It has been about a month since the last earnings report for TC PipeLines, LP (TCP - Free Report) . Shares have added about 3.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is TC PipeLines, LP due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
TC PipeLines Q1 Earnings Beat, Sales Down Y/Y
TC PipeLines reported earnings of $1.28 per unit, surpassing the Zacks Consensus Estimate of $1.12. Lower costs and higher earnings from Northern Border and PNGTS pipelines led to the outperformance.
However, the bottom line decreased from $1.32 per unit recorded in the year-ago quarter. Lower equity earnings, especially from the Great Lakes and Iroquois, impacted the results.
Quarterly transmission revenues of $113 million compared unfavorably with $115 million recorded in the first quarter of 2018 amid lower contribution from Bison Pipelines.
Distribution & Cash Flow
TC PipeLines announced first-quarter 2019 cash distribution of 65 cents per unit, in line with fourth-quarter 2018 and the year-ago figure. Notably, this marks the 80th consecutive quarterly distribution paid by the partnership. The distribution was paid on May 13, 2019 to its unitholders of record as of May 3.
The partnership's distributable cash flow increased to $116 million in the quarter under review from $112 million in the year-ago period, primarily driven by higher contribution from PNGTS and Northern Border pipelines.
In the reported quarter, TC PipeLines distributed $47 million in cash compared with $76 million in the year-ago period.
Pipeline Systems' Performance
Great Lakes: The partnership generated earnings of $20 million from equity investment, lower than the prior-year quarter’s 24 million.
Northern Border Pipeline: Equity earnings at this pipeline totaled $21 million compared with the prior-year level of $17 million.
Iroquois: Equity earnings at this pipeline amounted to $13 million, lower than the prior-year figure of $18 million.
Operation and maintenance expenses were $16 million in the quarter, in line with the year-ago period. General/administrative expenses totaled $2 million compared with the year-ago figure of $1 million. Property taxes remained unchanged from the year-ago level of $7 million. Depreciation costs declined to $20 million from $24 million in the year ago period. Financial and other charges in the quarter also reduced to $22 million from $23 million in the corresponding period of 2018.
As of Mar 31, TC PipeLines had cash and cash equivalents of $52 million. The partnership had a long-term debt of $2,040 million, representing debt-to capital ratio of 75%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
Currently, TC PipeLines, LP has a strong Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, TC PipeLines, LP has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.