Yahoo Finance Shareholders Will Be Pleased With The Quality of TC Energy's (TSE:TRP) Earnings
The subdued stock price reaction suggests that TC Energy Corporation's (TSE:TRP) strong earnings didn't offer any surprises. We think that investors have missed some encouraging factors underlying the profit figures.
View our latest analysis for TC Energy
How Do Unusual Items Influence Profit?
For anyone who wants to understand TC Energy's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CA$1.1b due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's hardly a surprise given these line items are considered unusual. If TC Energy doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.
That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.
Our Take On TC Energy's Profit Performance
Because unusual items detracted from TC Energy's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that TC Energy's statutory profit actually understates its earnings potential! Furthermore, it has done a great job growing EPS over the last year. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. While conducting our analysis, we found that TC Energy has 2 warning signs and it would be unwise to ignore them.
This note has only looked at a single factor that sheds light on the nature of TC Energy's profit. But there are plenty of other ways to inform your opinion of a company. Some people consider a high return on equity to be a good sign of a quality business. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
