Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link
NEW YORK (
-- TC Pipelines
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.
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Highlights from the ratings report include:
- TCP's debt-to-equity ratio is very low at 0.23 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 6.64, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for TC PIPELINES LP is currently very high, coming in at 81.25%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 143.75% significantly outperformed against the industry average.
- Despite the stagnant revenue growth, the company outperformed against the industry average of 9.1%. Since the same quarter one year prior, revenues have remained constant. Even though the company's revenue remained stagnant, the earnings per share decreased.
- 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, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- The change in net income from the same quarter one year ago has exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has significantly decreased by 30.3% when compared to the same quarter one year ago, falling from $33.00 million to $23.00 million.
TC PipeLines, LP transports natural gas to market hubs and consuming markets primarily in the western and midwestern United States, and central Canada. TC Pipelines has a market cap of $3.01 billion and is part of the basic materials sector and energy industry. Shares are up 19.5% year to date as of the close of trading on Monday.
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