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TC Power (TSX:TRP) was one of many winners to come back out of final week’s yo-yoing market. TC inventory rose after robust earnings and has since solely been climbing larger. So, let’s see what’s been driving the inventory lately and if there’s extra to come back.
Incomes its earnings
Shares of TC inventory rose after the corporate reported robust outcomes for its fourth quarter. The corporate delivered 16% development in comparable earnings earlier than curiosity, taxes, depreciation, and amortization (EBITDA) at $31 billion. Earnings per share (EPS) additionally got here in at $1.35 for the quarter, up 22% in comparison with 2022 ranges.
As for the total yr of 2023, there was much more nice information. TC inventory noticed 11% development in EBITDA to $11 billion. Additional, earnings virtually double to $6.1 billion for the yr. EPS elevated 5% to $4.52 for 2023, with internet revenue per share at $2.75. That was far larger than the web revenue per share of $0.64 the yr earlier than.
TC inventory attributed the robust outcomes each within the full quarter and the yr to continued “reliability, availability, and distinctive operational efficiency of our property.” This included its pure fuel pipelines enterprise, which continued to see robust utilization.
Extra to come back?
However maybe what traders are much more fascinated by is the longer term. If TC inventory can do nicely with problematic fuel costs (which aren’t associated to pipelines any manner) and better rates of interest, what can it do throughout a constructive surroundings?
The corporate is now specializing in long-term development, which incorporates the completion of its Coastal GasLink pipeline mission. Moreover, it intends to spin off its liquids pipelines enterprise for much more shareholder worth.
Lastly, its asset divestiture program has definitely helped the corporate strengthen its backside line. And that improved monetary place ought to assist as the corporate appears to execute initiatives this yr. This contains round $5.3 billion in 2023 in its finances. These would come with the enlargement of its NGTL System and Bruce Energy Unit 6 Main Element Substitute.
The most effective half?
But maybe the greatest half for traders in the present day was that TC inventory reported it might be rising its dividend as soon as extra. The corporate introduced a 3.2% dividend enhance in its quarterly dividend. This elevated it to $0.96 per share quarterly, or $3.84 per yr. It was additionally the twenty second consecutive yr of dividend development for the corporate.
That places the corporate at a dividend yield of seven.2% as of writing! That is enormous for a corporation seeing robust returns, particularly throughout the previous couple of months. Shares are up about 18% since bottoming out again in October.
General, the corporate believes that the inventory ought to proceed to see its shares develop by 5-7% within the years to come back. It also needs to have the ability to proceed rising its dividend as nicely, particularly with development readily available. And because the inventory appears for extra alternatives in renewable vitality, this might solely be the start of this development inventory’s future trajectory. In the meantime, you’ll be able to decide it up for a useful 19 instances earnings as of writing, with analysts rising worth targets on daily basis.
