DCF Studio

    ENB.TO · TOR · Energy

    Enbridge Inc.

    Also onConsensus Drift

    Implied value per share

    CAD 42.17

    Market price

    CAD 68.14

    Implied upside

    -38.1%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    AdjustedConsensus rests on as few as 2 analyst estimate(s).
    AdjustedCapital expenditure runs at 11.8% of revenue against depreciation of 9.3%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.
    NoteRisk-free rate is an assumption: CAD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    CAD 42.17-38.1%
    Exit multiple
    CAD 96.85+42.1%
    Market price
    CAD 68.14

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CAD). Outflows negative.

    0bn5bn10bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayCAD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueCAD 69.7bnCAD 74.6bnCAD 79.7bnCAD 85.3bnCAD 91.2bn+6.9%
    EBITCAD 12.6bnCAD 13.5bnCAD 14.4bnCAD 15.4bnCAD 16.5bn+6.9%
    NOPATCAD 9.7bnCAD 10.4bnCAD 11.1bnCAD 11.9bnCAD 12.7bn+6.9%
    Add depreciation & amortisationCAD 6.5bnCAD 6.9bnCAD 7.4bnCAD 7.9bnCAD 8.4bn+6.9%
    Less capital expenditureCAD -8.2bnCAD -8.8bnCAD -9.4bnCAD -10.1bnCAD -10.8bn+6.9%
    Less increase in working capitalCAD -542.3mCAD -579.9mCAD -620.1mCAD -663.2mCAD -709.2m+6.9%
    Free cashflow to firmCAD 7.4bnCAD 7.9bnCAD 8.4bnCAD 9.0bnCAD 9.6bn+6.9%
    Discount factor0.97040.91380.86050.81030.7630-
    Present valueCAD 7.2bnCAD 7.2bnCAD 7.3bnCAD 7.3bnCAD 7.4bn+0.7%
    Present Value Of The ForecastCAD 36.3bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate3.30%CAD assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta0.845Reported 0.769, pulled toward 1.0 (Blume)
    Cost of equity7.95%Risk-free + beta x equity risk premium
    Cost of debt4.82%Interest expense / average total debt
    Market capitalisationCAD 148.8bn58.6% of capital
    Total debtCAD 105.3bn41.4% of capital, book value as a proxy
    Tax rate23.0%Effective, capped at statutory
    WACC6.19%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareCAD 42.17

    82% of EV

    Forecast FCFF, final year
    CAD 9.6bn
    Capex at depreciation, working capital in reinvestment
    CAD 12.7bn
    Less reinvestment at g/ROIC (40.4% of NOPAT)
    CAD -5.1bn
    Capitalised
    CAD 7.6bn
    ROIC (WACC floor)
    6.2%
    Terminal value, undiscounted
    CAD 209.8bn
    Terminal value, discounted
    CAD 160.1bn
    Enterprise value
    CAD 196.3bn
    Less net debt
    CAD 104.2bn
    Equity value
    CAD 92.2bn

    Exit at 14.7x EBITDA

    Value per shareCAD 96.85

    89% of EV

    Terminal value, undiscounted
    CAD 366.4bn
    Terminal value, discounted
    CAD 279.6bn
    Enterprise value
    CAD 315.9bn
    Less net debt
    CAD 104.2bn
    Equity value
    CAD 211.7bn

    Spread between methods: 79%.

    Sensitivity

    Value per share (CAD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    4.19%96.07102.87113.39132.32177.82
    5.19%59.5860.0260.4760.9161.36
    6.19%41.4641.8142.1742.5342.89
    7.19%28.4128.7129.0029.3029.59
    8.19%18.5918.8419.0819.3319.58

    Outlined: this model. Green text: above today's price of 68.14. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year6.9%13.2%+6.2pp
    EBIT margin18.1%23.0%+4.9pp
    Discount rate6.2%4.9%-1.3pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.