Does Enbridge’s (TSX:ENB) soaring revenues make it a buy & hold call?

Summary

  • Enbridge stock has expanded by 21 per cent year-to-date (YTD) and it might soar in future as oil prices are expected to rise in future.
  • Enbridge holds a market cap of C$ 99.5 billion and is one of the largest oil and gas companies in Canada.
  • Enbridge has reassured the shareholders that it is on track with this year's financial guidance.

Stocks of Enbridge Inc. (TSX:ENB) declined by 0.9 per cent at market open on Friday, July 30, as the company announced results for the second quarter of this year. The oil and gas company posted strong results, but it fell short of the figures in the second quarter of 2020, despite rising demand for energy as countries recover from the COVID-19 pandemic.

Enbridge’s GAAP earnings in the second-quarter earnings report were C$ 1.4 billion compared to C$ 1.6 billion in Q2 2020. This means that the net income attributable to shareholders fell by 15 per cent year-over-year (YoY).

The Calgary-based energy company might not have surpassed the Q2 2020 earnings partly due to lesser foreign currency gains in the three months ended June 30, 2021. Addressing the shareholders, Al Monaco, CEO of Enbridge said that he is pleased with the company's growth in the first half of 2021 and the global economy is recovering well from the pandemic crisis.

For the remaining six months of this year, Enbridge has reassured the shareholders that it is on track with this year's financial guidance. The company claims that the earnings before interest, taxes, depreciation and amortization (EBITDA) will be between C$13.9 billion to C$ 14.3 billion. In addition, Enbridge's distributable cash flow will be between C$ 4.7 to C$5 per share.


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Should you invest in Enbridge's (TSX:ENB) stock?

According to the Bank of America, crude oil prices may cross the US$ 100 per barrel mark next year. If this happens, oil and gas companies will likely benefit from it. Enbridge is one of the largest companies in Canada with a market cap of C$ 99.5 billion, so, there are chances that the ENB stock might soar in future.

Enbridge’s statement to shareholders reassuring that it is on track with this year's financial guidance is a hopeful message. However, much of this depends on future crude prices and economic factors that are prone to volatility amid the ongoing pandemic situation.

ENB stock has expanded by about 21 per cent year-to-date (YTD) and clocked a 52-week high of C$ 50.41 per share on July 7, 2021. In the past one week, ENB stock relatively surged by 1.7 per cent and beat the Toronto Stock Exchange 300 Composite Index's growth of 0.7 per cent.

On July 27, Enbridge declared a quarterly dividend of C$ 0.835 per unit and it will be paid on September 1, 2021. Meanwhile, in Q2 2021, Enbridge's revenues climbed to C$ 10.9 billion from approximately C$ 8 billion in Q2 2020.

At 10:20 AM EST, Enbridge shares were trading at C$ 48.95 per share.

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