Analyzing Transportadora de Gas del Sur (TGS) and TC Pipelines (TCP)

Transportadora de Gas del Sur (NYSE: TGS) and TC Pipelines (NYSE:TCP) are both oils/energy companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, institutional ownership, valuation, earnings, analyst recommendations, risk and profitability.

Valuation & Earnings

This table compares Transportadora de Gas del Sur and TC Pipelines’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Transportadora de Gas del Sur $742.27 million 3.05 $168.71 million $1.07 13.30
TC Pipelines $422.00 million 4.44 $252.00 million $3.16 8.32

TC Pipelines has lower revenue, but higher earnings than Transportadora de Gas del Sur. TC Pipelines is trading at a lower price-to-earnings ratio than Transportadora de Gas del Sur, indicating that it is currently the more affordable of the two stocks.

Dividends

TC Pipelines pays an annual dividend of $2.60 per share and has a dividend yield of 9.9%. Transportadora de Gas del Sur does not pay a dividend. TC Pipelines pays out 82.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TC Pipelines has raised its dividend for 8 consecutive years.

Analyst Ratings

This is a summary of recent recommendations for Transportadora de Gas del Sur and TC Pipelines, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Transportadora de Gas del Sur 1 1 0 0 1.50
TC Pipelines 3 6 0 0 1.67

Transportadora de Gas del Sur presently has a consensus target price of $25.00, suggesting a potential upside of 75.69%. TC Pipelines has a consensus target price of $45.88, suggesting a potential upside of 74.43%. Given Transportadora de Gas del Sur’s higher probable upside, equities analysts plainly believe Transportadora de Gas del Sur is more favorable than TC Pipelines.

Profitability

This table compares Transportadora de Gas del Sur and TC Pipelines’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Transportadora de Gas del Sur 25.94% 72.93% 28.68%
TC Pipelines 63.76% 25.66% 7.60%

Institutional & Insider Ownership

9.2% of Transportadora de Gas del Sur shares are owned by institutional investors. Comparatively, 62.6% of TC Pipelines shares are owned by institutional investors. 0.1% of TC Pipelines shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Volatility & Risk

Transportadora de Gas del Sur has a beta of 1.18, suggesting that its stock price is 18% more volatile than the S&P 500. Comparatively, TC Pipelines has a beta of 1.13, suggesting that its stock price is 13% more volatile than the S&P 500.

Summary

TC Pipelines beats Transportadora de Gas del Sur on 9 of the 16 factors compared between the two stocks.

Transportadora de Gas del Sur Company Profile

Transportadora de Gas del Sur S.A. provides natural gas transportation and distribution services in Argentina. The company operates through four segments: Natural Gas Transportation, Liquids Production and Commercialization, Other Services, and Telecommunications. The Natural Gas Transportation segment transports natural gas through 5,706 miles of pipeline system to distribution companies, power plants, and industrial customers. As of December 31, 2017, it served 6.1 million residential, commercial, industrial, and electric power generation end-users. It also provides operation and maintenance services for the natural gas transportation facilities. The Liquids Production and Commercialization segment produces and commercializes natural gas liquids, such as ethane, LPG, natural gasoline, propane, and butane in Argentina and internationally. The Other Services segment offers midstream services, including natural gas treatment, separation, and removal of impurities from the natural gas stream, as well as natural gas compression. It also provides services related to pipeline and compression plant construction, operation, and maintenance; and generates steam for electricity production. The Telecommunications segment provides telecommunication services for telecommunication operators and corporate customers. Its telecommunication network includes a microwave digital network with synchronous digital hierarchy technology and a dark fiber optic network. The company was founded in 1992 and is headquartered in Buenos Aires, Argentina. Transportadora de Gas del Sur S.A. is a subsidiary of Compañía de Inversiones de Energía S.A.

TC Pipelines Company Profile

TC PipeLines, LP acquires, owns, and participates in the management of energy infrastructure businesses in North America. The company has interests in eight natural gas interstate pipeline systems that transport approximately 10.4 billion cubic feet per day of natural gas from producing regions and import facilities to market hubs and consuming markets primarily in the Western, Midwestern, and Eastern United States. It serves large utilities, local distribution companies, natural gas marketers, producing companies, and other interstate pipelines, including affiliates. TC PipeLines GP, Inc. operates as a general partner of the company. TC PipeLines, LP was founded in 1998 and is based in Houston, Texas.

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