NEW YORK (TheStreet) -- Shares of TransCanada Corp. (TRP) are up 1.27% to $51 in pre-market trade as legislation to approve the controversial Keystone XL oil pipeline began racing through the U.S. Congress yesterday as Democrats and Republicans appeared to be coming together in a challenge of President Obama's oversight of the project, Reuters reports.
In a series of rapid developments that unfolded just hours after Congress returned from a seven-week recess, there were indications the measure could pass and be sent to Obama sometime next week, according to Reuters.
Republicans, victorious in the Nov. 4 congressional elections in which they campaigned heavily on the need for Keystone, have been pushing for approval of the project amid objections from some Democrats, Reuters noted.
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, expanding profit margins, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 6.7%. Since the same quarter one year prior, revenues rose by 11.2%. 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 TRANSCANADA CORP is rather high; currently it is at 52.06%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 19.62% significantly outperformed against the industry average.
- Net operating cash flow has increased to $1,242.00 million or 11.09% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -2.53%.
- 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. 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's earnings per share declined by 5.9% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, TRANSCANADA CORP increased its bottom line by earning $2.42 versus $1.84 in the prior year.
- You can view the full analysis from the report here: TRP Ratings Report