TC Energy Corp (TRP:TSX) STA Research suggests stock is overvalued

BMO Financial targets TC Energy Corp as outperform at CAD 78 target
STA Research maintains a hold rating at CAD 60 target

Based on the TC Energy Corp stock forecasts from 17 analysts, the average analyst target price for TC Energy Corp is CAD 69.98 over the next 12 months. TC Energy Corp’s average analyst rating is Buy . Stock Target Advisor’s own stock analysis of TC Energy Corp is Neutral, which is based on 6 positive signals and 7 negative signals. At the last closing, TC Energy Corp’s stock price was CAD 66.40. TC Energy Corp’s stock price has changed by +0.00% over the past week, -6.96% over the past month and +5.36% over the last year.

STA Research maintained the Hold rating on the stock, with a 12 month target forecast of $60 per share.

BMO Financial recently maintained the Outperform rating on the company with a $78 target price.

In North America, TC Energy Corporation is a business that provides energy infrastructure. Natural gas pipelines in Canada, the United States, Mexico, liquid pipelines, and power and storage make up its five operating segments. In May 2019, the organisation, which was originally known as TransCanada Corporation, changed its name to TC Energy Corporation. Calgary, Canada serves as the corporate headquarters of TC Energy Corporation, which was founded in 1951.

 

What we like:

Superior total returns

The stock has outperformed its sector peers on average annual total returns basis in the past 5 years (for a hold period of at least 12 months) and is in the top quartile.

Underpriced on cashflow basis

The stock is trading low compared to its peers on a price to cash flow basis and is in the top quartile. It may be underpriced but do check its financial performance to make sure there is no specific reason.

Positive cash flow

The company had positive total cash flow in the most recent four quarters.

Positive free cash flow

The company had positive total free cash flow in the most recent four quarters.

Superior Earnings Growth

This stock has shown top quartile earnings growth in the previous 5 years compared to its sector.

High Gross Profit to Asset Ratio

This stock is in the top quartile compared to its peers on Gross Profit to Asset Ratio. This is a popular measure among value investors for showing superior returns in the long run.

 

What we don’t like:

High volatility

The total returns for this company are volatile and above median for its sector over the past 5 years. Make sure you have the risk tolerance for investing in such stock.

Overpriced compared to earnings

The stock is trading high compared to its peers on a price to earning basis and is above the sector median.

Poor capital utilization

The company management has delivered below median return on invested capital in the most recent 4 quarters compared to its peers.

Poor return on assets

The company management has delivered below median return on assets in the most recent 4 quarters compared to its peers.

Highly leveraged

The company is in the bottom half compared to its sector peers on debt to equity and is highly leveraged. However, do check the news and look at its sector and management statements. Sometimes this is high because the company is trying to grow aggressively.

Overpriced on free cash flow basis

The stock is trading high compared to its peers on a price to free cash flow basis. It is priced above the median for its sectors. Proceed with caution if you are considering buying.

Low Revenue Growth

This stock has shown below median revenue growth in the previous 5 years compared to its sector