ENB - Sticking with the all-of-the-above strategy

Research evidence excerpt

ENB - Sticking with the all-of-the-above strategy

May 14, 2026

Investment Conclusion

We rate Enbridge stock an Underperform. At a time the midstream sector is very healthy with accelerating

growth, we don't think investors should pay as large of a premium for ENB stock and its more utility-like attributes.

While the dividend yield and total return story is solid, we also think the high leverage and payout ratio limits

financial flexibility to fund organic growth over time. The stock also is somewhat of a conglomerate with an all-of-

the above strategy. While we agree with this strategy over the long term, investors are currently highly focused

on thematic pure plays in the midstream space which could reduce interest in ENB. Longer term, we think ENB is

a premium North American infrastructure company with large incumbent pipeline networks in the US and Canada,

but we think these attributes are fully reflected in the stock's premium valuation.

We value ENB using a 50-50 hybrid approach using a SOTP on our 2027 EBITDA estimates and total return

targets.

In our SOTP framework, we break out each of ENB’s different businesses and apply a valuation multiple on our

2027 EBITDA estimates based on various characteristics. We apply an 11x EBITDA multiple to ENB’s core Liquids

pipelines segment as the Mainline (50% of the segment) is critical infrastructure with a medium-term regulatory

agreement, albeit with limited growth and some rate risk given the need to manage rate base into the MTS

expiration in 2028. We value gas pipelines at 12.5x EBITDA given their stable nature with supportive regulatory

mechanisms, which is consistent with how we value these assets for other large cap peers. We value the gas