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TC Energy's (TRP) Stock Barely Moves Despite Q1 Earnings Beat

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TC Energy Corporation’s (TRP - Free Report) stock has seen an insignificant change in movement since first-quarter 2021 earnings announcement on May 7.

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 first-quarter 2021 adjusted earnings of 89 cents per share beat the Zacks Consensus Estimate of 87 cents as well as the year-ago quarter’s figure of 88 cents. Stellar results can be attributed to the solid performance of the Canadian Natural Gas Pipelines and U.S. Natural Gas Pipelines segments.

However, TC Energy’s comparable EBITDA of C$2.5 billion in the March quarter was down marginally from C$2.53 billion in the prior-year period due to adverse foreign exchange exposure.

This North America-based energy infrastructure provider’s quarterly revenues of $2.59 billion increased 1.8% year over year.

Segmental Information

Canadian Natural Gas Pipelines reported comparable EBITDA of C$686 million, up 15% 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.

U.S. Natural Gas Pipelines’ comparable EBITDA of C$1,055 million reflects a 2.2% increase from the prior-year quarter’s level. This upside can be attributed to improved Columbia Gas' net earnings as a result of its application for higher transportation prices, which took effect on Feb 1, 2021, incremental earnings from escalated capitalized pipeline integrity costs in 2021 relative to 2020 and the contribution from growth projects, which came online.

Mexico Natural Gas Pipelines’ comparable EBITDA of C$180 million declined from the year-earlier quarter’s figure of C$269 million. This downside was primarily due to US$55 million of fees recognized in 2020 as a result of the Sur de Texas pipeline's successful completion.

Liquids Pipelines unit’s comparable EBITDA of C$393 million in the reported quarter deteriorated from the year-earlier quarter’s level of C$445 million. This downtrend was because of 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$181 million, plummeting 6.7% year over year due to an earnings decline from Bruce Power, thanks to lower volumes stemming from greater outage days.

Capital Expenditures and Balance Sheet

As of Mar 31, 2021, TC Energy’s capital investments summed C$2.2 billion. Concurrently, the company had cash and cash equivalents worth C$2.26 billion and a long-term debt of C$39.6 billion. Its total debt to total capital was 61.4%.

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

Key Updates

The company reiterates its aforementioned guidance. In January, management at this leading industry player stated that it stalled its Keystone XL pipeline construction in response to President Biden’s pledge to suspend the presidential permits for proceeding with the project construction.

Construction stand-down operations were completely enforced shortly after the Presidential Permit was withdrawn but some activities are still underway to complete work that began in 2020, conforming to the company's dedication to safety and the environment.

TC Energy acquired TC PipeLines, LP in a $1.68-billion all-stock deal. Per the agreement, a fully-owned subsidiary of TC Energy acquired all the outstanding common units of TC PipeLines not beneficially owned by itself or its affiliates in return for TC Energy common shares.

Notably, the transaction was completed on Mar 3. Post the deal completion, TC Energy fully owns TC PipeLines and the latter is no longer a publicly-held master limited partnership.

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 second-quarter 2021 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 SilverBow Resources Inc. (SBOW - Free Report) , Matador Resources Co. (MTDR - Free Report) and Continental Resources, Inc. (CLR - 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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