QS Research · Michael Burry's Scion Capital analyst template · 2006
ENBRIDGE INC (ENB)
As of 2026-11-11 · 10/15 boxes filled from SEC filings and market data
Report price $47.76 (close 2026-11-10)
Conclusion: SHORT
Conviction low · base case -34% · downside -34% · upside +22%
The market is paying 23.9x GAAP and 17.3x operating earnings for a toll-road utility whose TTM free cash flow is only C$382M (0.3% yield) because capex is 71% of EBITDA, and whose shares are being issued (+2.2% net) rather than bought back. The operating record is real — EBIT C$11.00B, ROIC 13.5% against a 5.9% WACC, a $38B secured backlog and reaffirmed FY2026 adjusted EBITDA guidance of $20.2-20.8B — but the cash does not reach the equity, and the peer-median P/E of 15.8x puts the anchored base at $31.57, -33.9%; the downside at 14.7x is also $31.57, -33.9%. The upside case is +22.0% and reward/risk is 0.65, so the rule gives a short with low conviction: a mispricing may be forming on the crowded short and the backlog, but the price already discounts the growth. I would need either a lower entry or evidence that FCF converts before calling this a long.
Key numbers
- Share price: $47.76
- Market cap: $106.45B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): C$89.93B
- EV / EBITDA (TTM): 8.8x
- P/E (TTM): 23.9x
- FCF yield: 0.3%
- Price / book: 2.49x
- P/E, operating (tax-normalized) (TTM): 17.3x
- EV / FCF (TTM): 386.5x
- Revenue growth (latest fiscal year): +13.3%
- ROIC (TTM): 13.5%
- WACC: 5.9%
- Economic profit spread: +7.6 pts
The 15 boxes
- ✓ 1. Long-form business notes
Enbridge (FY2025 10-K) is four infrastructure segments — Liquids Pipelines (~6 mmbpd, described as the largest global crude network), Gas Transmission (growth projects now ~50% of the secured capital program), Gas Distribution and Storage utilities, and Renewable Power Generation — earning tolls, cost-of-service returns, take-or-pay and PPA revenue rather than commodity prices. Between the FY2020 and FY2025 10-Ks the secured capital backlog went from $16B (through 2023) to $39B (through 2033), and the strategy language moved from 'the transition to a low carbon future' to an 'all-of-the-above'/'energy evolution' framing aimed at LNG exports, data centres and coal-to-gas. XBRL (S24) shows revenue C$18.82B (FY2020) to C$29.33B (FY2025), operating income C$7.96B to C$10.96B with a FY2022 dip (operating income C$5.18B, net income to common C$2.59B). Post-deal TTM to 2026-09-30: operating income C$11.00B, net income to common C$6.31B, operating cash flow C$12.27B, capex C$11.88B — the TTM revenue cell (C$89.93B) is not usable.
- ✓ 2. Competitive advantage
Enbridge's advantage is contractual and regulatory rather than brand-driven: the sources show long-term PPAs insulating Renewable Power revenue from power prices, and rate-of-return style economic regulation of the rates it charges customers, but they also show that at contract expiry and on new development it faces large utilities, small independent power producers and private equity. The margin record on the post-deal base is level, not compressed: operating income rose from C$5.18B (FY2022) to C$10.96B (FY2025) and C$11.00B TTM to 2026-09-30, with operating cash flow of C$12.27B in FY2025 and TTM, so earnings are backed by cash. What the history does not show is a high-return franchise: capex of C$8.97B (FY2025) and C$11.88B (TTM) runs well above D&A of C$5.66B, there were no buybacks in FY2024 or FY2025, and diluted shares rose from 2,021.0M (FY2020) to 2,186.0M (FY2025). No return-on-capital or segment margin figure is given by any source, so the durability case rests on contracts, licences and scale, not on measured returns.
- ✓ 3. 10-Q takeaways
Q3 2026 GAAP earnings jumped to $1,288 million ($0.59/share) from $682 million ($0.30) largely on non-operating items — a $245 million unrealized derivative gain versus a $394 million loss in Q3 2025, plus a $66 million positive crude inventory adjustment — while adjusted earnings rose only $77 million to $1,074 million ($0.49/share) and Adjusted EBITDA rose to $4,434 million from $4,267 million. Liquids Pipelines EBITDA fell $150 million to $2,133 million on lower Mainline volumes and Line 9 tolls, offset by Gas Transmission up $188 million to $1,458 million (East Tennessee settlement, Texas Eastern rates) and Gas Distribution and Storage up $105 million to $665 million. 2026 guidance was reaffirmed at $20.2–20.8 billion adjusted EBITDA and $5.70–6.10 DCF/share, with net available liquidity of $11.8 billion at September 30, 2026 after a $3.0 billion common equity offering; the 10-Q notes no material modification to risk factors.
- ○ 4. Corporate governance
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ○ 9. Insider trading interpretation
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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