RE:Guidance for Return on Assets (RoA)Like a crack addict to the pipe, MANURE 16 can't help but relapse and continue posting elongated fluffy diatribes in weak attempts to convince others just how smart he is.
B!tch PUH-LEEEESE....
Manure wrote:"There are so many metrics that can be used to evaluate a company. The financial world keeps inventing new metrics to justify the multiples as pre-existing metrics cease to be palatable.
In our day to day "real" lives, we tend to measure things as a Return on Assets (RoA). For example: my house was worth x dollars last year or five or ten years ago and today it is worth x plus (hopefully). The difference in value as a percentage is the RoA. We measure the returns on our investment portfolios the same way as we compare the Total Return (dividends and hopefully capital gains) against the asset base at any given starting point.
In order to bring things back down to earth from the ever-changing fasmagorical metrics used by the street, I look at what a company is earning as a percentage of its assets because that is how I keep score in my own life.
ENB has $165 billion (rounded) as of the Q3 financials. Assets for the 9 months increased $4 billion and liabilities also increased $4 billion leaving an increase of about $300 million in equity growth over the 9 months.
It is difficult to evaluate the REAL market value of ENB's assets until they sell stuff. The book value of assets placed in the ground 10, 20, 30, up to 60 years ago is unlikely to accurately reflect what the assets are worth today. The fact that ENB has added a proportionally large amount of assets compared to historical numbers since 2017 when the company acquired Spectra makes the current book value of assets more realistic than for a company like TRP for example but I digress. As such, let's use the $165 billion of assets on the books as a fairly reasonable benchmark.
ENB plans to:
Since mgmt didn't mention debt reduction and clearly isn't focusing on it, I'm going to leave it out of the equation
* they plan to return $7.0 billion (roinded) to shareholders (2.026 billion shares x $3.44 per
share) in dividends = 4.2% RoA
* they plan to invest 6 billion dollars (high end of the $5 to $6 billion range) in growth
opportunitites which equates to 3.6% RoA
* they plan to buy back $1.5 billion dollars worth of shares through an NCIB = 0.4% RoA
In total, guidance indicates that the company is going to generate a return of about $14.5 billion or 8.2% RoA. The $14.5 million offered in segmented usage of funds vs the overall $15.0 to $15.6 billion of DCF guidance provides the company with flexibility to seize on opportunities.
The total RoA should be about 8.2% in 2022 with up to another 0.6% available if they meet the high end of their overall DCF target
How one decides if an 8.2% to 8.8% RoA meets their investment objectives is completely personal. The highly predictable and reliable nature of ENB's guidance (mgmt introduced the term ratability) will likely continue to appeal to income seekers and be dismissed by the more adventurous.
I have no idea how the ESG movement will treat ENB as the company has effectively inserted itself into the ESG conversation while maintaining disciplined but aggressive growth in the hydrocarbon industry.
I will leave all the name calling and ego-driven nonsense to those that seem to love it so much."