As you might know, TC Energy Corporation (TSE:TRP) recently reported its annual numbers. TC Energy missed revenue estimates by 3.4%, with sales of CA$13b, although statutory earnings per share (EPS) of CA$4.28 beat expectations, coming in 2.7% ahead of analyst estimates. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
After the latest results, the 13 analysts covering TC Energy are now predicting revenues of CA$14.2b in 2020. If met, this would reflect an okay 6.8% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to shrink 3.4% to CA$4.13 in the same period. Before this earnings report, analysts had been forecasting revenues of CA$14.3b and earnings per share (EPS) of CA$4.00 in 2020. So the consensus seems to have become somewhat more optimistic on TC Energy's earnings potential following these results.
There's been no major changes to the consensus price target of CA$73.43, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic TC Energy analyst has a price target of CA$81.00 per share, while the most pessimistic values it at CA$60.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. We can infer from the latest estimates that analysts are expecting a continuation of TC Energy's historical trends, as next year's forecast 6.8% revenue growth is roughly in line with 6.3% annual revenue growth over the past five years. Compare this with the wider market, which analyst estimates (in aggregate) suggest will see revenues grow 3.2% next year. So although TC Energy is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider market.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around TC Energy's earnings potential next year. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on TC Energy. Long-term earnings power is much more important than next year's profits. We have forecasts for TC Energy going out to 2024, and you can see them free on our platform here.
You can also see whether TC Energy is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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