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Enbridge’s Valuation Compared to Peers

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May. 10 2019, Published 12:20 p.m. ET

Enbridge’s valuation

Enbridge (ENB) is trading at a forward PE ratio of ~18x—lower than its five-year average PE ratio of ~22x. A lower PE ratio than the historical average indicates that the stock is trading at a discount compared to its historical valuation. Enbridge’s forward PE ratio is also lower than Kinder Morgan (KMI) and ONEOK (OKE). Kinder Morgan is trading at a forward PE ratio of 19x, while ONEOK is trading at 20x.

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TC Energy (TRP) is trading at a lower forward PE ratio than Enbridge. Historically, TC Energy has traded at a lower multiple than Enbridge. TC Energy’s five-year average PE ratio is ~19x compared to Enbridge’s average of ~22x. Currently, TC Energy is trading at a forward PE ratio of ~15x.

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Target prices

Among the 20 Reuters-surveyed analysts tracking Enbridge, three recommended a “strong buy,” 11 recommended a “buy,” and six recommended a “hold.” The average target price for Enbridge provided by the surveyed analysts is $40.3. The target price implies an upside potential of ~10.2% from Enbridge’s current price.

TC Energy’s target price of $48.8 implies an upside potential of ~4.2% from its current price. TC Energy’s target price was revised to 71 Canadian dollars from 65 Canadian dollars by RBC on May 7. On the same day, J.P. Morgan raised its target price for the stock by one Canadian dollar to 73 Canadian dollars.

Kinder Morgan’s mean target price of $21.6 implies an upside potential of ~9.6% from its current price. In comparison, ONEOK’s target price of $71.7 implies an upside potential of 8.6% from its current price.

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