Enbridge Stock: Is the Premium Price Justified or Too Much to Pay?
Hey everyone, let’s talk about something that’s been making waves in the investment world lately — Enbridge Inc., ticker symbol ENB. Now, if you’ve been keeping an eye on the stock market, you may have noticed that Enbridge has been trading at a premium valuation for quite some time. And the big question that’s floating around right now is: Is it worth paying that premium?
Currently, ENB is trading at a trailing 12-month EV/EBITDA ratio of 15.36x. That’s significantly above the industry average of 14.05x. So yes, it’s expensive compared to its peers. But does that mean it’s overpriced? Not necessarily — and that’s what I want to break down.
First off, Enbridge isn’t just another energy company. It’s a midstream giant with one of the most extensive crude oil and natural gas transportation networks in North America. We're talking 18,000+ miles of liquids pipelines and over 71,000 miles of gas pipelines across the U.S., Canada, and even into the Gulf of Mexico. They move around 20% of the natural gas used in the U.S. — that's huge.
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What makes ENB even more appealing is the reliability of its revenue. Over 98% of its EBITDA is backed by regulated or take-or-pay contracts, meaning they get paid whether or not the pipelines are fully utilized. Plus, more than 80% of their profits come from operations where they can adjust prices to keep up with inflation. This kind of financial predictability is gold for investors — especially in uncertain economic times.
Enbridge also has a massive secured capital project backlog worth C$28 billion. These projects, which extend through 2029, span liquids pipelines, gas transmission, storage, and even renewables. That backlog isn’t just future expansion — it’s future cash flow, and it adds long-term visibility to the company’s earnings outlook.
Yes, other companies like Kinder Morgan and Enterprise Products Partners offer similar models with stable, fee-based revenues. KMI and EPD are also solid players. But Enbridge has outperformed many of its peers over the past year, gaining 42.6% — that’s better than the industry average and even EPD’s solid 21.2% rise.
However, it's not all sunshine. Enbridge has recently acquired several U.S. gas utility companies, and while the early performance looks good, these are still new additions. Integration risk is real. Any missteps could disrupt their strong performance and impact returns. So that’s something to watch carefully.
Here’s the bottom line: if you already hold ENB, there’s no rush to sell. The fundamentals are strong, the revenue stream is solid, and the long-term outlook is encouraging. But for new investors? It might be wise to hold off just a little — wait for a better entry point. Paying a premium is fine if you’re confident the value is there, but caution never hurts, especially when the integration of major acquisitions is still in progress.
So, is Enbridge worth the premium? If you’re in for the long haul and can stomach some short-term uncertainty, maybe yes. But if you’re looking for a bargain or fast upside, you might want to keep watching from the sidelines — at least for now.
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