It's been a great afternoon session for TC Energy investors, who saw their shares rise 1.8% to a price of $33.49 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
TC Energy's Valuation Is in Line With Its Sector Averages:
TC Energy Corporation operates as an energy infrastructure company in North America. The company belongs to the Utilities sector, which has an average price to earnings (P/E) ratio of 22.89 and an average price to book (P/B) ratio of 1.03. In contrast, TC Energy has a trailing 12 month P/E ratio of 50.0 and a P/B ratio of 1.1.
When we divide TC Energy's P/E ratio by its expected EPS growth rate of the next five years, we obtain its PEG ratio of -29.25. Since it's negative, the company has negative growth expectations, and most investors will probably avoid the stock unless it has an exceptionally low P/E and P/B ratio.
Exceptional Profitability Overshadowed by Excessive Leverage:
| 2018-02-15 | 2019-02-14 | 2020-02-13 | 2021-02-18 | 2022-02-15 | 2023-02-14 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $13,449 | $13,679 | $13,255 | $12,999 | $13,387 | $14,977 |
| Operating Margins | 51% | 52% | 46% | 45% | 45% | 44% |
| Net Margins | 23.0% | 27.0% | 31.0% | 36.0% | 15.0% | 5.0% |
| Net Income (MM) | $3,157 | $3,702 | $4,140 | $4,616 | $1,955 | $748 |
| Net Interest Expense (MM) | -$1,885 | -$2,341 | -$1,873 | -$2,043 | -$2,170 | -$2,442 |
| Depreciation & Amort. (MM) | -$2,055 | -$2,350 | -$2,464 | -$2,590 | -$2,522 | -$2,584 |
| Earnings Per Share | $3.43 | $3.92 | $4.27 | $4.74 | $1.93 | $0.68 |
| EPS Growth | n/a | 14.29% | 8.93% | 11.01% | -59.28% | -64.77% |
| Diluted Shares (MM) | 874 | 903 | 931 | 940 | 940 | 940 |
| Free Cash Flow (MM) | $8,076 | $15,855 | $12,866 | $11,786 | $12,779 | $13,673 |
| Capital Expenditures (MM) | -$2,846 | -$9,300 | -$5,784 | -$4,728 | -$5,889 | -$6,727 |
| Net Current Assets (MM) | -$54,530 | -$62,792 | -$59,231 | -$61,626 | -$63,399 | -$72,900 |
| Long Term Debt (MM) | $38,882 | $44,017 | $42,894 | $43,411 | $46,280 | $50,140 |
| Net Debt / EBITDA | 4.73 | 5.23 | 5.64 | 5.72 | 6.12 | 6.27 |
