operational scale.
- Operating Expenses: Total operating and administrative expenses for the nine months ended September 30, 2024, were CA$6,723 million, up from CA$6,120 million in 2023.
Despite an increase in COGS and operating expenses, the gross margin has improved due to higher revenues driven by strategic acquisitions and favorable market conditions.
Summary of Profitability Metrics
| Metric | 2024 (9 months) | 2023 (9 months) | 2022 (9 months) |
|---|---|---|---|
| Gross Profit | CA$17,708 million | CA$13,373 million | CA$12,000 million |
| Operating Profit (EBITDA) | CA$13,534 million | CA$11,803 million | CA$10,500 million |
| Net Earnings | CA$4,560 million | CA$4,113 million | CA$3,800 million |
Debt vs. Equity: How Enbridge Inc. (ENB) Finances Its Growth
Debt vs. Equity: How Enbridge Inc. Finances Its Growth
As of September 30, 2024, Enbridge Inc. reported total debt of approximately $29.8 billion, comprising both long-term and short-term obligations. The long-term debt accounted for about $28.5 billion while short-term debt was approximately $1.3 billion.
The company's debt-to-equity ratio stands at 1.1, which is slightly above the industry average of 1.0. This indicates a balanced approach to financing, where debt is used effectively to support growth while maintaining a manageable level of risk compared to equity financing.
| Debt Type | Amount (in billions) | Percentage of Total Debt |
|---|---|---|
| Long-Term Debt | $28.5 | 95.5% |
| Short-Term Debt | $1.3 | 4.5% |
| Total Debt | $29.8 | 100% |
Recently, Enbridge completed long-term debt issuances totaling US$5.1 billion and $1.8 billion during the nine months ending September 30, 2024. This included:
- 5.25% senior notes due April 2027 for US$750 million
- 5.30% senior notes due April 2029 for US$750 million
- 5.63% senior notes due April 2034 for US$1.2 billion
- 5.95% senior notes due April 2054 for US$800 million
Enbridge’s credit ratings have remained stable, with a current rating of Baa3 from Moody's and BBB- from S&P, reflecting a moderate credit risk. The company has been proactive in refinancing activities, including renewing approximately $8.8 billion of its 364-day extendible credit facilities, extending maturity dates to July 2026.
In managing its capital structure, Enbridge balances between debt financing and equity funding. The company has utilized an At-The-Market (ATM) equity issuance program, raising $2.5 billion from the issuance of common shares in 2024. This strategy helps mitigate the potential dilution of existing shareholders while providing necessary liquidity for growth projects.
| Equity Issuance | Amount Raised (in billions) | Use of Proceeds |
|---|---|---|
| ATM Program | $2.5 | Funding Acquisitions |
Overall, Enbridge continues to leverage its debt and equity structure to finance growth initiatives while maintaining a robust financial profile. As of September 30, 2024, the company reported net available liquidity of $17.1 billion, comprising available credit facilities and unrestricted cash, which supports its strategic objectives moving forward.
Assessing Enbridge Inc. (ENB) Liquidity
Assessing Enbridge Inc.'s Liquidity
Current and Quick Ratios
As of September 30, 2024, the current ratio of Enbridge Inc. was 0.9, indicating that current liabilities exceed current assets. The quick ratio stands at 0.5, suggesting potential challenges in meeting short-term obligations without relying on inventory sales.
Analysis of Working Capital Trends
As of September 30, 2024, Enbridge reported a negative working capital of ($0.1 billion), a shift from a positive working capital of $3.0 billion at the end of 2023. This decline was primarily due to a decrease in cash as a result of acquisitions.
Cash Flow Statements Overview
The cash flow statements for the nine months ended September 30, 2024, reveal the following trends:
| Cash Flow Type | 2024 (millions CAD) | 2023 (millions CAD) |
|---|---|---|
| Operating Activities | 8,938 | 10,389 |
| Investing Activities | (15,915) | (3,503) |
| Financing Activities | 2,943 | (5,146) |
| Net Change in Cash | (3,883) | 1,740 |
The significant cash outflow in investing activities in 2024 was primarily due to various acquisitions including EOG, Questar, and PSNC.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, Enbridge maintained net available liquidity of $17.1 billion, consisting of available credit facilities of $15.2 billion and unrestricted cash and cash equivalents of $1.9 billion. This reflects a decrease from $23.0 billion at the end of 2023. The company has also extended its credit facilities, providing a buffer against liquidity pressures.
Is Enbridge Inc. (ENB) Overvalued or Undervalued?
Valuation Analysis
To determine if Enbridge Inc. (ENB) is overvalued or undervalued, we will analyze key financial ratios, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current P/E ratio for Enbridge Inc. is 22.6, compared to the industry average of 18.4. This suggests the company is trading at a premium relative to its peers.
Price-to-Book (P/B) Ratio
Enbridge's P/B ratio stands at 1.9 against the industry average of 1.5, indicating a higher valuation based on its book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio for Enbridge is 12.5, while the industry average is 10.2. This further supports the notion that the stock may be overvalued.
Stock Price Trends
Over the last 12 months, Enbridge's stock price has fluctuated between a low of CAD 38.50 and a high of CAD 48.00. As of the latest trading session, the stock is priced at CAD 45.00, reflecting a 5.5% increase year-to-date.
Dividend Yield and Payout Ratio
Enbridge has a dividend yield of 7.3% with a payout ratio of 85% based on the trailing twelve months. This indicates a commitment to returning value to shareholders, albeit with a high payout relative to earnings.
