NEW YORK (TheStreet) -- Shares of TransCanada Corp. (TRP - Get Report) are down slightly in early morning trade as the company faces a new regulatory hurdle and potentially more legal challenges in its effort to build the Keystone XL pipeline, the Financial Post reports.
The company now has to recertify the Alberta-to-Nebraska conduit where it passes through South Dakota.
The state approved the project in June 2010, and while the permit has not expired, TransCanada needs to "certify that the conditions placed upon the pipeline" by the regulator South Dakota Public Utilities Commission (PUC) are all still valid and that the company will meet all of those conditions, the Post said.
TheStreet Ratings team rates TRANSCANADA CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate TRANSCANADA CORP (TRP) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, increase in stock price during the past year, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 3.2%. Since the same quarter one year prior, revenues rose by 28.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has increased to $979.00 million or 38.66% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 17.57%.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- 43.34% is the gross profit margin for TRANSCANADA CORP which we consider to be strong. Regardless of TRP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TRP's net profit margin of 15.08% compares favorably to the industry average.
- TRANSCANADA CORP's earnings per share declined by 7.9% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, TRANSCANADA CORP increased its bottom line by earning $2.42 versus $1.84 in the prior year.
- You can view the full analysis from the report here: TRP Ratings Report