How Enbridge’s US Expansion News Impacts Its 2025 Valuation

• Wondering if Enbridge is a bargain or overpriced? You are not alone, and that question is front of mind for investors right now.
• The stock recently climbed 0.5% over the past week and is up 10.1% year-to-date, showing that market sentiment and risk perception can change quickly.
• Notably, Enbridge’s recent share price moves have coincided with major news about its strategic acquisitions and regulatory developments, which have reignited investor interest. Headlines around its expansion into U.S. natural gas infrastructure have been especially impactful as they hint at future growth and diversification.
• On the valuation front, Enbridge currently scores 2 out of 6 in our undervaluation checks, so there is more to unpack before calling it a deal or a danger. Up next, we will explore how valuation is measured and why the usual approaches sometimes miss the full picture. Be sure to read on for a unique perspective by the end of this article.

Enbridge scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Enbridge Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model calculates what a company is worth today by projecting its future cash flows and then discounting them back to the present. For Enbridge, this involves forecasting how much cash the company is expected to generate over the next decade and estimating those flows in today’s CA$ value.

Enbridge’s current Free Cash Flow stands at CA$4.94 Billion. Analyst estimates are available for the next five years, after which cash flows are extrapolated. According to projections, Enbridge’s Free Cash Flow could reach CA$17.79 Billion annually by the end of 2029. Over a full ten-year period, projections suggest steady growth, with future Free Cash Flow potentially rising to over CA$40 Billion by 2035.

Based on this model, the estimated intrinsic value of Enbridge shares is CA$351.05. This suggests the stock is trading at an 80.6% discount to its "fair value" according to these cash flow projections.

In summary, the DCF model currently points to Enbridge being significantly undervalued by the market, even as investors absorb the latest company moves and industry trends.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Enbridge is undervalued by 80.6%. Track this in your watchlist or portfolio, or discover 919 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Enbridge.

Approach 2: Enbridge Price vs Earnings

The Price-to-Earnings (PE) ratio is often the preferred valuation metric for established, profitable companies like Enbridge. This ratio offers a snapshot of how much investors are willing to pay for each dollar of the company’s earnings, making it a practical tool for comparing profitability across similar businesses.

When assessing what a “normal” or “fair” PE ratio should be for a stock, it is important to consider both growth expectations and risk. Companies with higher expected earnings growth, stable cash flows, or lower risk typically command higher PE ratios. Conversely, if growth is limited or risks are greater, the fair PE contracts accordingly.

Enbridge’s current PE ratio stands at 26.6x. This means the stock is commanding a premium compared to the Oil and Gas industry average of 15.0x and even relative to a peer average of 20.2x. At first glance, this might make Enbridge appear expensive versus its sector.

However, Simply Wall St’s proprietary “Fair Ratio” seeks to go further than simple peer or industry comparisons. The Fair Ratio, calculated at 19.0x for Enbridge, reflects a holistic view informed by earnings growth, profit margin, market capitalization, risk factors, and industry dynamics. This aims to set a more relevant benchmark for valuation. Because it incorporates these additional elements, it delivers a fairer sense of whether a stock’s price tag is justified.

Comparing the actual PE ratio of 26.6x to the Fair Ratio of 19.0x signals that the stock is trading above what would be considered fair, even after adjusting for Enbridge’s strong fundamentals and industry tailwinds. This suggests investors are paying a premium that goes beyond the company’s underlying business drivers.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1423 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Enbridge Narrative

Earlier, we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives. A Narrative is your investment story—the unique perspective you bring by connecting your assumptions about a company’s future revenue, earnings, and margins to its fair value, beyond the headline numbers.

With Narratives, you combine the latest facts with your own reasoning, directly linking Enbridge’s business outlook to financial forecasts and a fair value estimate. Narratives make this process easy and accessible on Simply Wall St’s Community page, where millions of investors quickly share, discuss, and track their perspectives as the facts change.

By building your own Narrative, you can compare your personal fair value to Enbridge’s current price and spot buying or selling opportunities that match your convictions. Best of all, Narratives automatically update with the newest news or earnings, so your story and your investment decisions evolve alongside the real world.

For example, some investors are optimistic about Enbridge’s long-term policy support and expect a fair value as high as CA$77.0, while others focus on industry headwinds and set a much lower target of CA$60.0. Narratives make these perspectives discoverable, so you can decide what story fits you best.

Do you think there's more to the story for Enbridge? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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