Why TransCanada (TRP) Stock Closed Down Today

NEW YORK (TheStreet) -- Shares of TransCanada Corp. (TRP) closed down 2.08% to $55.02 after the company said that the new cost estimate to build the Keystone XL oil pipeline may rise by up to 85% to $10 billion, according to the Globe and Mail.

TransCanada confirmed the new estimate late last week, which is higher than the current $5.4 billion projection.

The U.S. State Department is awaiting the outcome of a Nebraska court battle over the regulatory review of the line's path through the state before making a ruling. The department has jurisdiction over the project because it would cross the U.S. border with Canada, the Globe and Mail reports.

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, solid stock price performance, growth in earnings per share, expanding profit margins and good cash flow from operations. 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 3.1%. Since the same quarter one year prior, revenues rose by 11.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • TRANSCANADA CORP has improved earnings per share by 13.5% 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.
  • 49.37% 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 19.74% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $1,119.00 million or 33.05% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -5.24%.
  • You can view the full analysis from the report here: TRP Ratings Report
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