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Can Enbridge (ENB) Maintain Earnings Beat Streak in Q2?

Zacks Equity Research

We expect Enbridge Inc. ENB to surpass expectations when it reports second-quarter 2019 results before the opening bell on Aug 2.

Enbridge reported first-quarter 2019 earnings per share of 61 cents, which beat the Zacks Consensus Estimate of 52 cents on the back of higher throughput in the Mainline System and increased volumes of distributed gas. The energy infrastructure player has not missed estimates in the last four quarters, with the average positive surprise being 18.46%.

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 are shaping up for this announcement.

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Which Way are Estimates Trending?

Let’s take a look at estimate revisions to get a clear picture of what analysts are thinking about the company’s upcoming earnings release.

The Zacks Consensus Estimate for second-quarter earnings of 43 cents has seen one upward and no downward revision by firms in the past 30 days. The estimated figure indicates a year-over-year decline of almost 30.7%.

What Our Model Unveils

Our proven model conclusively shows that Enbridge is likely to beat the Zacks Consensus Estimate in the quarter to be reported. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. It has the right mix, as elaborated below.

Earnings ESP: Earnings ESP represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Enbridge has an ESP of +6.70% as the Most Accurate Estimate stands at 46 cents while the Zacks Consensus Estimate is pegged at 43 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Enbridge currently carries a Zacks Rank #3, which increases the predictive power of ESP. Further, a positive ESP in the stock’s combination makes us confident about its earnings beat this reporting cycle.

Conversely, Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Factors at Play

Enbridge has the longest and most advanced crude and liquids pipeline system in the world that spreads across 17,018 miles. Owing to these extensive networks of midstream properties that transport the commodities, the company is likely to generate stable fee-based revenues in the to-be-reported quarter.

In the second quarter, it is also likely to generate 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. Markedly, in Canada, the company is touted to be the largest natural gas distributer, which will enable it to generate strong earnings from transportation operations, driven by a string of long-term contracts.

Other Energy Stocks With Favorable Combination

Here are some other companies from the energy sector, which according to our model have the right combination of elements to post an earnings beat in the upcoming quarterly releases.

TransCanada Corporation TRP is set to report second-quarter 2019 earnings on Aug 1. The stock has an Earnings ESP of +0.98% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Callon Petroleum Company CPE has an Earnings ESP of +0.84% and is a #3 Ranked player. The company is slated to release second-quarter 2019 earnings on Aug 6.

Carrizo Oil & Gas, Inc. CRZO is set to report second-quarter 2019 earnings on Aug 5. The stock has an Earnings ESP of +1.10% and a Zacks Rank #3.

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Enbridge Inc (ENB) : Free Stock Analysis Report
 
TransCanada Corporation (TRP) : Free Stock Analysis Report
 
Callon Petroleum Company (CPE) : Free Stock Analysis Report
 
Carrizo Oil & Gas, Inc. (CRZO) : Free Stock Analysis Report
 
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