NEW YORK ( TheStreet) -- TC Pipelines (NYSE: TCP) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, largely solid financial position with reasonable debt levels by most measures, increase in net income and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself. Highlights from the ratings report include:
- The revenue growth significantly trails the industry average of 36.1%. Since the same quarter one year prior, revenues slightly increased by 1.1%. 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.
- The gross profit margin for TC PIPELINES LP is currently very high, coming in at 80.70%. Regardless of TCP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TCP's net profit margin of 231.30% significantly outperformed against the industry.
- The current debt-to-equity ratio, 0.56, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.05 is very weak and demonstrates a lack of ability to pay short-term obligations.
- TC PIPELINES LP's earnings per share declined by 8.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TC PIPELINES LP increased its bottom line by earning $2.91 versus $2.34 in the prior year. This year, the market expects an improvement in earnings ($3.10 versus $2.91).
- The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Oil, Gas & Consumable Fuels industry average. The net income increased by 5.4% when compared to the same quarter one year prior, going from $38.60 million to $40.70 million.