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TC Energy (TRP) Holds Annual Investor Day: Key Takeaways
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At its Annual Investor Day last week, midstream biggie TC Energy (TRP - Free Report) presented a summary of its five-year corporate strategy and operational targets. The company believes that its massive secured project portfolio will add meaningfully to future profitability and shareholder returns. TC Energy also looks poised to grow its dividend, underpinned by stable cash flows from long-term contracts.
This premier energy infrastructure provider in North America expects natural gas to play a ”pivotal role” in the continent’s energy future with consumption growing by more than 25% through 2030. However, liquids will keep playing an important role in the fuel mix. At the same time, TC Energy continues to expand its portfolio increasingly toward renewables, hydrogen as well as carbon capture, utilization and storage. The projects include powering the U.S. portion of the Keystone pipeline using renewable energy and a unique initiative to develop 24x7 carbon-free power
TC Energy has C$29 billion of secured capital programs (with C$7 billion to be okayed by the end of this year) set to provide an average after-tax return of about 8% to shareholders. TRP added that between now and 2026, capital spending would total C$21 billion this year – enough to support EBITDA at a CAGR of 5% over that time. In particular, the pipeline operator is eyeing investments to the tune of C$5-6 billion in Mexico natural gas, considering the strong base business there. The company’s capital allocation strategy will also help it to achieve its long-term leverage reduction target of approximately 4.75x debt-to--EBITDA
TC Energy, which has hiked its dividend for 21 years in a row, expects to be able to keep raising the payout by 3%-5% in the future. While the dividend growth rate is down from 5%-7% previously, the current yield of around 6% appears safe on the back of impressive growth projects in the backlog.
Zacks Rank & Stock Picks
TC Energy currently carries a Zacks Rank #3 (Hold). While TRP shares have largely underperformed the industry in a year (6.3% versus 20.6%), we believe the company is trending toward the right direction, which will help the stock catch up.
ConocoPhillips has a projected earnings growth rate of 712.4% for the current year. The Zacks Consensus Estimate for COP’s current-year earnings has been revised 16.9% upward over the past 60 days.
ConocoPhillips beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 13%. COP shares have gained around 79.1% in a year.
Chesapeake Energy has a projected earnings growth rate of 121.1% for the current year. CHK's consensus estimate for the current year has been revised 14.8% upward over the past 60 days.
Chesapeake Energy beat the Zacks Consensus Estimate for earnings in three of the last four quarters. The stock has a trailing four-quarter earnings surprise of roughly 23.1%, on average. CHK shares have rallied around 56.8% in a year.
HollyFrontier has an expected earnings growth rate of 355.2% for the current year. The Zacks Consensus Estimate for HFC's current-year earnings has been revised 72.1% upward over the last 60 days.
HollyFrontier beat the Zacks Consensus Estimate for earnings in two of the last four quarters but missed it twice. It has a trailing four-quarter earnings surprise of roughly 20.9%, on average. HFC has gained around 22.7% in a year.
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TC Energy (TRP) Holds Annual Investor Day: Key Takeaways
At its Annual Investor Day last week, midstream biggie TC Energy (TRP - Free Report) presented a summary of its five-year corporate strategy and operational targets. The company believes that its massive secured project portfolio will add meaningfully to future profitability and shareholder returns. TC Energy also looks poised to grow its dividend, underpinned by stable cash flows from long-term contracts.
This premier energy infrastructure provider in North America expects natural gas to play a ”pivotal role” in the continent’s energy future with consumption growing by more than 25% through 2030. However, liquids will keep playing an important role in the fuel mix. At the same time, TC Energy continues to expand its portfolio increasingly toward renewables, hydrogen as well as carbon capture, utilization and storage. The projects include powering the U.S. portion of the Keystone pipeline using renewable energy and a unique initiative to develop 24x7 carbon-free power
TC Energy has C$29 billion of secured capital programs (with C$7 billion to be okayed by the end of this year) set to provide an average after-tax return of about 8% to shareholders. TRP added that between now and 2026, capital spending would total C$21 billion this year – enough to support EBITDA at a CAGR of 5% over that time. In particular, the pipeline operator is eyeing investments to the tune of C$5-6 billion in Mexico natural gas, considering the strong base business there. The company’s capital allocation strategy will also help it to achieve its long-term leverage reduction target of approximately 4.75x debt-to--EBITDA
TC Energy, which has hiked its dividend for 21 years in a row, expects to be able to keep raising the payout by 3%-5% in the future. While the dividend growth rate is down from 5%-7% previously, the current yield of around 6% appears safe on the back of impressive growth projects in the backlog.
Zacks Rank & Stock Picks
TC Energy currently carries a Zacks Rank #3 (Hold). While TRP shares have largely underperformed the industry in a year (6.3% versus 20.6%), we believe the company is trending toward the right direction, which will help the stock catch up.
Some better-ranked players in the energy space are ConocoPhillips (COP - Free Report) , Chesapeake Energy (CHK - Free Report) and HollyFrontier . All the companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
ConocoPhillips has a projected earnings growth rate of 712.4% for the current year. The Zacks Consensus Estimate for COP’s current-year earnings has been revised 16.9% upward over the past 60 days.
ConocoPhillips beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 13%. COP shares have gained around 79.1% in a year.
Chesapeake Energy has a projected earnings growth rate of 121.1% for the current year. CHK's consensus estimate for the current year has been revised 14.8% upward over the past 60 days.
Chesapeake Energy beat the Zacks Consensus Estimate for earnings in three of the last four quarters. The stock has a trailing four-quarter earnings surprise of roughly 23.1%, on average. CHK shares have rallied around 56.8% in a year.
HollyFrontier has an expected earnings growth rate of 355.2% for the current year. The Zacks Consensus Estimate for HFC's current-year earnings has been revised 72.1% upward over the last 60 days.
HollyFrontier beat the Zacks Consensus Estimate for earnings in two of the last four quarters but missed it twice. It has a trailing four-quarter earnings surprise of roughly 20.9%, on average. HFC has gained around 22.7% in a year.