NEW YORK (TheStreet) -- TransCanada Corp. (TRP) shares are up 0.57% to $50.97 in early market trading on Thursday after the energy infrastructure company announced plans to double its dividend growth rate through 2017.
The company said that it has about $13 billion in small and medium sized projects set to begin over the next five years and in turn the company will increase its dividend growth rate to between 8% and 10% each year, more than double its current rate of 4% growth, according to the Globe and Mail.
The company said that it has $46 billion worth of projects in its pipeline currently, including the $8 billion Keystone XL Pipeline project, although a bill giving the Keystone project legal authorization lost a Senate vote in Washington, D.C. on Tuesday.
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 6.4%. 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 -2.19%.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. 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