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Enbridge (ENB) to Report Q3 Earnings: What's in the Cards?

Zacks Equity Research

Enbridge Inc. ENB is scheduled to release third-quarter 2019 results on Nov 8, before the opening bell.

The midstream energy company beat earnings estimates thrice and met the same once in the trailing four quarters, with the average positive surprise being 11.3%. In the last reported quarter, it came up with earnings per share of 50 cents, beating the Zacks Consensus Estimate of 42 cents on higher throughput in the Mainline System and increased volumes of distributed gas. However, the figure declined from the year-ago period’s 62 cents, primarily due to lower contributions from Canadian Gas Transmission activities and the U.S. Midstream business.

Enbridge Inc Price and EPS Surprise

Enbridge Inc Price and EPS Surprise
Enbridge Inc Price and EPS Surprise

Enbridge Inc price-eps-surprise | Enbridge Inc Quote

Let’s see how things have shaped up prior to the upcoming announcement.

Trend in Estimates

The Zacks Consensus Estimate for third-quarter earnings of 42 cents per share has moved upward from 40 cents over the past week. The estimate has seen one upward movement and no downward revision by firms during this time period. The estimated figure indicates no change from the year-ago reported earnings.

Factors at Play

Enbridge, which ships around 62% of U.S.-bound Canadian export volumes, has the longest and most advanced crude and liquids pipeline system in the world that spreads across 17,127 miles. Owing to these extensive networks of midstream properties, the company is likely to have generated stable fee-based revenues in third-quarter 2019.

Enbridge’s Stratton Ridge project, which connects producers in shale plays to train 3 for Freeport LNG, came online in the first half of the year. This is expected to have led to year-over-year improvement in profit levels.

In third-quarter 2019, it is expected to have earned handsome cash flow from the natural gas utility business in North America. In the continent, Enbridge is the largest natural gas utility in terms of volumes of natural gas distributed to the growing customer base.

However, we are concerned about the company’s rise in operating expenses. Through first-half 2019, its commodity costs increased nearly 11%, a trend that is expected to have continued and affected the bottom line in the to-be-reported quarter.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Enbridge this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here as you will see below.

Earnings ESP: Enbridge has an ESP of -0.40%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.   

Zacks Rank: Currently, Enbridge carries a Zacks Rank #3.

Energy Stocks With Favorable Combination

Here are some companies from the energy space that you may want to consider, as our model shows that these have the right combination of elements to deliver an earnings beat in the upcoming quarterly reports:

Canadian Natural Resources Limited CNQ has an Earnings ESP of +7.42% and a Zacks Rank of 3. The company is slated to announce third-quarter 2019 earnings on Nov 7. You can see the complete list of today’s Zacks #1 Rank stocks here.

Berry Petroleum Corporation BRY has an Earnings ESP of +0.21% and a Zacks Rank of 3. The company is slated to announce third-quarter 2019 earnings on Nov 7.

Nine Energy Service, Inc. NINE has an Earnings ESP of +10.76% and is a #3 Ranked player. The company is scheduled to release third-quarter 2019 earnings on Nov 11.

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