Enbridge Posts Strong Q4 Results but DeepValue Maintains Hold Amid Persistent Risks

What happened

Enbridge reported robust Q4 2025 earnings with 17% adjusted growth, a dividend hike for the 31st consecutive year, and a $39 billion secured capital backlog, prompting a Seeking Alpha upgrade to strong buy. The company emphasizes operational excellence and inflation-protected EBITDA, reinforcing its North American infrastructure leadership. However, the DeepValue master report holds a HOLD stance, citing valuation near the DCF base value of $46.85 per share and elevated leverage with net debt/EBITDA at 5.92x. Key risks include regulatory and legal overhangs from rate cases and the Line 5 dispute, which could impact cash flows and returns. Despite the positive quarterly performance, these structural issues cap near-term upside, leaving the investment thesis unchanged.

Implication

Enbridge's Q4 earnings beat and dividend increase validate its predictable cash flow model, supported by long-term contracts and the Mainline Tolling Settlement through 2028. The record capital backlog suggests growth potential, but execution risks and funding needs are heightened by elevated debt levels and modest interest coverage of 2.31x. Regulatory outcomes, such as pending rate cases and Line 5 litigation, pose significant uncertainty to allowed returns and throughput, potentially affecting future profitability. While macro tailwinds from U.S. crude production and LNG exports are constructive, the stock trades near intrinsic value, offering limited margin of safety. Therefore, a hold position is prudent until clearer progress on deleveraging and favorable regulatory resolutions emerges.

Thesis delta

The Seeking Alpha upgrade and strong Q4 results do not shift the core investment thesis. The DeepValue report's HOLD rating is based on balanced risks, including valuation near base and persistent leverage and regulatory issues, which remain unaddressed in the news. No new catalysts in the article alter the need for caution, so the thesis stands unchanged pending further developments.