Enbridge’s Q4/17 results were slightly better than expected with free cash flow per share (FCFPS or DCF as the company defines it) of $1.05 ahead of us and consensus at $1.01. On a full year basis Enbridge’s FCFPS of $3.68 met the company’s guidance range of $3.60-3.90. This would be despite a number of headwinds in 2018 including a late Spectra close, warmer than normal weather and upstream production outages. As such, we view Q4 as the only “clean” quarter in 2017 and looking forward we expect strong growth from the company. We believe Enbridge’s shares are set to outperform in 2018 as the regulatory process regarding Line 3 unfolds (Administrative Law Judge recommendation in April, decision in June), the company executes its funding plan including assets sales, and the growth of the business is shown through improved quarterly results.
One of the greatest sports movie ever made was Hoosiers, starring Gene Hackman as Norman Dale, a basketball coach. Perhaps you have seen it. What follows is one of Norman Dale’s key speeches1 and I reproduce it here because it is crucial to your response to what is going on in the markets right now:
‘There’s a tradition in tournament play to not talk about the next step until you’ve climbed the one in front of you. I’m sure going to the State finals is beyond your wildest dreams, so let’s just keep it right there. Forget about the crowds, the size of the school, their fancy uniforms and remember what got you here. Focus on the fundamentals that we’ve gone over time and time again. And most important, don’t get caught up thinking about winning or losing this game. If you put your effort and concentration into playing to your potential, to be the best that you can be, I don’t care what the scoreboard says at the end of the game. In my book, we’re gonna be winners! Okay?!’