Editor's Note: This analysis was originally published as a stock note by Morningstar Equity Research.
Key Morningstar Metrics for TC Energy
- Fair Value Estimate: C$53
- Morningstar Rating: ★★
- Morningstar Economic Moat Rating: Narrow
- Morningstar Uncertainty Rating: Medium
What We Thought of TC Energy’s Earnings
TC Energy TRP reported C$2.7 billion of adjusted EBITDA in the first quarter, flat from the same year-ago quarter.
Why it matters: Natural gas pipeline flows supported EBITDA across Canadian, US, and Mexico pipeline operations. An offline unit in the Power and Energy Solutions business offset these benefits.
- Management reaffirmed C$10.7 billion-C$10.9 billion adjusted EBITDA for the year, slightly above our full-year estimate.
- The company is on track to invest C$5.5 billion-C$6 billion in net capital expenditures in 2025.
The bottom line: We are reaffirming our fair value estimate of C$53 per share for TC Energy. Our narrow moat remains unchanged.
- TC Energy trades at a 30% premium to our fair value estimate as of May 1.
- Management disclosed that for every C$0.01 change to the USD/CAD foreign exchange rate, full-year EBITDA increases or decreases C$45 million, with minimal earnings impacts. We view this foreign currency impact as manageable.
Long view: We are at the high end of management’s expectation for adjusted EBITDA of C$11.7 billion-C$11.9 billion in 2027.
- Management has set a goal of C$6 billion- C$7 billion in net annual capital expenditures through 2030. Management has secured most of the targeted capital through 2028. Opportunities in US and Canada natural gas pipelines have been the biggest beneficiaries of capital.
- TC Energy continues to have minimal risk from tariffs, with most of its earnings either rate-regulated, long-term, or take-or-pay contracts with little commodity or volume risk.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.