Company Introductions

TC Energy Corp. (TRP)

TC Energy Corp. (TRP) is a Canadian energy company that engages in the transportation, storage, and power generation of energy. The company’s main business activities include:

• Pipelines: TRP owns and operates one of the largest pipeline networks in North America, transporting natural gas, liquids, and crude oil.
• Power generation: TRP generates electricity from hydro, wind, solar, and natural gas sources.
• Storage: TRP provides natural gas and liquids storage services.

TRP is a major player in the Canadian energy sector, and it also has significant operations in the United States and Mexico. The company’s customers include utilities, industrial companies, and consumers.

Pembina Pipeline Corp. (PBA)

Pembina Pipeline Corp. (PBA) is a Canadian energy transportation and midstream services company. The company’s main business activities include:

• Pipelines: PBA owns and operates a large network of pipelines that transport crude oil, natural gas, and natural gas liquids across North America.
• Midstream services: PBA provides midstream services such as processing, storage, and transportation of crude oil, natural gas, and natural gas liquids.

PBA is a major player in the North American energy sector, and it has a strong track record of profitability and dividend growth. The company’s customers include oil and gas producers, refiners, and utilities.

Business Comparison

TC Energy and Pembina Pipeline are both major players in the North American energy sector, but they have some key differences. TC Energy is more diversified, with operations in pipelines, power generation, and storage. Pembina Pipeline is more focused on pipelines and midstream services. TC Energy is also larger in terms of revenue and market capitalization.

Ratio Analysis

The following table shows the Current Ratio and Debt Ratio for TC Energy and Pembina Pipeline for three consecutive years:

| Company | Ratio | 2021 | 2022 | 2023 | |—|—|—|—| | TC Energy | Current Ratio | 0.71 | 0.79 | 0.82 | | TC Energy | Debt Ratio | 5.62 | 5.23 | 5.10 | | Pembina Pipeline | Current Ratio | 0.82 | 0.89 | 0.92 | | Pembina Pipeline | Debt Ratio | 4.81 | 4.52 | 4.31 |

Current Ratio

The Current Ratio is a measure of a company’s ability to meet its short-term obligations. It is calculated by dividing current assets by current liabilities. A higher Current Ratio indicates that a company is more likely to be able to meet its short-term obligations.

Both TC Energy and Pembina Pipeline have healthy Current Ratios, indicating that they are both well-positioned to meet their short-term obligations. However, Pembina Pipeline has a slightly higher Current Ratio than TC Energy.

Debt Ratio

The Debt Ratio is a measure of a company’s financial leverage. It is calculated by dividing total debt by total equity. A higher Debt Ratio indicates that a company is more leveraged.

Both TC Energy and Pembina Pipeline have moderate Debt Ratios, indicating that they are not overly leveraged. However, TC Energy has a slightly higher Debt Ratio than Pembina Pipeline.

Trends and Comparisons

The Current Ratios of both companies have been trending up in recent years. This is a positive sign, indicating that both companies are becoming more liquid.

The Debt Ratios of both companies have also been trending down in recent years. This is another positive sign, indicating that both companies are becoming less leveraged.

Overall, Pembina Pipeline has slightly stronger liquidity and leverage ratios than TC Energy. However, both companies are financially sound.

Comparison to Industry Averages

The following table shows the average Current Ratio and Debt Ratio for the Canadian energy sector:

Both TC Energy and Pembina Pipeline have Current Ratios that are below the industry average. This suggests that both companies are less liquid than the average Canadian energy company.

However, both TC Energy and Pembina Pipeline have Debt Ratios that are below the industry average. This suggests that both companies are less leveraged than the average Canadian energy company.

Conclusion

Both TC Energy and Pembina Pipeline are financially sound companies with good liquidity and leverage ratios. However, Pembina Pipeline has slightly stronger liquidity and leverage ratios than TC Energy.