TC Energy -- The Essentials

TC Energy logged a 0.9% change during today's evening session, and is now trading at a price of $37.84 per share.

TC Energy returned losses of -11.0% last year, with its stock price reaching a high of $45.18 and a low of $32.52. Over the same period, the stock underperformed the S&P 500 index by -25.0%. As of April 2023, the company's 50-day average price was $35.4. TC Energy Corporation operates as an energy infrastructure company in North America. Based in Calgary, Canada, the large-cap Utilities company has 7,477 full time employees. TC Energy has returned a 10.3% dividend yield over the last 12 months, but the company's patchy cash flow history may not sustain it for much longer.

The Company's Revenues Are Declining:

2018 2019 2020 2021 2022 2023
Revenue (MM) $13,679 $13,255 $12,999 $13,387 $14,977 $14,977
Gross Margins 36% 44% 45% 23% 38% 38%
Operating Margins 42% 50% 52% 30% 24% 24%
Net Margins 27% 33% 38% 15% 5% 5%
Net Income (MM) $3,702 $4,433 $4,913 $2,046 $785 $785
Net Interest Expense (MM) $2,265 $2,333 $2,228 $2,360 $2,588 $2,588
Depreciation & Amort. (MM) $2,350 $2,464 $2,590 $2,522 $2,584 $2,584
Earnings Per Share $3.92 $4.27 $4.74 $1.86 $0.64 $0.64
Diluted Shares (MM) 903 931 940 974 996 996
Free Cash Flow (MM) -$4,374 -$1,702 -$1,842 -$244 -$2,586 -$2,586
Capital Expenditures (MM) $10,929 $8,784 $8,900 $7,134 $8,961 $8,961
Net Current Assets (MM) -$62,792 -$59,231 -$61,626 -$63,399 -$72,900 -$72,900
Long Term Debt (MM) $36,509 $36,509 $51,652 $55,105 $60,020 $60,020
Net Debt / EBITDA 4.78 4.35 6.46 9.89 9.62 9.62

TC Energy's financial statements include several red flags such as weak revenue growth and decreasing reinvestment in the business, declining EPS growth, and an unconvincing cash flow history. Additionally, the firm has a highly leveraged balance sheet. On the other hand, the company benefits from wider gross margins than its peer group and decent operating margins with a negative growth trend.

TC Energy does not have a meaningful trailing P/E ratio since its earnings per share are currently in the red. Based on its EPS guidance of $3.05, the company has a forward P/E ratio of 11.6. In comparison, the average P/E ratio for the Utilities sector is 17.53. On the other hand, the market is undervaluing TC Energy in terms of its equity because its P/B ratio is 1.26. In comparison, the sector average is 1.71.

TC Energy Has an Analyst Consensus of Some Upside Potential:

The 8 analysts following TC Energy have set target prices ranging from $29.19 to $72.46 per share, for an average of $43.27 with a hold rating. As of April 2023, the company is trading -18.2% away from its average target price, indicating that there is an analyst consensus of some upside potential.

The largest shareholder is Royal Bank of Canada, whose 9% stake in the company is worth $3,694,693,452.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.