CA - Enbridge: Continuing To Look Like A Solid Core Income Holding

2024-02-15 14:28:01 ET

Summary

• Enbridge Inc. reported growth in gross profit and net income in Q4 2023, despite a slight decline in revenues.
• The market did not react positively to the earnings report, with Enbridge's stock price declining more than the broader market indices.
• Enbridge's earnings results reinforced its position as a core holding for income-focused investors, with slow but steady growth and a reasonable yield.
• The majority of the company's revenue weakness came from its natural gas marketing operation, which was largely due to natural gas prices being lower than a year ago.
• The company's debt and dividend coverage is okay, but its target ratio for leverage is higher than peers. This may pose a risk.

On Friday, February 9, 2024, Canadian pipeline and midstream giant Enbridge Inc. ( ENB ) announced its fourth-quarter 2023 earnings results. At first glance, these results appeared to be quite rather decent, as Enbridge reported growth in both gross profit and net income relative to the prior-year quarter. The company's revenues were, unfortunately, down slightly year-over-year but this is not surprising considering the trend that we have seen among some other midstream companies that have reported.

While Enbridge does not have quite the same exposure to high-growth areas (such as the Permian Basin) as peers such as Enterprise Products Partners ( EPD ) or MPLX ( MPLX ), the company still managed to deliver fairly impressive volume growth over the course of the year. Enbridge is fairly well-positioned to continue to deliver growth going forward so investors should be reasonably satisfied with the company's future potential as a provider of income during inflationary periods....

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