Wednesday, September 9, 2009

Enbridge Income Fund 2

I am reviewing this stock (TSX- ENF.UN) today as I have updated my spreadsheet with the December 2008 annual report and I have never blogged on this stock. It is a stock I follow, but I do not own it.

When looking at Insider Buying and Insider Selling, I find there is no activity whatsoever. There is a major owner, holding just over 40% of there units. This is Enbridge Incorporated. I have reviewed this as Enbridge Inc. on my site and blog.

When I look at the P/E ratio, I find that it was 17 at the end of 2008 and it is 19 now. This is fairly high, although the 5 year average low is 19.5. The P/E ratio on this stock has been quite high, and it has come down substantially over the 6 years of existence for this stock. If you look at the Price/Book Value, at the end of 2008 ratio was about 93% of the 10 year average. However, currently, the P/BV ratio is, at 1.66, higher than the 10 year average of 1.47.

The problem with this stock is the steady decline in the Book Value. This stock is paying, on average, some 39% of the cash flow in distributions. You would expect some increase in Book Value, yet, on average, the Book Value is declining at the rate of 4.5% per year.

The current price is about 36% higher than the Graham Price. At then end of the accounting year of December 2008, the stock price was at the Graham Price. The problem here again is the declining Book Value. Also, this stock is not expected to earn in 2009 anywhere near the earnings of 2008.

When I look at analysts’ recommendations, the consensus is a Hold. There are few analysts that follow this stock with most recommending a Hold. However, there are also Underperform and Sell recommendations on this stock. There are no other recommendations for this stock. (See my site for information on analyst ratings.)

I like stocks that you can buy and hold and not worry too much about. Considering the decreasing Book Value on this stock and that fact that most Income Trust will not survive the changes in the Tax regime, I can see no reason personally that I would want to buy this stock.

The Enbridge Income Fund assets are a 50% interest in the Alliance Canada Pipeline and a 100% interest in Enbridge Pipelines (Saskatchewan) Inc. They also have Green Power assets, which include a 50% interest in NRGreen Power Limited Partnership. NRGreen operates electrical generation facilities using waste heat, and holds interest in three wind power projects in Western Canada. Just over 40% of the trust units are owned by Enbridge Inc. Its web site is See my spreadsheet at

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at for a list of the stocks for which I have put up spreadsheets.

1 comment:

  1. If I would had to choose between Enbridge (ENB) and Enbridge Income Fund, I will choose Enbidge. I don't really like the Enbridge Income Fund. As for Enbridge, I don't have any stocks of Enbridge yet, too expensive for me right now.