TC Energy vs. Expand Energy: A Detailed Investment Comparison

Investors are increasingly focusing on the comparative strengths of two major energy firms: TC Energy and Expand Energy. Both companies are recognized as large-cap entities in the energy sector, yet their investment profiles differ significantly. This article examines key factors, including institutional ownership, earnings, dividends, and analyst recommendations, to determine which company presents a more attractive investment opportunity.

Risk and Volatility Analysis

In terms of stock volatility, Expand Energy shows a beta of 0.47, indicating its share price is approximately 53% less volatile than the S&P 500 index. In contrast, TC Energy has a beta of 0.73, reflecting a 27% lower volatility compared to the same benchmark. This suggests that while both stocks are less volatile than the broader market, Expand Energy may offer a slightly more stable investment profile.

Dividend Performance and Payouts

When it comes to dividends, Expand Energy pays an annual dividend of $2.30 per share, yielding about 2.0%. Meanwhile, TC Energy provides a higher annual dividend of $2.41 per share, boasting a yield of 4.5%. It is noteworthy that Expand Energy distributes approximately 65.3% of its earnings as dividends, while TC Energy’s payout ratio stands at an alarming 103.9%. This implies that TC Energy may struggle to sustain its dividend payments without sufficient earnings in the future. Despite having raised its dividend for one consecutive year, TC Energy is positioned as the stronger dividend stock due to its higher yield and established track record.

Ownership Insights

The ownership structure of these companies reveals important insights into their market perception. A remarkable 97.9% of Expand Energy shares are held by institutional investors, suggesting strong confidence among large financial entities. In comparison, institutional ownership for TC Energy is at 83.1%. Insider ownership for Expand Energy is minimal at just 0.2%, highlighting the dominance of institutional investment in its equity.

Analyst Ratings and Price Targets

Recent ratings from analysts provide further context for potential investors. According to MarketBeat, Expand Energy currently holds no sell ratings, with a consensus price target of $128.32, suggesting a potential upside of 10.10%. Conversely, TC Energy enjoys a more favorable outlook with four buy ratings and a higher consensus price target of $84.00, indicating a potential upside of 56.42%. This disparity in analyst sentiment clearly positions TC Energy as the preferred choice among analysts.

Financial Performance and Valuation

A side-by-side comparison of key financial metrics reveals that TC Energy outpaces Expand Energy in several areas. For instance, TC Energy reported gross revenue of $14.65 billion, compared to Expand Energy’s $10.85 billion. Additionally, TC Energy’s net income stands at $3.43 billion, while Expand Energy reported a net loss of $714 million. This financial performance translates into earnings per share of $2.32 for TC Energy versus $3.52 for Expand Energy, with both companies trading at price-to-earnings ratios of 23.15 and 33.11, respectively. Notably, TC Energy is currently viewed as the more affordable stock based on its lower price-to-earnings ratio.

Profitability Metrics

In terms of profitability, TC Energy demonstrates a significant advantage. Its net margin is reported at 28.98%, while Expand Energy lags at 7.99%. Furthermore, TC Energy’s return on equity is 11.22%, compared to Expand Energy’s 6.31%. The return on assets for TC Energy stands at 3.31%, while Expand Energy’s is 4.02%, indicating a more efficient use of assets across both companies.

In summary, TC Energy outperforms Expand Energy across nine of the seventeen factors analyzed. While Expand Energy has strong institutional backing, its financial struggles and lower dividend yield may concern potential investors. In contrast, TC Energy offers a more compelling investment profile with its robust revenue, profitability metrics, and favorable analyst ratings. Investors should carefully consider these aspects when evaluating their options in the energy sector.

About Expand Energy: Expand Energy Corporation is an independent natural gas producer based in Oklahoma City, primarily operating within the United States. The company was formerly known as Chesapeake Energy Corporation.

About TC Energy: TC Energy Corporation, headquartered in Calgary, Canada, operates as an energy infrastructure company across North America. Established in 1951, it manages extensive natural gas and liquids pipelines, as well as power generation facilities. The company rebranded from TransCanada Corporation to TC Energy Corporation in May 2019.