Enbridge Inc. (TSX:ENB)(NYSE:ENB), one of world’s leading transporters and distributors or crude oil and natural gas, announced first-quarter earnings before the market opened on May 6, and its stock responded by falling over 2.5% in the trading session that followed. Let’s take a closer look at the quarterly results to determine if we should consider using this weakness as a long-term buying opportunity.
Breaking down the first-quarter report
Here’s a summary of Enbridge’s first-quarter earnings results compared with its results in the same period a year ago.
| Metric | Q1 2015 | Q1 2014 |
| Adjusted Earnings Per Share | $0.56 | $0.60 |
| Revenue | $7.93 billion | $10.52 billion |
Source: Enbridge Inc.
Enbridge’s adjusted earnings per share decreased 6.7% and its revenue decreased 24.6% compared with the first quarter of fiscal 2014, as its adjusted net income decreased 4.9% to $468 million. The company noted that these weak results could be attributed to a “weaker commodity price environment,” which provided challenges to its customers and led to its commodity sales decreasing 34.7% to $5.23 billion.
Here’s a quick breakdown of 10 other notable statistics from the report compared with the year-ago period:
- Average deliveries increased 16.1% to 2.21 million barrels per day in its Canadian Mainline segment
- Average deliveries increased 21.5% to 815,000 barrels per day in its Regional Oil Sands System segment
- Average deliveries decreased 18.5% to 150,000 barrels per day in its Spearhead Pipeline segment
- Gas distribution volume increased 2.4% to 217 billion cubic feet
- Number of active customers increased 1.5% to 2,108 in its Gas Distribution segment
- Average throughput volume increased 4% to 1.86 billion cubic feet per day in its Vector Pipeline segment
- Average throughput volume decreased 16.4% to 1.15 billion cubic feet per day in its Enbridge Offshore Pipelines segment
- Gas distribution sales increased 43.2% to $1.59 billion
- Transportation and other services sales decreased 21.2% to $1.11 billion
- Cash provided by operating activities increased 353.5% to $1.51 billion
Also, on May 5 Enbridge announced that it will be maintaining its quarterly dividend of $0.465 per share. The next payment will come on June 1 to shareholders of record at the close of business on May 15.
Should you become an investor of Enbridge today?
I think the post-earnings decline in Enbridge’s stock was warranted, but I also think it represents a great long-term buying opportunity.
First, Enbridge’s stock trades at just 27.8 times its median earnings per share outlook of $2.20 for fiscal 2015 and only 23.3 times analysts’ estimated earnings per share of $2.62 for fiscal 2016, both of which are very inexpensive compared with its five-year average price-to-earnings multiple of 39.4 and the industry average multiple of 40.4.
Second, Enbridge pays an annual dividend of $1.86 per share, which gives its stock a 3% yield at current levels. The company has also increased its dividend every year since 1996, making it one of the top dividend-growth plays in the market today.
With all of the information provided above in mind, I think Enbridge represents one of the best long-term investment opportunities in the market today. Foolish investors should take a closer look and strongly consider establishing positions.
