Enbridge (ENB) Valuation: Assessing Stability and Cash Flow

Make better investment decisions with Simply Wall St's easy, visual tools that give you a competitive edge. With no single headline event driving attention today, Enbridge (TSX:ENB) is back on many investors’ radars as they weigh its recent share performance against current earnings, revenue and valuation signals. See our latest analysis for Enbridge. At around CA$66.17, Enbridge’s recent 7 day share price return of 3.86% follows a generally flat pattern over the past quarter, while its 1 year total shareholder return of 9.70% reflects steadier long term compounding. If Enbridge’s mix of income and stability appeals to you, this could be a good moment to widen your search with healthcare stocks as a different corner of the market to consider. With CA$64.2b in revenue, CA$5.6b in net income and a current price around CA$66, the question now is whether Enbridge’s income profile is still attractively valued or if the market is already fully reflecting its prospects. Most Popular Narrative: 7% Undervalued Against Enbridge’s last close of CA$66.17, the most followed narrative points to a fair value of about CA$71.12, implying modest upside based on its cash flow outlook and risk profile. The strategic build out responding to surging electricity and data center needs including utility scale renewables, gas transmission expansions, and power generation projects underpins multi year earnings and cash flow growth as power demand accelerates through the decade. Investment and policy focus on energy infrastructure security in the U.S. and Canada, including government incentives and indigenous partnerships, is likely to extend asset life and drive policy supported steady cash flow growth by reinforcing Enbridge's critical incumbency and market position. Read the complete narrative. Curious what keeps that fair value above today’s price? The narrative leans heavily on richer margins, steadier earnings and a higher future earnings multiple. Result: Fair Value of CA$71.12 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, this depends on regulators remaining cooperative and on long term oil and gas demand not weakening faster than expected. Either factor could quickly challenge that narrative. Find out about the key risks to this Enbridge narrative. Another Angle On The Price Tag Our fair value model based on cash flows suggests Enbridge at CA$66.17 is trading at a very large discount to an estimated value of CA$261.64, while the popular narrative pegs fair value near CA$71.12. With such a wide gap between cash flow math and sentiment, which signal do you treat as more useful? Look into how the SWS DCF model arrives at its fair value. Build Your Own Enbridge Narrative If you see the story differently or prefer to test the assumptions yourself, you can build a custom Enbridge view in just a few minutes by starting with Do it your way. A great starting point for your Enbridge research is our analysis highlighting 2 key rewards and 4 important warning signs that could impact your investment decision. Looking for more investment ideas? If Enbridge is already on your radar, do not stop there. Widen your net now so you are not missing out on other potential opportunities. Spot underappreciated names by scanning these 865 undervalued stocks based on cash flows that currently trade at prices the market may not be fully crediting. Tap into the potential of artificial intelligence by reviewing these 24 AI penny stocks that are working with data, automation and machine learning. Add a higher risk, higher reward angle by checking out these 3526 penny stocks with strong financials that meet clear financial quality filters. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include ENB.TO. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com