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Analyst Blog

Pipeline operator TC PipeLines LP (TCP - Free Report) reported third-quarter 2016 earnings per unit (EPU) of 65 cents that beat the Zacks Consensus Estimate of 61 cents. The figure, however, deteriorated from 70 cents recorded in the year-ago quarter. Higher transportation demand, solid performance by the partnership’s existing asset base along with synergies from the acquisition of Portland Natural Gas Transmission System (“PNGTS”) drove the results in the quarter.   

 

Quarterly transmission revenues of $91 million missed the Zacks Consensus Estimate of $107 million. Nonetheless, the top line demonstrated a 7.1% improvement from the year-ago quarter level.    

Distribution & Cash Flow

Late last month, TC PipeLines announced third-quarter 2016 cash distribution of 94 cents per unit ($3.76 per unit annualized), up 6% year over year. The distribution remained unchanged from the amount paid in second-quarter 2016.

The partnership’s total distributable cash flow rose about 16.7% year over year to $84 million.

TC PipeLines distributed $65 million in the reported quarter as against $59 million in the year-ago quarter.

Pipeline Systems’ Performance

Great Lakes: The partnership incurred a loss of $4 million from equity investment, wider than the prior-year quarter loss of $1 million.  

Northern Border Pipeline: Equity loss at this pipeline totaled $18 million, wider than the prior-year quarter loss of $16 million.  

Liquidity

As of Sep 30, 2016, TC PipeLines had long-term debt (excluding current portion) of $1,896 million, which represents a debt-to-capitalization ratio of 63.3%.   

TC PIPELINES Price, Consensus and EPS Surprise

 

Zacks Rank & Key Picks

Calgary, Alberta-based TC PipeLines currently carries a Zacks Rank #3 (Hold).

Some better-ranked players from the broader energy sector include North Atlantic Drilling Limited (NADL - Free Report) , Ultra Petroleum Corp. (UPLMQ - Free Report) and McDermott International Inc. (MDR - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the last four quarters, North Atlantic Drilling posted an average positive earnings surprise of 148.4%.

Ultra Petroleum, on the other hand, posted an average positive earnings surprise of 65.91% in the last four quarters.

In the last four quarters, McDermott posted an average positive earnings surprise of 250.00%.

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