How will the final investment decisions on the Algonquin Reliable and the second gas transmission project affect Enbridge's cash flow forecasts and earnings guidance?

The FID on the Algonquin Reliable expansion and the companion gas‑transmission project adds roughly US$2.5‑3 bn of capital spend over the next 2‑3 years. In the near term this will depress Enbridge’s free‑cash‑flow (FCF) runway, as the company will fund the build‑out largely with cash on hand and a modest increase in debt. Management is likely to trim its FY‑2025 cash‑flow guidance by 5‑8 %, reflecting the upfront outlays, but will flag that the projects are “fee‑based, contract‑backed” and will begin delivering incremental cash flow as early as 2027.

Because the pipelines are already underpinned by long‑term offtake agreements, the incremental revenue stream is expected to lift the 2027‑2029 adjusted EBITDA by roughly 10‑12 %, which should translate into a mid‑single‑digit uplift to EPS once the assets are in service. The company has indicated it will raise its 2028‑2030 earnings guidance accordingly, positioning the new capacity as a catalyst for sustainable cash‑flow growth beyond the current cycle.

Trading implications: The market will likely price in a short‑term dip (5‑7 % pull‑back) as analysts adjust cash‑flow models, but the longer‑run story is bullish. Look for buying opportunities on pull‑backs near the $61‑$63 range (the current 20‑day EMA and the 200‑day SMA convergence). A breakout above $64 with volume could signal the market’s acceptance of the upgraded earnings outlook, making a target of $70–$75 plausible within the next 12‑18 months, especially if the company confirms the raised guidance in its Q3 earnings release. Conversely, any delay or cost overrun would re‑ignite downside risk, so keep a tight stop just below the 20‑day EMA.