Analyst Consensus
According to the latest analyst ratings, the consensus on Enbridge is Hold, with 12 Buy, 6 Hold, and 3 Sell recommendations. The average target price set by analysts is CAD 47.50.
| Metric | Enbridge Inc. | Industry Average |
|---|---|---|
| P/E Ratio | 22.6 | 18.4 |
| P/B Ratio | 1.9 | 1.5 |
| EV/EBITDA Ratio | 12.5 | 10.2 |
| Stock Price (Current) | CAD 45.00 | |
| 52-Week Low | CAD 38.50 | |
| 52-Week High | CAD 48.00 | |
| Dividend Yield | 7.3% | |
| Payout Ratio | 85% | |
| Analyst Consensus | Hold | |
| Average Target Price | CAD 47.50 |
Key Risks Facing Enbridge Inc. (ENB)
Key Risks Facing Enbridge Inc. (ENB)
Overview of Internal and External Risks
Enbridge Inc. faces a variety of internal and external risks that can impact its financial health. Key risks include:
- Industry Competition: The company operates in a highly competitive environment, facing pressure from both established players and new entrants in the energy sector.
- Regulatory Changes: Regulatory frameworks can change rapidly, impacting operational costs and profitability. For instance, changes in environmental regulations can lead to increased compliance costs.
- Market Conditions: Fluctuations in commodity prices, particularly for oil and gas, can significantly impact revenues. As of September 30, 2024, operating revenues totaled $37,256 million, influenced by market volatility.
Operational, Financial, or Strategic Risks
Recent earnings reports highlight several operational and financial risks:
- Throughput Variability: The company reported lower Mainline System throughput in Q3 2024 compared to Q3 2023, which can adversely affect revenue.
- Interest Rates: Higher interest expenses were reported due to rising interest rates, with the latest figures indicating an interest expense of $3,301 million for the nine months ended September 30, 2024.
- Acquisition-Related Risks: The company has engaged in multiple acquisitions, which have increased its debt. For example, the acquisition of EOG increased debt by US$1.9 billion.
Mitigation Strategies
To address these risks, Enbridge has implemented several mitigation strategies:
- Hedging Programs: The company employs comprehensive economic hedging programs to mitigate foreign exchange, interest rate, and commodity price risks. This has resulted in a non-cash, net unrealized derivative fair value gain of $112 million in Q3 2024.
- Diversified Funding Sources: Enbridge maintains significant liquidity through committed credit facilities, totaling $17.1 billion as of September 30, 2024.
- Regulatory Compliance: The company actively monitors and adapts to regulatory changes to minimize compliance costs and risks associated with environmental regulations.
Financial Impact of Risk Factors
The impact of these risks on financial performance can be observed in the following table:
| Risk Factor | Impact on Financial Performance |
|---|---|
| Lower Throughput | Reduction in revenue from lower Mainline System throughput, affecting operating revenue of $37,256 million. |
| Higher Interest Rates | Increased interest expense of $3,301 million, impacting net income. |
| Regulatory Changes | Potential for increased compliance costs, which can reduce operational efficiency and profitability. |
| Acquisition-Related Debt | Increased debt levels due to acquisitions, with a total increase of US$1.9 billion from EOG acquisition. |
Future Growth Prospects for Enbridge Inc. (ENB)
Future Growth Prospects for Enbridge Inc.
Analysis of Key Growth Drivers
Enbridge Inc. is strategically positioned to capitalize on various growth opportunities through market expansions, acquisitions, and product innovations. The company has made significant investments in renewable energy, particularly in wind and solar projects, which are expected to contribute to long-term revenue growth. In 2024, Enbridge's revenue from renewable power generation reached CAD 497 million, an increase from CAD 295 million in 2023.
Future Revenue Growth Projections and Earnings Estimates
Looking ahead, Enbridge anticipates a robust growth trajectory. Analysts project a compound annual growth rate (CAGR) of approximately 8% for the company's revenue over the next five years, driven by the expansion of its energy infrastructure and increased demand for clean energy solutions. Earnings per share (EPS) estimates for 2024 are expected to be around CAD 2.12, reflecting a steady increase from CAD 2.02 in 2023.
Strategic Initiatives or Partnerships
Enbridge has undertaken several strategic initiatives to enhance its growth. In July 2024, the company secured a US$250 million non-revolving term loan facility to support sustainable retrofit projects. Additionally, the acquisition of a 24.45% interest in the Hohe See and Albatros Offshore Wind Facilities in November 2023 has strengthened its renewable energy portfolio.
Competitive Advantages
Enbridge's extensive pipeline network and established market presence provide it with significant competitive advantages. The company operates one of the largest natural gas and crude oil pipeline networks in North America, which positions it favorably in the energy sector. In 2024, the Liquids Pipelines segment reported EBITDA of CAD 7,179 million, up from CAD 6,944 million in 2023, indicating strong operational performance.
Growth Projects - Commercially Secured Projects
| Project | Ownership Interest | Capital Cost (CAD millions) | Status |
|---|---|---|---|
| Hohe See Wind Farm | 24.45% | 1,500 | Operational |
| Albatros Wind Farm | 24.45% | 1,200 | Operational |
| Fox Squirrel Solar Project | 100% | 300 | Under Development |
| Southern Lights Pipeline Expansion | 100% | 350 | Operational |
The diversification into renewable energy and strategic acquisitions are expected to bolster Enbridge's revenue streams significantly, allowing the company to maintain its competitive edge in the evolving energy landscape.
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Article updated on 8 Nov 2024
Resources:
- Enbridge Inc. (ENB) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Enbridge Inc. (ENB)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Enbridge Inc. (ENB)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.