Company Summary

Enbridge Inc. ("Enbridge" or "the Company") is a leading energy infrastructure company in North America with about 17,000 employees that are mainly concentrated in Canada and the United States (U.S). The company primarily operates through five (5) segments: Liquids Pipelines, Gas Transmission and Midstream, Gas Distribution & Storage, Renewable Power Generation, and Energy Services and each of these segments contribute 26.2%, 12.3%, 11.5%, 1.5% and 48.5%, respectively to total revenues.

Under its key business - Energy Services, the company transports energy through the most extensive and advanced crude and liquids pipeline system that spreads across 17,127 miles globally. The company transports 3 million barrels of crude every day which accounts for almost 63% of the Canadian crude oil production that are transported to the U.S. Enbridge generates stable fee-based revenues from its diversified network of midstream assets.

The following fundamentals and factors have been evaluated and summarized to make an investment recommendation regarding Enbridge:

Earnings Per Share (EPS) Information

Current Quarter (Q1, 2021) EPS Estimate	0.55
Current Year (2021) EPS Estimate	2.05
EPS growth in 2020 vs Previous Year	-6.52%
EPS growth in Q4 2020 vs Previous Quarter	19.44%
Estimated Long-Term EPS Growth Rate	6.00%

Dividend Information

Dividend Yield	6.73%
Annual Dividend	$2.61
Payout Ratio	1.35
YoY Change in Payout Ratio	0.27
Last Dividend Payout / Amount	11/02/2021 / $0.65

Price to Earning Ratio (P/E ratio)

P/E	18.96
Trailing 12 months	21.30

Financial Summary (in millions of CAD)

	TTM	12/31/2020	12/31/2019	12/31/2018
Revenue	37,087	37,087	50,069	46,378
Operating Profit	7,957	7,957	8,683	6,939
EBIT	7,034	7,034	10,265	6,404
Total Assets	-	160,276	163,269	166,905
Total Liabilities	-	95,913	93,862	93,470
Total Equity	-	64,363	69,407	73,435
End Cash Position	490	490	676	637

Key Financial Ratios as at 2020 FY

Gross Margin	36.75%
Operating Margin	19.38%
Net Margin	8.65%
Return on Assets	2.08
Return on Equity	5.28
Return of Total Capital	5.64
Return on Invested Capital	2.68
Interest Coverage	2.73
Total Debt to Equity	110.25

Source: 2020 Enbridge Financials/ Utradea Analyst Estimates

Comments and Recommendation

Despite the fact that oil prices declined by a significant margin in 2020, Enbridge managed to generate a steady stream of cash flows regardless of the prevailing macroeconomic uncertainty - thus showcasing the resiliency of its business model and making it a top buy (especially for value and contrarian investors). The company's stock has an attractive forward yield of over 6%. It has increased dividend payouts for 26 consecutive years including a 10% hike in 2020 and a 3% hike in 2021. Tracking the enbridge stock in line with input from other analysts reveals a 12-month average target price of $52 which is 11% above the current trading price as at the time of writng this report. After accounting for its attractive dividend yield, annual returns will be closer to 17%.

Through 2023, the Company's management estimates that the Enbridge stock will grow its distributable cash flow per share by 5-7% per year. This should lead to healthy dividend increases of approximately 3-5% in the period. Therefore, ignoring any potential valuation expansion, Enbridge can deliver annualized returns of 10-12% through 2023 and these returns will primarily come from its compelling dividend yield of 7%.