Is TC Pipelines Worth Your Time?

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TC Pipelines was plucked from the Alerian MLP Infrastructure Index on Friday. What's wrong with it?

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Is TC Pipelines Worth Your Time?

  1. 1. Is TC Pipelines Worth Your Time?
  2. 2. You’re outta here! Last Friday, Alerian pulled TC Pipelines from its Alerian MLP Infrastructure Index, replacing it with EQT Midstream. What gives?
  3. 3. Debbie Downer • Only up ~5% YTD • Only up ~60% over 10 years • Other MLPs having banner years, up hundreds of % over 10 years TC Pipelines (NYSE: TCP)
  4. 4. The replacement rules
  5. 5. But… Is there anything fundamentally wrong with TC Pipelines?
  6. 6. Time for a quick check-up Three numbers will help us determine the health and opportunity at TC Pipelines: 1. Distribution coverage ratio 2. YOY Distribution growth 3. Price-to-Distributable Cash Flow
  7. 7. Distribution coverage • TC Pipelines hasn’t missed on its coverage in any of the last four quarters Verdict: Sparkling!
  8. 8. YOY Distribution growth • Among the lowest in the space, some MLPs are posting growth like that quarter- over-quarter! Verdict: Lousy!
  9. 9. Price-to-Distributable Cash Flow • The industry average is typically ~15x, but many MLPs are posting higher ratios now (meaning they are overpriced). Verdict: Good
  10. 10. Key takeaway There is nothing fundamentally broken at TC Pipelines… …there just isn’t much to love about it right now. Investors can find better distribution growth elsewhere, which in turn usually leads to better unit price appreciation.
  11. 11. Here are your better ideas

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