Today we're going to take a closer look at Large-Cap Energy company Enbridge, whose shares are currently trading at $42.18. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!
Trading Near Its Fair Price but Has an Elevated P/E Ratio:
Enbridge Inc., together with its subsidiaries, operates as an energy infrastructure company. The company belongs to the Energy sector, which has an average price to earnings (P/E) ratio of 13.62 and an average price to book (P/B) ratio of 1.86. In contrast, Enbridge has a trailing 12 month P/E ratio of 20.2 and a P/B ratio of 1.56.
Enbridge has moved 25.2% over the last year compared to 29.1% for the S&P 500 — a difference of -3.9%. Enbridge has a 52 week high of $43.31 and a 52 week low of $32.85.
The Company's Revenues Are Declining:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $46,378 | $50,069 | $39,087 | $47,071 | $53,309 | $43,649 |
| Operating Margins | 10% | 16% | 20% | 17% | 10% | 20% |
| Net Margins | 6% | 11% | 9% | 13% | 6% | 14% |
| Net Income (M) | $2,882 | $5,705 | $3,363 | $6,189 | $3,003 | $6,191 |
| Net Interest Expense (M) | $2,703 | $2,663 | $2,790 | $2,655 | $3,179 | $3,812 |
| Depreciation & Amort. (M) | $3,246 | $3,391 | $3,712 | $3,852 | $4,317 | $4,613 |
| Diluted Shares (M) | 1,727 | 2,020 | 2,021 | 2,025 | 2,029 | 2,058 |
| Earnings Per Share | $1.46 | $2.63 | $1.48 | $2.87 | $1.28 | $2.84 |
| EPS Growth | n/a | 80.14% | -43.73% | 93.92% | -55.4% | 121.87% |
| Avg. Price | $24.0 | $27.59 | $26.38 | $33.77 | $40.34 | $42.18 |
| P/E Ratio | 16.44 | 10.45 | 17.82 | 11.77 | 31.52 | 14.85 |
| Free Cash Flow (M) | $3,696 | $5,205 | $4,376 | $1,438 | $6,583 | $9,547 |
| CAPEX (M) | $6,806 | $4,193 | $5,405 | $7,818 | $4,647 | $4,654 |
| EV / EBITDA | 12.87 | 10.23 | 10.18 | 12.2 | 16.84 | 12.09 |
| Total Debt (M) | $63,586 | $64,065 | $65,776 | $74,125 | $78,984 | $80,799 |
| Net Debt / EBITDA | 7.82 | 5.44 | 5.6 | 6.33 | 8.23 | 5.65 |
| Current Ratio | 0.58 | 0.55 | 0.53 | 0.49 | 0.6 | 0.83 |
Enbridge has generally positive cash flows, decent operating margins with a positive growth rate, and a strong EPS growth trend. However, Enbridge has declining revenues and decreasing reinvestment in the business, not enough current assets to cover current liabilities because its current ratio is 0.83, and a highly leveraged balance sheet.
