Why TransCanada (TR) Stock Is Lower

NEW YORK (TheStreet) -- Shares of TransCanada Corp.  (TRP) are down -3.41% to $44.98 after the U.S. State Department on Friday said that it would delay making a recommendation about the Keystone XL pipeline  until questions about the way the route was approved through Nebraska are resolved.

TransCanada is the Canadian company that wants to build the pipeline.

Also, the ongoing debate now moves to the Nebraska Supreme Court which was asked to consider a legal challenge to the pipeline.

If that court were to uphold a lower court decision, TransCanada would then have to apply to the Nebraska's Public Service Commission, potentially adding an additional delay of several months.

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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, impressive record of earnings per share growth, compelling growth in net income, 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 came in higher than the industry average of 7.6%. Since the same quarter one year prior, revenues rose by 11.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • TRANSCANADA CORP has improved earnings per share by 37.2% in the most recent quarter compared to the same quarter a year ago. 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 $2.42 versus $1.84 in the prior year.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Oil, Gas & Consumable Fuels industry average. The net income increased by 37.2% when compared to the same quarter one year prior, rising from $320.00 million to $439.00 million.
  • 49.14% 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 18.82% significantly outperformed against the industry average.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength 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 Ratings Report

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