Earnings Preview: Can TransCanada Corporation Deliver for Shareholders?

What to look for when the company reports earnings today.

| More on:
The Motley Fool

TransCanada (TSX: TRP)(NYSE: TRP) is scheduled to publish its quarterly earnings today. After repeated delays of the company’s controversial Keystone XL pipeline, TransCanada has been searching for new expansion avenues. Now some elements of that new growth strategy are starting to emerge.

Let’s take an early peek at what’s been happening at the company over the past few months and what we’re likely to see in the upcoming report.

Stats on TransCanada

Analyst EPS Estimate $0.50
Year-Ago EPS $0.51
Revenue Estimate $2.30B
Change From Year-Ago Revenue 14.60%
Earnings Beats in Past 4 Quarters 2

Source: Yahoo! Finance

Can TransCanada deliver for shareholders this week?

Analysts have become more pessimistic regarding TransCanada’s earnings potential. Over the past few months analysts have reduced their consensus earnings estimate for the upcoming quarter and full fiscal year by $0.04 per share. However, none of this has had much of an impact on the stock price. TransCanada shares are up 8% over the past three months.

Thanks to growing opposition against the energy industry, TransCanada has struggled to expand its pipeline business. Earlier this year the U.S. State Department delayed its final decision on the company’s controversial Keystone XL pipeline, likely pushing back any decision until after the November mid-term election. Without an obvious expansion avenue, most investors were starting to give up on the stock.

However, in lieu of Keystone, TransCanada is starting to move forward on alternative projects. This week, the company announced that it will file an application to build its massive Energy East pipeline as early as next month. Touted as one of North America’s largest energy projects, the $12 billion proposal will find a new outlet for Alberta’s landlocked oil production.

If approved, the pipeline will transport 1.1 million barrels of oil sands bitumen per day to refineries on Canada’s east coast. Work on the project could begin as early as the first quarter of 2016, although this is assuming a speedy approval by the National Energy Board.

TransCanada is also finding expansion opportunities outside of its oil transportation business. The company has secured $15 billion in new natural gas pipelines and power generation projects. Debottlenecking initiatives and cost cutting efforts could also drive further earnings growth.

In TransCanada’s report, investors should continue to look for alternative expansion possibilities. If the company can prove to shareholders that it’s more than just Keystone XL, then the stock could once more gain favour with investors.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Robert Baillieul has no position in any stocks mentioned.

More on Investing

path road success business
Bank Stocks

Scotiabank Is Down 0.9% After Earnings: What Investors Need to Know

Bank of Nova Scotia (TSX:BNS) released earnings yesterday. Here's what you need to know.

Read more »

Hourglass projecting a dollar sign as shadow
Dividend Stocks

For a Shot at $5,000/Year in Passive Income, Buy 6,850 Shares of This TSX Stock

Whitecap Resources is a monthly dividend stock that offers you a tasty dividend yield while trading at a cheap valuation.

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Wednesday, May 29

Besides more Canadian corporate earnings, volatile commodity prices could give further direction to the TSX benchmark today.

Read more »

Happy family father of mother and child daughter launch a kite on nature at sunset
Investing

3 Soaring Stocks to Hold for the Next 20 Years

These three stocks are good bets for the long haul, given their healthy long-term growth prospects.

Read more »

grow dividends
Tech Stocks

Celestica Stock Is up 44% Since Earnings: What Investors Need to Know

Celestica continues to benefit from strong demand and production efficiencies, yet the stock remains undervalued.

Read more »

A plant grows from coins.
Investing

2 Dividend Stocks Paying 5% or More That Could Beat the Market in 2024 and Beyond 

Here are two top dividend stocks long-term investors may certainly want to consider for their yields and growth profiles right…

Read more »

edit Balloon shaped as a heart
Dividend Stocks

Love Value Stocks? 2 That Are Screaming Buys in May 2024

Patience can pay off by investing in these two value stocks with nice dividends and the potential to turn around.

Read more »

healthcare pharma
Tech Stocks

What’s Going on With WELL Health Stock?

WELL stock (TSX:WELL) made strong moves once again, with record earnings and even higher guidance for 2024.

Read more »