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ENB has managed to substantially grow ROA over the last 5 years. If ROA is decreasing, then that implies that profitability is decreasing and growth projects are merely hiding underlying weakness. Stable or increasing ROA implies that profitability is increasing, with growth projects adding to that profitability. By looking at ROA based on distributable cash flow (‘DCF’) over time, we can see if the company is able to maintain profitability on its asset base. How does one go about determining if ENB is a high quality operator? I use two metrics: return on assets (‘ROA’) and leverage. The company was able to prove that title during the pandemic, as it was able to more or less maintain revenues in spite of a crash in the broader energy market. That’s important to point out, because whereas crude oil seems to face strong secular headwinds from an ESG perspective, natural gas remains considered a relatively carbon-friendly alternative.Īs a pipeline operator, ENB is one of those stocks frequently called the “toll roads” of the energy sector. Enbridge: Pipeline GiantĮNB is one of the largest pipeline giants in the continent, as it transports 25% of crude oil and 20% of natural gas in North America.ĮNB has gradually reduced its exposure to crude oil liquids and increased its exposure to natural gas, now totaling 43% of income in 2020. It appears that optimism regarding vaccine distribution has investors hoping for a swift rebound in the energy sector. Since then, the stock has almost fully recovered to pre-pandemic levels. Enbridge Stock HistoryĪs the world came to a stand still, ENB saw its stock crash in March of 2020. I give my final verdict regarding whether the stock is a buy, sell, or hold. Leverage remains high, but if the company can continue executing, then the robust growth rates may more than make up for it. In this article, I explain why ENB has been one of the best pipeline operators in the continent. Still, the stock is yielding 7%, which is arguably high when considering ENB’s high growth rate. Photo by Maksim Safaniuk/iStock via Getty ImagesĮnbridge ( NYSE: ENB) has seen a solid recovery since crashing last year.