TC PipeLines Reports Flat Earnings in 3Q17



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%.

Analysts’ recommendations

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.

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