TSX:IPL

Stock Analysis Report

Inter Pipeline

Executive Summary

Inter Pipeline Ltd. engages in the petroleum transportation and storage, and natural gas liquids processing businesses in Canada and Europe.

Rewards

Trading at 16.3% below its fair value

Revenue is forecast to grow 8.28% per year

Pays a reliable dividend of 7.84%

Risk Analysis

Earnings are forecast to decline by an average of -15.4% per year for the next 3 years

Debt is not well covered by operating cash flow

Dividend of 7.84% is not well covered by earnings or forecast to be in the next 3 years

Shareholders have been diluted in the past year



Snowflake Analysis

Average dividend payer with acceptable track record.


Similar Companies

Share Price & News

How has Inter Pipeline's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: IPL has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

1.1%

IPL

-0.7%

CA Oil and Gas

0.2%

CA Market


1 Year Return

4.3%

IPL

-1.1%

CA Oil and Gas

4.9%

CA Market

Return vs Industry: IPL exceeded the Canadian Oil and Gas industry which returned 0.2% over the past year.

Return vs Market: IPL underperformed the Canadian Market which returned 5.8% over the past year.


Shareholder returns

IPLIndustryMarket
7 Day1.1%-0.7%0.2%
30 Day-2.7%-2.7%0.4%
90 Day-1.4%2.8%3.7%
1 Year12.7%4.3%3.2%-1.1%8.2%4.9%
3 Year-8.4%-25.7%-6.5%-16.5%15.9%5.5%
5 Year-10.0%-34.9%-9.8%-24.1%33.8%14.3%

Price Volatility Vs. Market

How volatile is Inter Pipeline's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Inter Pipeline undervalued compared to its fair value and its price relative to the market?

16.0%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: IPL (CA$21.82) is trading below our estimate of fair value (CA$26.07)

Significantly Below Fair Value: IPL is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: IPL is poor value based on its PE Ratio (15.2x) compared to the Oil and Gas industry average (11x).

PE vs Market: IPL is good value based on its PE Ratio (15.2x) compared to the Canadian market (15.9x).


Price to Earnings Growth Ratio

PEG Ratio: IPL's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: IPL is overvalued based on its PB Ratio (2.2x) compared to the CA Oil and Gas industry average (0.7x).


Next Steps

Future Growth

How is Inter Pipeline forecast to perform in the next 1 to 3 years based on estimates from 7 analysts?

-15.4%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: IPL's earnings are forecast to decline over the next 3 years (-15.4% per year).

Earnings vs Market: IPL's earnings are forecast to decline over the next 3 years (-15.4% per year).

High Growth Earnings: IPL's earnings are forecast to decline over the next 3 years.

Revenue vs Market: IPL's revenue (8.3% per year) is forecast to grow faster than the Canadian market (5% per year).

High Growth Revenue: IPL's revenue (8.3% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: IPL's Return on Equity is forecast to be low in 3 years time (15.2%).


Next Steps

Past Performance

How has Inter Pipeline performed over the past 5 years?

12.5%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: IPL has high quality earnings.

Growing Profit Margin: IPL's current net profit margins (23.1%) are higher than last year (22.9%).


Past Earnings Growth Analysis

Earnings Trend: IPL's earnings have grown by 12.5% per year over the past 5 years.

Accelerating Growth: IPL's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: IPL had negative earnings growth (-1.2%) over the past year, making it difficult to compare to the Oil and Gas industry average (6%).


Return on Equity

High ROE: IPL's Return on Equity (14.4%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Inter Pipeline's financial position?


Financial Position Analysis

Short Term Liabilities: IPL's short term assets (CA$366.6M) do not cover its short term liabilities (CA$3.1B).

Long Term Liabilities: IPL's short term assets (CA$366.6M) do not cover its long term liabilities (CA$5.3B).


Debt to Equity History and Analysis

Debt Level: IPL's debt to equity ratio (154.1%) is considered high.

Reducing Debt: IPL's debt to equity ratio has increased from 151.8% to 154.1% over the past 5 years.

Debt Coverage: IPL's debt is not well covered by operating cash flow (14.2%).

Interest Coverage: IPL's interest payments on its debt are well covered by EBIT (4.8x coverage).


Balance Sheet

Inventory Level: IPL has a high level of physical assets or inventory.

Debt Coverage by Assets: IPL's debt is not covered by short term assets (assets are 0.1x debt).


Next Steps

Dividend

What is Inter Pipeline's current dividend yield, its reliability and sustainability?

7.80%

Current Dividend Yield


Upcoming Dividend Payment

Purchase Inter Pipeline before the 'Buy Limit' to receive their next dividend payment.


Dividend Yield vs Market

company7.8%marketbottom25%1.9%markettop25%5.3%industryaverage4.8%forecastin3Years8.0%

Current dividend yield vs market & industry

Notable Dividend: IPL's dividend (7.84%) is higher than the bottom 25% of dividend payers in the Canadian market (1.89%).

High Dividend: IPL's dividend (7.84%) is in the top 25% of dividend payers in the Canadian market (5.32%)


Stability and Growth of Payments

Stable Dividend: IPL's dividends per share have been stable in the past 10 years.

