TC PipeLines LP (NYSE:TCP): Are Analysts Bullish?

The most recent earnings announcement TC PipeLines LP’s (NYSE:TCP) released in December 2017 suggested that the company benefited from a slight tailwind, eventuating to a single-digit earnings growth of 3.79%. Below is my commentary, albeit very simple and high-level, on how market analysts predict TC PipeLines’s earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings. See our latest analysis for TC PipeLines

Market analysts’ prospects for this coming year seems rather muted, with earnings increasing by a single digit 9.48%. The growth outlook in the following year seems much more buoyant with rates reaching double digit 17.60% compared to today’s earnings, and finally hitting US$311.85M by 2021.

NYSE:TCP Future Profit Mar 30th 18
NYSE:TCP Future Profit Mar 30th 18

Even though it’s useful to be aware of the rate of growth year by year relative to today’s value, it may be more valuable to gauge the rate at which the earnings are rising or falling on average every year. The advantage of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of TC PipeLines’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 10.37%. This means that, we can assume TC PipeLines will grow its earnings by 10.37% every year for the next few years.

Next Steps:

For TC PipeLines, I’ve put together three key factors you should look at:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is TCP worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether TCP is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of TCP? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!