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Analyzing Enbridge’s Earnings Growth

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Enbridge’s earnings

Enbridge (ENB) has shown consistent earnings growth over the years. The company’s adjusted EPS rose 35% in 2018. Enbridge’s adjusted EBITDA, which reflects the company’s operational performance, rose 25% in 2018. The high year-over-year growth in 2018 was largely driven by the fiscal impact of the merger with Spectra Energy compared to only ten months of combined results in 2017.

Enbridge’s high earnings growth in 2018 was also due to the strong operational performance across its segments and contributions from growth projects placed in service in 2018. Enbridge’s DCF (distributable cash flow) grew 36% in 2018. The above graph shows Enbridge’s adjusted EBITDA and adjusted EPS over three years.

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2019 guidance

Enbridge has provided an adjusted EBITDA guidance of ~13 billion Canadian dollars for 2019, which implies growth of ~1.0% over 2018. However, the company expects a DCF of ~8.9 billion Canadian dollars for 2019—17% growth over 2018.

Enbridge has provided a DCF per share guidance range of 4.3–4.6 Canadian dollars for 2019 compared to a DCF per share of 4.42 Canadian dollars in 2018. Enbridge used an exchange rate of 1.3 Canadian dollars per US dollar for its guidance.

Enbridge expects an impact of ~0.005 Canadian dollars per share on the DCF for a 0.25% change in interest rates and an ~0.01 Canadian dollar per share impact on the DCF for a 0.01 change in the Canadian dollar to US dollar exchange rate.

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