TC Energy (TSX:TRP) has garnered interest recently, especially after a series of strategic moves and notable financial performances. Known for its vast infrastructure and reliable dividend, TC Energy stock has long been a staple for Canadian energy investors.

But with market shifts, a recent spinoff, and evolving energy trends, the big question is whether TC Energy stock makes a compelling buy. Here, we dive into TC Energy's latest earnings, performance, and future outlook to offer a balanced view.

Into earnings

In its most recent earnings, TC Energy stock reported strong quarterly growth, with revenue hitting $16.5 billion and an impressive 6.7% year-over-year revenue growth. One of the standout figures was its earnings growth, which saw an astonishing 262.6% rise. These numbers suggest the company is bouncing back from challenges it has faced over recent years. This is further supported by robust operations across its gas, oil, and power segments.

Looking at past performance, TC Energy stock has historically been a solid performer — particularly appealing to income investors thanks to its steady dividends. The company's forward annual dividend yield of 5.85% is impressive, well above the five-year average. And it reflects a longstanding commitment to shareholders. The recent increase in its market cap, from $53.8 billion to $68.11 billion within a few quarters, highlights renewed investor confidence.

Growth prospects

However, TC Energy stock recently spun off its liquids pipeline business into South Bow, making this a pivotal moment for the company. By shifting focus more heavily onto natural gas, TC Energy stock aims to streamline operations, reduce debt, and enhance profitability. This strategic decision was well-received by investors as it underscores a commitment to efficiency and focus on growth in areas with strong demand.

Future growth prospects also look promising. Natural gas remains in high demand across North America. With governments promoting cleaner energy, TC Energy stock is positioned to benefit from its extensive pipeline infrastructure. The company's commitment to exploring renewable energy integration alongside its gas assets further strengthens its outlook. Bank of Nova Scotia's recent substantial acquisition of TC Energy stock shares aligns with this optimistic view, showing institutional backing for TC Energy's future.

What to watch

Despite these positives, TC Energy stock faces some headwinds. Its total debt of $65.13 billion, combined with a debt-to-equity ratio of 160.84%, could pose a challenge by unforeseen market shifts. Plus, the spinoff and capital restructuring efforts are costly, as evidenced by the recent $7.9 billion debt offering to fund the separation.

Another aspect to consider is valuation. TC Energy stock's trailing price-to-earnings (P/E) ratio sits at 19.83, while its forward P/E is lower at 16.92, thus indicating that investors anticipate higher earnings. This relatively attractive valuation, combined with a high dividend yield, makes TC Energy stock an appealing buy for value-seeking investors who prioritize dividends.

Bottom line

With shares currently trading near the upper range of their 52-week high, investors might hesitate — especially given TC Energy's volatile price history over the past year. However, the stock's lower beta of 0.82 suggests it's less prone to market swings, adding stability to portfolios, even in uncertain times.

TC Energy stock appears to be a strong buy for income-focused investors who can handle a degree of risk. The company's strategic direction and solid fundamentals paint a promising picture. However, for those focused purely on growth, other options in the energy sector might provide more aggressive returns.