Earnings in 3Q17
TC PipeLines (TCP), TransCanada’s (TRP) midstream MLP subsidiary, posted flat earnings in 3Q17. The partnership reported adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $103 million, which represents a marginal 1.0% rise from 3Q16. Moreover, the partnership missed its EBITDA estimate by 7.5%.
The slight increase in its adjusted EBITDA was due to a higher equity interest in Iroquois Gas Transmission System. This growth was offset by lower revenue and higher operating costs.
Distribution in 3Q17
TCP declared a distribution of $1 per unit in 3Q17, which represents a 12.4% rise from 3Q16 and a 6.4% rise from 2Q17. Based on its recent distribution, TCP is trading at a distribution yield of 7.5%.
Of the analysts covering TCP, 60.0% had recommended “buy,” 20% had recommended “hold,” and the remaining 20.0% had recommended “sell” as of November 8. The partnership is currently trading close to the low range ($53) of analysts’ target price. TCP’s average target price of $60.60 implies a ~14% potential upside based on its current price.