NEW YORK (TheStreet) -- TransCanada (TRP) - Get Report stock is climbing by 1.17% to $31.18 in early morning trading on Wednesday, after the energy infrastructure company behind the Keystone XL pipeline said it would drop Nebraska lawsuits and instead seek approval from the state regulator.
The company plans to drop court battles that have arisen as it clashes with Nebraska landowners, who largely oppose the pipeline, about the pipeline's proposed route through privately owned land, Bloomberg reports.
TransCanada will instead file an application with the Nebraska Public Service Commission to seek route approval, which the company said "reduces conflict with those who oppose the project and sets clear rules for approval of the route," according to a statement.
The move could slow the Keystone XL pipeline's review process in Washington, the Wall Street Journal reports. Such a delay could benefit TransCanada if a Republican administration more likely to approve the project were to take office in 2017.
The Keystone XL pipeline has been a point of contention between Democrats and Republicans for years, as Democrats oppose the project for its potentially adverse environmental impact and uncertain economic benefits whereas Republicans support it for potential job creation and energy independence.
Separately, TheStreet Ratings team rates TRANSCANADA CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
We rate TRANSCANADA CORP (TRP) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and increase in net income. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and weak operating cash flow.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 34.6%. Since the same quarter one year prior, revenues rose by 17.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- 49.98% is the gross profit margin for TRANSCANADA CORP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 17.25% significantly outperformed against the industry average.
- TRANSCANADA CORP's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. During the past fiscal year, TRANSCANADA CORP increased its bottom line by earning $2.46 versus $2.42 in the prior year.
- Currently the debt-to-equity ratio of 1.61 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.28, which clearly demonstrates the inability to cover short-term cash needs.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, TRANSCANADA CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- You can view the full analysis from the report here: TRP