Enbridge Needs Backlog Momentum To Outweigh Mainline Delay And Leverage Concerns In Q3

Enbridge heads into its third-quarter report with a striking disconnect. Last quarter, management described what may be the best environment for growth in recent memory, pointing to a swelling backlog and a run of new LNG, power and liquids projects. The stock has fallen 12.3% since then, while the S&P 500 gained 3.7%. The November 6 release, due before the open, needs to show whether that optimism is turning into earnings and balance-sheet progress, or whether the market was right to focus on what went wrong.

The Street expects earnings of $0.36 a share, up 9.1% from $0.33 a year ago, on revenue of about $10.32 billion, down 2.9%. Investors should not read much into the revenue dip. A large share of Enbridge's top line passes through commodity and energy services activity, so the fee-based cash flow behind earnings matters far more. The sharp drop from the prior quarter's $0.46 and $21.18 billion is also expected, because the third quarter is typically a softer period for the gas utility business. Management reaffirmed its outlook last quarter rather than raising it. A high single-digit earnings gain would fit that steady posture, but it would not by itself support the more bullish tone.

The main test is execution on the growth pipeline. The secured backlog has risen each quarter, from $35 billion a year ago to $41 billion, and roughly $9 billion had been sanctioned by midyear against a target of up to $20 billion across 2026 and 2027. Another step up, together with clear progress on the TTC Connector option to Freeport LNG or the Project Beacon expansion, would show that the deal flow is real. Project Beacon's open season reportedly drew far more interest than expected. Blackcomb is also worth tracking. Management targeted full service in the second half of 2026, so commissioning updates this quarter will show whether new assets are arriving on schedule to support growth into 2027. On the utility side, a more ambitious rate-base growth outlook and an expanded Meta relationship, now four projects, raise the question of whether these initiatives are moving toward sanctioned capital.

The weaker side of the story deserves equal attention. The MLO2 mainline expansion was once framed as a firm 250,000 barrel-per-day project for 2028. It has been broken into pieces, with downstream Chicago-area segments moving first and the upstream portion pushed out. Management blamed volatile oil prices and the slow, still non-binding policy process in Alberta for holding back producer commitments. Any sign of further slippage, or silence on a binding open season, would undercut Enbridge's core Canadian egress story. Leverage is the other concern. Debt to EBITDA reached 5.1 times, above the 4.5 to 5.0 range, mostly because of currency moves. Investors will want evidence that EBITDA growth and FX are bringing that ratio back down rather than further up. Comments on the Ohio rate case, where new rates are expected in early 2027, and the low-probability rate-freeze proposal will also help gauge regulatory risk.

Sentiment has improved, with the bullish reading climbing to 31.7% from 11.8% a quarter ago, even as the shares slid. At $48.55, the stock sits below its 200-day moving average of $52.16 and in the lower part of its post-earnings range of $45.49 to $55.60. That entire range sits well below the prior quarter's $53.20 to $58.45 band, a sign the market has reset its valuation lower despite the stronger operating narrative.

That gap shapes the setup. Matching consensus is probably not enough. The narrative stays intact if Enbridge can show continued backlog growth, keep Blackcomb on schedule and lay out a credible path back inside its leverage range. Further MLO2 drift or rising debt metrics would suggest the market's skepticism was justified.

This earnings preview was originally published on Earnings Whispers.

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