Thursday, April 21, 2011

Enbridge Inc 2

I first bought this stock (TSX-ENB) in Jul 2005 and then some more in November 2008 and in January 2009. To date I have made a total return of 16.5% per year. Probably, the dividend portion is around 2.6 to 2.7% per year.

When I look at insider trading, I find Insider Selling at $49.9M. The selling seems to be all stock options, including $22M by the CEO. Everyone, except Directors have lots more stock options than shares. Even for the directors, their stock options are just below the number of shares they own. There is a bit of insider buying, but it is too minor to mention. The management has shown confidence in this company by increasing the dividend for this year by 15.3%.

I get 5 year median low Price/Earning Ratio of 17.7 and a 5 year median high P/E Ratio of 21. So the current P/E ratio of 20.7 is quite close to, but below the 5 year median high. I get a Graham Price of $35.26 and the current stock price of $59.38 is some 68% higher. The 10 year median difference between the Graham Price and the stock price is 38%. So on a relative basis, the stock price is high.

I get a 10 year median Price/Book Value Ratio of 2.69 and a current P/B Ratio of 3.07. The current P/B Ratio is some 14% higher than the 10 year median P/B Ratio. This would also point to a relatively high stock price.
I get a current dividend yield of 3.3% and a 5year median average yield of 3.3%. So this show the stock price is about average.

Another site to get ratios to compare to my spreadsheets would be Reuters. This stock would be at Enbridge. See the summary and financial tabs for applicable ratios. What is interesting is with the financial tab you not only get the ratios for this company, but the average in the particular sector, industry and S&P500. Although this seems orientated towards US stocks, it is still a useful comparison. By the way, TTM means trailing twelve months and MRQ means most recent quarter.

When I look at analysts recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus would be a Buy recommendation. (See my site for information on analyst ratings.)

Analysts with Hold recommendations give a 12 month target for the stock price between $59 and $61. A couple of analysts with hold recommendations thought any price above $57 was too high to pay for this stock. Analysts with Buy recommendations talk about the good dividends and long term capital gains that can be made on this stock. A number of analysts mention that it is a well managed company and that it should be a core holding in any Canadian portfolio.

I am pleased with my investment in this company and will be keeping the stock I currently hold as a core part of my portfolio.

A number of other bloggers have mentioned this stock lately. First, My Own Advisor Blog mentioned Enbridge on April 18th. The Loonie Bin Blogger wrote about Enbridge on February 26, 2011. The passive Income Earner wrote about Enbridge on February 11th, 2011. Also, The Best Green Stocks blogger lists Enbridge as a clean energy stock on April 5th 2011.

On Tuesday, after the holidays, I will be talking about Melcor Developments Inc (TSX-MRD).

Enbridge is focused on three core businesses of crude oil and liquids pipelines, natural gas pipelines, and natural gas distribution. They operate in Canada and US. Its web site is here Enbridge. See my spreadsheet at enb.htm.

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 for stocks followed and investment notes. Follow me on twitter.

1 comment:

  1. Thanks for the mention Susan. I'm a huge fan of Enbridge, they provide what everyone needs: energy.

    Eventually, I plan to move a few ENB shares into my TFSA to shelter the dividend income from these guys.

    Are you, have you done the same thing or, are all your Canadian stocks still unregistered? I would be interested in knowing.

    My Own Advisor