Behind TC PipeLines High Year-to-Date Returns



TCP’s year-to-date returns

As of April 11, 2016, TC PipeLines’ (TCP) total YTD (year-to-date) return was nearly -2.4%. By comparison, midstream energy peers Enbridge Energy Partners (EEP), Western Gas Partners (WES), and American Midstream Partners (AMID) had total YTD returns of -24%, -13%, and -18%, respectively, as of the same day.

Notably, the Alerian MLP ETF (AMLP), which holds the top infrastructure MLPs, had a total YTD return of -11%. The Alerian MLP Index (AMZ), at the same time, saw total returns of -9%. TCP’s returns in 2016 have thus exceeded those of peers and the industry—so far.

Behind TC PipeLines High Year-to-Date Returns

The above graph compares the YTD returns of TCP with those of EEP, WES, AMID, and AMZ. TCP is currently (as of April 11) trading 4% above its 50-day moving average and 5% below its 200-day moving average.

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TCP was formed by TransCanada (TRP) in 1998. Through its subsidiaries, TransCanada owns ~26.6% of TCP’s common units and all of its Class B units and IDRs (incentive distribution rights). It also effectively owns 2% general partner interest in TCP. TC PipeLines owns or has interest in FERC (Federal Energy Regulatory Commission) regulated energy infrastructure pipelines, which are capable of moving 9.1 billion cubic feet per day of natural gas.

In this series

In this series, we’ll analyze TCP’s price targets, leverage, earnings, capital expenditure, and distribution growth. We’ll also analyze the company’s valuation relative to its historical valuation and to the valuations of its peers. Finally, we’ll analyze the key drivers of TCP’s stock price.

Let’s start with TC PipeLines’ price targets and analyst recommendations.


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