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TC Energy's (TRP) Stock Down 12.4% Since Q3 Earnings Report

·5-min read

TC Energy Corporation’s TRP stock has dropped 12.4% since the third-quarter 2021 earnings announcement on Nov 5.

This downward stock movement can be attributed to a huge debt burden and the cost overruns for its Coastal Gaslink pipeline.

Behind TC Energy’s Earnings

TC Energy’s third-quarter 2021 adjusted earnings of 79 cents per share matched the Zacks Consensus Estimate. Results can be attributed to the solid performance of the U.S. Natural Gas Pipelines segment, partially offset by a weak performance of the Canadian Natural Gas Pipelines, and the Power and Storage segments.

The bottom line improved from the year-ago quarter’s figure of 71 cents.

TRP’s comparable EBITDA of C$2.24 billion in the September quarter was down from C$2.29 billion in the prior-year period.

This North America-based energy infrastructure provider’s quarterly revenues of $2.57 billion increased 7.3% year over year.

Segmental Information

Canadian Natural Gas Pipelines reported comparable EBITDA of C$631 million, down 5.3% from the year-ago quarter’s levels. This downside was the outcome of Canadian Mainline's reduced flow-through depreciation and financial costs.

U.S. Natural Gas Pipelines’ comparable EBITDA of C$890 million reflects a 3.1% increase from the prior-year quarter’s level. This upside can be attributed to improved Columbia Gas' net earnings as a result of TRP’s application for higher transportation prices, which took effect on Feb 1, 2021.

Mexico Natural Gas Pipelines’ comparable EBITDA of C$171 million marginally improved from the year-earlier quarter’s figure. This upside was primarily attributable to improved Sur de Texas earnings as a result of decreased interest and deferred income tax expenditures.

Liquids Pipelines unit’s comparable EBITDA of C$387 million in the reported quarter deteriorated from the year-earlier quarter’s level of C$415 million. This downtrend was because of the plunging volumes of the Keystone Pipeline System.

Power and Storage posted a comparable EBITDA of C$168 million, dropping 10.2% year over year due to lower earnings from Bruce Power, thanks to lower volumes, increased operating expenses and higher outage days.

Capital Expenditures and Balance Sheet

As of Sep 30, 2021, TC Energy’s capital investments summed C$1.45 billion. Concurrently, TRP had cash and cash equivalents worth C$2.86 billion and long-term debt of C$35.1 billion. Its total debt to total capital was 61.3%.

TC Energy Corporation Price, Consensus and EPS Surprise

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

Key Updates

In June 2021, TC Energy and Pembina Pipeline Corporation PBA 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 third quarter, TRP invested $1.7 billion in different growth initiatives, adding to its $22-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 project completion deferrals and the impacts of the pandemic.

TC Energy's board of directors announced the fourth-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 EOG Resources EOG and ConocoPhillips COP, each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

EOG Resources reported third-quarter 2021 adjusted earnings per share of $2.16, beating the Zacks Consensus Estimate of $2.01. Strong earnings were driven by increased production volumes and a higher realization of commodity prices.

EOG announced a quarterly dividend of 75 cents per share, indicating an 82% increase from the previous level. The dividend will be paid out on Jan 28, 2022, to its shareholders of record as of Jan 14, 2022. EOG Resources also declared a special dividend of $2 per share. Moreover, the board of directors updated its share repurchase authorization to $5 billion.

ConocoPhillips reported third-quarter 2021 adjusted earnings per share of $1.77, comfortably beating the Zacks Consensus Estimate of $1.53. This outperformance is led by increased production volumes owing to the Concho acquisition and the rising realized commodity prices.

Based in Houston, TX, this one of the world’s largest independent oil and gas producers’ capital expenditures and investments totaled $1.3 billion, and dividend payments grossed $579 million. ConocoPhillips’ net cash provided by operating activities was recorded at $4.8 billion, up from the year-ago figure of $868 million. COP generated a free cash flow of $2.8 billion in the third quarter.


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