EnLink Midstream LLC

ENLC · NYSE

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The case for and against

Updated Feb 1, 2025

Bull case

EnLink Midstream's positive outlook is supported by significant growth in its Louisiana segment and the Permian Basin, coupled with the recent expansion of its natural gas storage facilities, which enhances its long-term positioning. The company's decision to increase its buyback authorization reflects confidence in its financial health, especially amid price-driven shut-ins in Oklahoma and North Texas. Furthermore, anticipated improvements in natural gas and NGL prices, along with potential catalysts such as higher rig counts and major carbon capture projects, could contribute to sustained revenue growth and operational stability.

Bear case

EnLink Midstream's financial performance has exhibited concerning trends, with EBITDA falling 6% short of Street estimates primarily due to lower margins that offset higher volumes across its operating segments. The company's downside valuation scenarios reflect anticipated weaknesses in commodity pricing that could adversely impact the performance of its gathering and processing (G&P) operations by approximately 10% against 2025 EBITDA estimates. Additionally, risks related to capital return on major projects, reduced drilling activity, and overall commodity exposure further underscore challenges that may hinder future growth and profitability.

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