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TC Energy's (TRP) Stock Barely Moves Despite Q2 Earnings Beat

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TC Energy Corporation’s (TRP - Free Report) stock has seen an insignificant change in its movement since second-quarter 2021 earnings announcement on Jul 29.

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 second-quarter 2021 adjusted earnings of 87 cents per share beat the Zacks Consensus Estimate of 76 cents as well as the year-ago quarter’s figure of 67 cents. Stellar results can be attributed to the solid performance of the Canadian Natural Gas Pipelines and U.S. Natural Gas Pipelines segments.

The company’s comparable EBITDA of C$2.25 billion in the June quarter was up from C$2.2 billion in the prior-year period.

This North America-based energy infrastructure provider’s quarterly revenues of $2.59 billion increased 15.4% year over year.

Segmental Information

Canadian Natural Gas Pipelines  reported comparable EBITDA of C$684 million, up 10.1% 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$879 million reflects a 6.7% increase from the prior-year quarter’s level. This upside can be attributed to improved Columbia Gas' net earnings as a result of the company’s application for higher transportation prices, which took effect on Feb 1, 2021 as well as increased earnings across its U.S. Natural Gas Pipelines assets subsequent to the cold weather occurrences of 2021.

Mexico Natural Gas Pipelines’ comparable EBITDA of C$164 million declined from the year-earlier quarter’s figure of C$181 million. This downside was primarily due to $55 million of fees recognized in 2020 for the Sur de Texas pipeline's successful completion.

Liquids Pipelines unit’s comparable EBITDA of C$366 million in the reported quarter deteriorated from the year-earlier quarter’s level of C$432 million. This downtrend was because of the plunging volumes of the Keystone Pipeline System.

Power and Storage posted a comparable EBITDA of C$157 million, rising 16.3% year over year owing to higher earnings from Bruce Power, courtesy of a rise in contract price and lesser outage days.

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 Jun 30, 2021, TC Energy’s capital investments summed C$2.2 billion. Concurrently, the company had cash and cash equivalents worth C$2.89 billion and a long-term debt of C$35.8 billion. Its total debt to total capital was 61.2%.

Key Updates

In June 2021, TC Energy along with Pembina Pipeline Corporation (PBA - Free Report) announced intentions to collaborate on a large-scale carbon transportation and sequestration (CCUS) infrastructure project, which on completion will be able to transfer more than 20 million tons of carbon dioxide per year.

The project will connect the existing pipelines through an open-access system, thus linking the Fort McMurray, the Alberta Industrial Heartland and the Drayton Valley regions, and will be built around a new sequestration hub called the Alberta Carbon Grid (ACG).

The ACG represents the infrastructural framework required for Alberta-based companies to successfully control their emissions, progressively contribute to Alberta's lower-carbon economy and unlock a long-term value for both Pembina and TC Energy shareholders.

During the second quarter, the firm invested $1.4 billion in different growth initiatives, adding to its $21-billion secured capital program.

This energy infrastructure provider also 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 third-quarter 2021 dividend of 87 Canadian cents per share (or C$3.48 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) and Continental Resources, Inc. , 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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