TRP: Extended 2028 Outlook And Project Execution Will Shape Future Performance

Analysts have nudged their fair value estimate for TC Energy up by C$0.50 to C$78.00, citing higher price targets and increased confidence in the company’s long term growth opportunities and project execution.

Analyst Commentary

Recent Street research reflects a generally constructive stance on TC Energy, with multiple firms lifting ratings and price targets in response to the company’s latest operating and financial updates.

Bullish Takeaways

Bullish analysts highlight the confirmation of fiscal 2025 guidance and the extension of the company’s outlook to 2028 as evidence of greater visibility on long term cash flow and earnings growth.
Higher price targets in the C$78 to C$84 range are being framed as recognition of TC Energy’s robust project pipeline and perceived upside to medium term targets as execution continues.
The move to more positive ratings, including upgrades to Outperformer, is being linked to improved confidence that capital projects can be delivered largely on time and on budget, supporting valuation re rating.
Some research suggests that, with major projects progressing and cost inflation moderating, the company’s risk reward profile is tilting more favorably toward growth and multiple expansion.

Bearish Takeaways

Bearish analysts, or those taking a more neutral stance, point to the recent history of rating reversals as a sign that execution risk and regulatory uncertainty still warrant caution on how quickly valuation can rerate.
There is concern that the stock’s rising price targets, now clustering around the high C$70s to low C$80s, may already discount a good portion of the expected improvement in earnings and returns.
Some commentary emphasizes that while the opportunity set through the end of the decade appears robust, any delays, cost overruns, or macro headwinds could pressure free cash flow and limit upside to the current fair value range.
Neutral views also reflect skepticism around the pace at which balance sheet metrics can improve given the capital intensity of the project backlog, which could constrain flexibility for further growth initiatives.

What's in the News

TC Energy Corporation preferred shares were dropped from the S&P/TSX Preferred Share Index, potentially affecting demand from index-linked investors and passive funds (Index Constituent Drops).
TC Energy plans to redeem all outstanding Cumulative Redeemable First Preferred Shares, Series 11, on November 28, 2025 at $25.00 per share. After this date, the shares will cease paying dividends and will be delisted from the Toronto Stock Exchange (Preferred Stock Buybacks).
The company intends to use net proceeds from recently issued notes to fund the Series 11 preferred share redemption, reduce indebtedness, and support general corporate purposes. This indicates continued balance sheet management (Preferred Stock Buybacks).

Valuation Changes

The fair value estimate has risen slightly to CA$78.00 from CA$77.50, reflecting marginally greater confidence in long-term cash generation.
The discount rate has increased slightly to 6.56 percent from 6.55 percent, indicating a modestly higher required return in the valuation model.
The revenue growth assumption is effectively unchanged at approximately 5.71 percent, signaling a stable outlook for top-line expansion.
The net profit margin forecast remains essentially flat at about 25.28 percent, suggesting no material change to long-run profitability expectations.
The future P/E multiple has risen slightly to about 21.6x from 21.4x, implying a modestly higher valuation multiple applied to forward earnings.

Investor optimism may be misplaced due to underestimated risks from energy transition trends, stricter climate policies, and declining long-term demand for fossil fuels.
Ongoing capital needs, regulatory challenges, and potential contract instability could threaten project economics, asset utilization, and overall financial stability.
Strong asset base, stable earnings, disciplined growth, and ESG initiatives position TC Energy for resilient performance and expanding opportunities in a changing energy landscape.

Catalysts

About TC Energy

Operates as an energy infrastructure company in North America.What are the underlying business or industry changes driving this perspective?

Investors may be overestimating TC Energy's long-term revenue and EBITDA growth by assuming that the current surge in North American natural gas demand-driven by LNG export growth, coal-to-gas conversions, data center buildouts, and electrification-will persist at elevated rates, despite mounting global pressures for renewables and potential demand destruction for fossil fuels over the long run.
Market optimism around new project announcements and sanctioned capacity additions may be ignoring structural risks from stricter climate policies and possible future carbon pricing, which could increase regulatory costs and compress net margins for pipeline operators like TC Energy.
There is excessive confidence in the long-term stability of rate-regulated or take-or-pay contracts; however, longer-term secular shifts toward decarbonization and capital flight from fossil fuel infrastructure could result in lower asset utilization and impair TC Energy's ability to renew or replace contracts at current terms, impacting revenues and earnings stability.
The expected cadence of brownfield expansions and the associated capital-efficient returns may prove unsustainable if advancements in alternative energy storage, electrification, or declines in North American gas production reduce system throughput, challenging future revenue growth and project economics.
Investors may be underappreciating the long-term impact of elevated leverage and ongoing capital expenditure needs, especially if future project execution is delayed or faces cost overruns due to regulatory, legal, or stakeholder challenges; this increases the risk profile and could drive higher interest costs, weaker net margins, and potential credit rating pressure.

TC Energy Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming TC Energy's revenue will grow by 6.3% annually over the next 3 years.
Analysts assume that profit margins will shrink from 29.7% today to 23.4% in 3 years time.
Analysts expect earnings to reach CA$4.0 billion (and earnings per share of CA$4.01) by about September 2028, down from CA$4.2 billion today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 23.5x on those 2028 earnings, up from 17.6x today. This future PE is greater than the current PE for the CA Oil and Gas industry at 12.2x.
Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.04%, as per the Simply Wall St company report.

TC Energy Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Structural long-term growth in North American natural gas demand, driven by increased LNG exports, electrification, coal-to-gas conversions, and rapidly expanding data center and industrial loads, positions TC Energy to benefit from greater asset utilization and expanded project opportunities-supporting top-line revenue growth.
Robust backlog of brownfield, capital-efficient projects with higher average unlevered after-tax IRRs (up to 12%), take-or-pay contracts, and sanctioned returns underpins predictability in future earnings and supports net margin stability.
Long-lived, regulated pipeline assets and high barriers to entry (including incumbent market positions and customer relationships) enable TC Energy to secure long-term contract renewals, shielding revenues and earnings from competitive and regulatory shocks.
Active balance sheet optimization, marked by successful project execution, deleveraging targets (aiming for 4.75x by 2026), and disciplined capital allocation, improves financial resilience and could support sustained or growing dividends-positively impacting earnings and shareholder value.
Strategic investments in emissions reduction, renewable natural gas, nuclear (e.g., Bruce Power), and ongoing partnerships position the company to access ESG-focused capital, maintain its social license, and diversify revenue streams-potentially leading to steady or increasing net margins over the long term.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of CA$73.952 for TC Energy based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CA$80.0, and the most bearish reporting a price target of just CA$59.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be CA$17.2 billion, earnings will come to CA$4.0 billion, and it would be trading on a PE ratio of 23.5x, assuming you use a discount rate of 7.0%.
Given the current share price of CA$71.88, the analyst price target of CA$73.95 is 2.8% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

TRP: Share Performance Will Reflect Rising Margins Amid Cautious Sector Outlook