It’s shaping up to be a tough period for TC Energy Corporation (TSE:TRP), which a week ago released some disappointing third-quarter results that could have a notable impact on how the market views the stock. It looks like quite a negative result overall, with both revenues and earnings falling well short of analyst predictions. Revenues of CA$3.1b missed by 12%, and earnings per share of CA$0.79 fell short of forecasts by21%. Earnings are an important time for investors, as they can track a company’s performance, look at what top analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. With this in mind, we’ve gathered the latest forecasts to see what analysts are expecting for next year.
After the latest results, the twelve analysts covering TC Energy are now predicting revenues of CA$14b in 2020. If met, this would reflect a satisfactory 3.0% improvement in sales compared to the last 12 months. Earnings per share are expected to shrink 5.1% to CA$4.07 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of CA$15b and earnings per share (EPS) of CA$4.10 in 2020. The consensus analysts don’t seem to have seen anything in these results that would have changed their view on the business, given there’s been no major change to their estimates.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at CA$70.63. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values TC Energy at CA$77.00 per share, while the most bearish prices it at CA$56.00. The narrow spread of estimates could suggest that the business’ future is relatively easy to value, or that analysts have a clear view on its prospects.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that TC Energy’s revenue growth is expected to slow, with forecast 3.0% increase next year well below the historical 7.2%p.a. growth over the last five years. By way of comparison, the 198 other companies in this market with analyst coverage, are forecast to grow their revenue at 3.7% per year. So it’s pretty clear that, while revenue growth is expected to slow down, analysts also expect the wider market to grow faster than TC Energy.
The Bottom Line
The most important thing to take away is that there’s been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – although our data does suggest that TC Energy’s revenues are expected to perform worse than the wider market. The consensus price target held steady at CA$70.63, with the latest estimates not enough to have an impact on analysts’ estimated valuations.
With that said, the long-term trajectory of the company’s earnings is a lot more important than next year. We have estimates – from multiple TC Energy analysts – going out to 2023, and you can see them free on our platform here.
It might also be worth considering whether TC Energy’s debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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