Enable Midstream Q3 Earnings: Is NYSE:ENBL Cheap at 7.3x Price/EPS?

in EARNINGS/INVESTING IDEAS by

Enable Midstream Partners, LP (NYSE:ENBL) is scheduled to report Q3 earnings results on November 4, 2020.

The company is expected to report earnings of $0.13/share on revenue of $716.5 million. The consensus earnings per share (EPS) of $0.13/share is based on a poll of 3 analysts and represents a decline in eps of −54.4% over the same quarter last year, when the company reported earnings of $0.28/share.

The revenue forecast of $716.5 million based on a poll of 3 analysts implies a year-over-year (YoY) growth in revenue of 2.5%. Last year the company reported $699 million in revenue for the quarter.

Expected to report EPS contraction of −54.4% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $716.54 $699.00 2.5%
EPS $0.13 $0.28 −54.4%

Earnings Call Trends

Historically, management has exceeded analyst expectations 5 out of the last 8 tracked quarters, and missed expectations 3 quarters.

What are your expectations from Enable Midstream Partners, LP for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.09 $0.08 −9.9% Missed
Q1, 2020 $0.27 $0.24 −9.5% Missed
Q4, 2019 $0.25 $0.21 −15.5% Missed
Q3, 2019 $0.26 $0.28 9.6% Beat
Q2, 2019 $0.25 $0.26 5.9% Beat
Q1, 2019 $0.25 $0.26 2.4% Beat
Q4, 2018 $0.27 $0.38 42.0% Beat
Q3, 2018 $0.25 $0.30 20.4% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 22.1%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 5, 2020 $4.93 $6.02 22.1% Increase
May 6, 2020 $4.12 $4.15 0.7% Increase
February 19, 2020 $8.50 $7.81 −8.1% Decline
November 6, 2019 $10.43 $10.35 −0.8% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.84, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.84 implies a 0.2% chance of earnings manipulation.

Fundamentals And Technical Analysis

Enable Midstream Partners, LP is currently trading at $4.52/share, down −4.8% for the day. The company is trading at approximately 42.1% of its 52-week high of $10.81/share. The company’s stock price is down −24.9% since the last earnings report and down −3.6% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 49.85 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:ENBL Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 7.32 and a forward P/E multiple of 8.59.

Enable Midstream Partners, LP’s current share price also implies a price-to-book (P/B) multiple of 0.29. The following table summarizes some other key fundamental ratios:

Data as of October 28, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $4.52
P/E Ratio 7.3x
P/E Ratio (Fwd) 8.6x
PEG Ratio −0.2
Total Debt / Total Capital 64.3%
Levered Free Cash Flow $544 million
EV / EBITDA 6.3x

Finbox

Enable Midstream Partners, LP is a mid-cap stock with a market capitalization of $2.068 billion and a total enterprise value of $6.865 billion. The company operates in the Energy sector and the Oil, Gas & Consumable Fuels industry.

Enable Midstream Partners, LP owns, operates, and develops midstream energy infrastructure assets in the United States. The company operates in two segments, Gathering and Processing; and Transportation and Storage. The Gathering and Processing segment provides natural gas gathering, processing, and fractionation services in the Anadarko, Arkoma, and Ark-La-Tex basins, as well as crude oil gathering services in the Bakken Shale formation of the Williston Basin for its producer customers. The Transportation and Storage segment offers interstate and intrastate natural gas pipeline transportation and storage services to natural gas producers, utilities, and industrial customers. The company’s natural gas gathering and processing assets are located in Oklahoma, Texas, Arkansas, and Louisiana; crude oil gathering assets are located in North Dakota; and natural gas transportation and storage assets extend from western Oklahoma and the Texas Panhandle to Louisiana, from Louisiana to Illinois, in Oklahoma, and from Louisiana to Alabama. As of December 31, 2018, its portfolio of midstream energy infrastructure assets included approximately 13,900 miles of gathering pipelines; 15 processing plants with 2.6 billion cubic feet per day of processing capacity; approximately 7,800 miles of interstate pipelines; approximately 2,300 miles of intrastate pipelines; and 8 natural gas storage facilities with 84.5 billion cubic feet of storage capacity. The company was founded in 2013 and is based in Oklahoma City, Oklahoma. Enable Midstream Partners, LP operates as a subsidiary of Centerpoint Energy Resources Corp.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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