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Enable Midstream (ENBL) Hits Fresh Highs: Is There Still Room to Run?

Zacks Equity Research
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Have you been paying attention to shares of Enable Midstream Partners, ENBL? Shares have been on the move with the stock up 20.6% over the past month. ENBL hit a new 52-week high of $17.41 in the previous session. Enable Midstream Partners, has gained 20.6% since the start of the year compared to the 6.6% move for the Oils-Energy sector and the 5.7% year-to-date return for its peer group.

What's Driving the Outperformance?

The stock has a great record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on May 2, 2018, Enable Midstream Partners, reported EPS of $0.24 versus the Zacks Consensus Estimate of $0.22.

For the current fiscal year, Enable Midstream Partners, is expected to post earnings of $1 per share on $3.26 billion in revenues. This represents an 8.7% change in EPS on a 16.22% change in revenues. For the next fiscal year, the company is expected to earn $1.07 per share on $3.48 billion in revenues. This represents a year-over-year change of 7% and 6.79%, respectively.

Valuation Metrics

While ENBL has moved to its 52-week high in the recent past, investors need to be asking, what is next for the company? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.

On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

Enable Midstream Partners, has a Value Score of C. The stock's Growth and Momentum Scores are B and B, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 17.2X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 9.3X versus its peer group's average of 8.3X. Additionally, the stock has a PEG ratio of 2.71. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Enable Midstream Partners, LP Price and Consensus

Enable Midstream Partners, LP Price and Consensus | Enable Midstream Partners, LP Quote

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Enable Midstream Partners, currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 and Style Scores of A or B, it looks as if Enable Midstream Partners, fits the bill. Thus, it seems as though ENBL shares could have potential in the weeks and months to come.

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