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TC Energy's (TRP) Q4 Earnings Surpass Estimates, Rise Y/Y

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TC Energy Corporation (TRP - Free Report) stock has been stable since the company’s fourth-quarter 2020 earnings announcement on Feb 18.

In spite of its solid earnings and revenues, the company’s shares failed to display an uptrend after management informed about the cost overruns for its Coastal Gaslink pipeline.

Inside TC Energy’s Earnings

TC Energy’s fourth-quarter 2020 adjusted earnings of 88 cents per share beat the Zacks Consensus Estimate as well as the year-ago quarter’s figure of 78 cents. Stellar results can be attributed to the rapid development of projects in the Canadian Natural Gas Pipelines and Mexico Natural Gas Pipelines segments.

Moreover, TC Energy’s comparable EBITDA of C$2.32 billion in the December quarter was up marginally from C$2.31 billion in the prior-year period.

This North America-based energy infrastructure provider’s quarterly revenues of $2.53 billion increased 2.3% year over year.

Segmental Information

Canadian Natural Gas Pipelines reported comparable EBITDA of C$682 million, up 10.4% from the year-ago quarter’s levels. This upside was the outcome of robust growth at the Canadian Natural Gas Pipelines owing to improved rate base earnings, flow-through depreciation and financial charges on the NGTL System from additional facilities.

U.S. Natural Gas Pipelines’ comparable EBITDA of C$919 million reflects a 7.5% increase from the prior-year quarter’s level. This upside can be attributed to reduced operating costs and increased earnings from ANR owing to the natural gas sale from some gas storage facilities.

Mexico Natural Gas Pipelines’ comparable EBITDA of C$170 million improved marginally from the year-earlier quarter’s figure of C$153 million. This upside came primarily on the back of solid earnings from investment in the Sur de Texas pipeline, which became operational in 2019 September.

Liquids Pipelines unit’s comparable EBITDA of C$408 million in the reported quarter deteriorated from the year-earlier quarter’s level of C$472 million. This downtrend resulted from the plunging volumes of the Keystone Pipeline System. Moreover, lower earnings from liquids marketing activities were a prime reason.

Power and Storage posted a comparable EBITDA of C$161 million, plummeting 23.3% year over year due to an earnings decline from Bruce Power, thanks to the planned commencement of unit 6.

TC Energy Corporation Price, Consensus and EPS Surprise

TC Energy Corporation Price, Consensus and EPS Surprise

TC Energy Corporation price-consensus-eps-surprise-chart | TC Energy Corporation Quote

Capital Expenditures and Balance Sheet

As of Dec 31, 2020, TC Energy’s capital investments summed C$2.2 billion. Concurrently, the company had cash and cash equivalents worth C$1.53 billion and a long-term debt of C$34.9 billion. Its total debt to total capital was 57.8%.

Key Updates

The company re-emphasizes its aforementioned guidance. Last month, management of this leading industry player stated that its Keystone XL pipeline construction is likely to be discontinued in response to President Joe Biden’s pledge to suspend the presidential permits to proceed with the project construction. TC Energy is displeased with Biden’s decision and expects the pipeline’s extensive regulatory reviews to get revoked. The company further decided to terminate more than 1,000 construction jobs in the weeks ahead.

Management also mentioned that the company is progressing with the Wisconsin Access Project to increase its natural gas capacity. This $200-million project is also set to improve a pipeline system’s reliability that delivers fuel from various basins to the U.S. Midwest and the Gulf Coast.

Further, this energy infrastructure provider expects costs for its Coastal Gaslink pipeline in British Columbia to shoot up from its prior projections due to increased scale, permit deferrals and the impacts of the pandemic.

TC Energy's board of directors announced the fourth-quarter 2020 dividend of 87 Canadian cents per share (or C$3.48 cents annually).

Zacks Rank & Key Picks

TC Energy currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are Matador Resources Company (MTDR - Free Report) , PDC Energy, Inc. (PDCE - Free Report) and Denbury Inc. (DEN - Free Report) , each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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