It has been about a month since the last earnings report for Enbridge Energy, L.P. EEP. Units have lost about 2.7% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Fourth-Quarter 2016 Report
Enbridge Energy Partners reported fourth-quarter 2016 adjusted earnings of $0.14 per unit, which came in above the Zacks Consensus Estimate of $0.13. The bottom line also improved from the year-earlier level of $0.11. The upside was mainly driven by higher deliveries on the Lakehead pipeline system.
Total revenue in the quarter increased to $1,250.8 million from the year-ago level of $1,136.7 million and also beat the Zacks Consensus Estimate of $1,100 million.
Segment Performance
Liquids:Adjusted operating income in the Liquids segment increased to $311.9 million from $282.7 million in the comparable period of 2015. The upside was driven by higher revenues due to increased Lakehead system deliveries owing to new assets placed into service as well as lower operating and administrative expenses. This was partially offset by the rise in depreciation expenses over the prior-year comparable period due to new assets placed into service.
Natural Gas: The Natural Gas unit reported adjusted loss of $3.7 million that compared unfavorably with an operating income of $5.0 million in the year-ago quarter. The deterioration mainly stemmed from lower natural gas and NGL system production volumes. Reduced system volumes were primarily attributable to the still low commodity price environment for hydrocarbons. The decrease was partially offset by lower operating and administrative expenses from due to the cost-reduction measures undertaken.
Distribution
Enbridge Energy Partners declared a quarterly cash distribution of $0.583 per unit, or $2.332 per unit on an annualized basis. The approved distribution remained unchanged from the previous quarter. The distribution was paid on Feb 14, to unitholders on record at the close of business on Feb 7.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one downward revision for the current quarter. In the past month, the consensus estimate has also shifted downward by 10.4% due to these changes.
Enbridge Energy, L.P. Price and Consensus
Enbridge Energy, L.P. Price and Consensus | Enbridge Energy, L.P. Quote
VGM Scores
At this time, Enbridge Energy's stock has an average Growth Score of 'C', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Zacks Investment Research
March 21, 2017 at 04:52PM
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