Asset structure analysis
Enbridge’s total assets were $180.3 billion as of December 31, 2023, up from $179.6 billion as of December 31, 2022.
Property, plant and equipment, net were $104.6 billion as of December 31, 2023, accounting for 58% of total assets.
Goodwill was $31.8 billion as of December 31, 2023, consisting of 17.6% of total assets. The amount of goodwill reflect the company’s expanding strategy by acquiring another company.
Total current assets were $14.4 billion as of December 31, 2023, making up 8% of total assets.
As you can see, there is a deep impression on Enbridge’s asset structure.
Liquidity and Solvency
Total current liabilities were $17.4 billion as of December 31, 2023.
The current ratio was about 0.83 for fiscal 2023.
Total liabilities were $115.8 billion as of December 31, 2023.
The debt ratio was 64.2% for fiscal 2023.
The current ratio is very low, and we think the company’s liquidity depend on cash flow or the ability of borrowing money.
Profitability Analysis
Total operating revenues were $43.6 billion, $53.3 billion and $47 billion in fiscal 2023, 2022 and 2021, respectively.
Operating income was $8.65 billion, $5.18 billion and $7.8 billion in fiscal 2023, 2022 and 2022, respectively.
Interest expense was $3.8 billion, $3.1 billion and $2.66 billion in fiscal 2023, 2022 and 2021, respectively, which indicate that Enbridge has a lot of liabilities.
Net earnings was $6 billion, $2.9 billion and $6.3 billion in 2023, 2022 and 2021, respectively.
Cash Flow Analysis
Net cash provided by operating activities was $14.2 billion, $11.2 billion and $9.3 billion in 2023, 2022 and 2021, respectively.
Capital expenditures were $4.65 billion, $4.65 billion and $7.8 billion in 2023, 2022 and 2021, respectively.
Enbridge’s free cash flow was $9.55 billion, $6.55 billion and $1.5 billion in 2023, 2022 and 2021, respectively.
Common stock dividends were $7.28 billion, $7 billion and $6.8 billion in 2023, 2022 and 2021, respectively.
The rate of common stock dividends to Enbridge’s free cash flow was 76.2%, 107% and 453% in 2023, 2022 and 2021, respectively.
Actually, we think that Enbridge’s free cash flow is not enough to pay dividends, and only adding debt to pay dividends.
Enbridge’s operating performance for Q1 2024
Total operating revenues were $11 billion and $12 billion in Q1 2024 and Q1 2023, respectively.
The total operating revenues in Q1 2024 was down 8.3% year on year.
Net earnings was $1.57 billion and $1.87 billion in Q1 2024 and Q1 2023, respectively.
Net cash provided by operating activities was $3.15 billion and $3.9 billion in Q1 2024 and Q1 2023, respectively.
Conclusion
Enbridge has a lot of liabilities, and adding debt to pay dividends.
Whether the company’s dividends policy is continued, which is a question.
Dividends yield is about 7.54%, which is a good number, but if you take it immediately, you may make a mistake.
We reckon that Enbridge’s reasonable valuation is about $40 billion to $50 billion, while the company’s market capitalization is about $75.67 billion, which is equivalent to $35.59 per share.
Disclaimer: The content is for reference only and does not constitute investment advice.
Introduction
Enbridge is a leading North American energy infrastructure company. Their core businesses include Liquids Pipelines, which consists of pipelines and terminals in Canada and the US that transport and export various grades of crude oil and other liquid hydrocarbons; Gas Transmission and Midstream, which consists of investments in natural gas pipelines and gathering and processing facilities in Canada and the US; Gas Distribution and Storage, which consists of natural gas utility operations that serve residential, commercial and industrial customers in Ontario and Québec; and Renewable Power Generation, which consists primarily of investments in wind and solar assets, as well as geothermal, waste heat recovery and transmission assets, in North America and Europe.
