TC Energy (TRP) Stock Declines 6.1% After Q1 Earnings Miss

Shares of TC Energy TRP have gone down 6.1% since the company’s first-quarter 2022 earnings announcement on Apr 29. The stock performance is primarily due to TC Energy’s first-quarter earnings and revenue lagging estimates.

TRP reported first-quarter 2022 adjusted earnings of 88 cents per share, marginally lagging the Zacks Consensus Estimate as well as the year-ago quarter’s profit of 89 cents. This underperformance could be attributed to the weak results of the Canadian Natural Gas Pipelines, Mexico Natural Gas Pipelines, Liquids Pipelines and Power and Storage segments, partially offset by the strength of the U.S. Natural Gas Pipelines unit.

TC Energy’s comparable EBITDA of about C$2.39 billion in the reported quarter was down from C$2.49 billion in the prior-year period.

This North America-based energy infrastructure provider’s quarterly revenues of $2.76 billion increased 6.5% year over year but missed the Zacks Consensus Estimate of $2.78 billion.

TC Energy’s Board of Directors announced a quarterly dividend of 90 Canadian cents per common share for the quarter ending Jun 30, 2022. The dividend is payable on Jul 29, 2022 to shareholders of record at the close of the business on Jun 30, 2022.

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

Segmental Information

Canadian Natural Gas Pipelines reported a comparable EBITDA of C$644 million, down about 6.1% from the year-ago quarter’s levels. This decrease was largely due to the impact of lower flow-through depreciation on the Canadian Mainline.

U.S. Natural Gas Pipelines’ comparable EBITDA of C$1.1 billion reflects a 4.9% increase from the prior-year quarter’s level. This upside can be attributed to a net increase in the comparable EBITDA from Columbia Gas following the FERC-approved settlement for higher transportation rates, which came into effect in February 2021, and incremental earnings from growth projects placed in service.

Mexico Natural Gas Pipelines’ comparable EBITDA of C$148 million was down about 17.8% from the year-earlier quarter’s figure of C$180 million. This downside was primarily due to lower equity earnings from Sur de Texas due to the higher deferred income tax expense as a result of a foreign exchange gain calculated for Mexico income tax purposes on the revaluation of U.S. dollar-denominated loans.

Liquids Pipelines unit’s comparable EBITDA of C$329 million in the reported quarter deteriorated from the year-earlier quarter’s level of C$393 million. This downtrend was due to lower contributions from liquids marketing activities, mainly attributable to lower margins.

Power and Storage posted a comparable EBITDA of C$157 million, down by 11.8% from the year-earlier quarter’s figure of C$178 million. The downtrend was due to lower Natural Gas Storage and other results reflecting lower realized Alberta natural gas storage spreads.

Expenditure and Balance Sheet

As of Mar 31, 2022, TC Energy’s capital investments for the reported quarter summed at C$1.7 billion.

TRP had cash and cash equivalents worth C$1073 million and long-term debt of C$36.98 billion, which represented a debt-to-capitalization of 52.89%.

Key Updates

TC Energy is advancing its $25 billion secured capital program and expects to sanction more than $5 billion of new projects per year throughout the decade, including recoverable maintenance capital. All of TC Energy’s secured capital projects are underpinned by long-term contracts and regulated business models, providing visibility to deliver earnings and cash flow growth while reducing the GHG emission intensity and continuing to lower overall leverage metrics.

The company said that its 2.1 billion cubic feet per day Coastal GasLink project is 63% complete and that grading is more than 74% complete and more than 275 km of the pipeline has been installed, with reclamation activities underway in many areas.

Zacks Rank & Key Picks

TC Energy currently has a Zacks Rank #4 (Sell). Some better-ranked stocks from the energy space that warrant a look include PDC Energy PDCE, Devon Energy DVN and Marathon Petroleum MPC. While PDC Energy sports a Zacks Rank #1 (Strong Buy), Marathon Petroleum and Devon Energy each have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PDC Energy’s stock price has increased 71.2% in a year. The Zacks Consensus Estimate for PDC Energy’s 2022 earnings has been revised about 31.5% upward over the past 60 days from $13.32 per share to $17.52.

The Zacks Consensus Estimate for PDCE’s 2022 earnings is pegged at $17.52 per share, up 119.3% from the projected year-ago earnings of $7.99.

The Zacks Consensus Estimate for Devon Energy’s 2022 earnings is projected at $8.62 per share, up about 144.2% from the projected year-ago earnings of $3.53. Devon Energy’s stock has rallied 179% in a year.

Devon Energy beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average being around 13.4%. DVN is valued at around $42.7 billion.

Marathon Petroleum beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average being around 65%.

The Zacks Consensus Estimate for MPC’s 2022 earnings is projected at $9.78 per share, up approximately 299.2% from the projected year-ago earnings of $2.45.

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