Growing Dividend: IPL's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (119.3%), IPL's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: IPL's dividends in 3 years are not forecast to be well covered by earnings (129.7% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

4.0yrs

Average management tenure


CEO

Chris Bayle (50yo)

6.1yrs

Tenure

CA$3,934,566

Compensation

Mr. Christian P. Bayle, also known as Chris, is Chief Executive Officer and President of Inter Pipeline Ltd. since January 1, 2014. He has been Director of Inter Pipeline Ltd. since January 1, 2017. Mr. Ba ...


CEO Compensation Analysis

Compensation vs Market: Chris's total compensation ($USD2.97M) is about average for companies of similar size in the Canadian market ($USD3.73M).

Compensation vs Earnings: Chris's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Christian Bayle
President6.1yrsCA$3.93m0.11% CA$10.6m
Brent Heagy
Chief Financial Officer5.9yrsCA$1.92mno data
Bernard Perron
Senior Vice President of Projects & Operations Services1.8yrsCA$1.40m0.0036% CA$329.3k
Jeffrey Marchant
Senior Vice President of Transportation5.7yrsCA$1.46mno data
James Madro
Senior Vice President of NGL Processing1.8yrsCA$1.48mno data
Jeremy Roberge
VP of Finance and Investor Relations1.8yrsno data0.0044% CA$405.1k
Anita Elizabeth Oliva
Vice President of Legal4.1yrsno data0.0028% CA$262.7k
S. Arsenych
Chief Compliance Officer4.1yrsCA$935.11kno data
Spilios Kousinioris
Vice President of Corporate Development3.9yrsno data0.0030% CA$275.6k
Megan Joyce
Vice President of Human Resources1.8yrsno datano data

4.0yrs

Average Tenure

Experienced Management: IPL's management team is considered experienced (4 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Christian Bayle
President6.1yrsCA$3.93m0.11% CA$10.6m
Alison Love
Independent Director6.1yrsCA$215.65k0.0051% CA$474.5k
Brant Sangster
Independent Director10.9yrsCA$213.49k0.0024% CA$225.7k
Arthur Korpach
Independent Director1.8yrsCA$132.34k0.0031% CA$284.9k
William Robertson
Independent Director16.7yrsCA$225.12k0.0071% CA$655.7k
Richard Shaw
Independent Chairman of the Board6.1yrsCA$329.09k0.0077% CA$712.2k
Peter Cella
Independent Director1.8yrsCA$130.71k0.0071% CA$657.6k
Duane Keinick
Independent Director12yrsCA$217.62k0.0025% CA$233.1k
Margaret McKenzie
Independent Director4.5yrsCA$209.06k0.0047% CA$438.4k
Julie Dill
Independent Director1.8yrsCA$132.34k0.00024% CA$22.2k

5.3yrs

Average Tenure

63.5yo

Average Age

Experienced Board: IPL's board of directors are considered experienced (5.3 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 6.3%.


Top Shareholders

Company Information

Inter Pipeline Ltd.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Inter Pipeline Ltd.
  • Ticker: IPL
  • Exchange: TSX
  • Founded: 1997
  • Industry: Oil and Gas Storage and Transportation
  • Sector: Energy
  • Market Cap: CA$9.249b
  • Shares outstanding: 422.12m
  • Website: https://www.interpipeline.com

Number of Employees


Location

  • Inter Pipeline Ltd.
  • 215 – 2nd Street SW
  • Suite 3200
  • Calgary
  • Alberta
  • T2P 1M4
  • Canada

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
IPLTSX (The Toronto Stock Exchange)YesCommon SharesCACADNov 1998
IPPL.FOTCPK (Pink Sheets LLC)YesCommon SharesUSUSDNov 1998
2IPDB (Deutsche Boerse AG)YesCommon SharesDEEURNov 1998

Biography

Inter Pipeline Ltd. engages in the petroleum transportation and storage, and natural gas liquids processing businesses in Canada and Europe. The company operates through four segments: Oil Sands Transportation; Conventional Oil Pipelines; Natural Gas Liquids (NGL) Processing; and Bulk Liquid Storage. The Oil Sands Transportation segment transports petroleum products, such as bitumen blend and diluent through Cold Lake, Corridor, and Polaris pipeline systems covering approximately 3,300 kilometers of pipeline and 3.8 million barrels of storage capacity. This segment also offers related blending and handling services. The Conventional Oil Pipelines segment is involved in the transportation of petroleum products, including crude oil through Bow River, Central Alberta, and Mid-Saskatchewan pipeline systems covering approximately 3,900 kilometers of pipeline and 1,375,000 barrels of storage capacity; and related blending, handling, and marketing activities. The NGL Processing segment processes pipeline natural gas to remove NGL, including ethane, propane, butane, and pentanes-plus; and fractionates NGL stream to produce ethane products and propane plus. These NGLs are used as energy products; and as a feedstock for the petrochemical and crude oil refining industries. The Bulk Liquid Storage segment stores and handles bulk liquid products. This segment operates 23 bulk liquid storage terminals and approximately 37 million barrels of storage capacity. Inter Pipeline Ltd. was founded in 1997 and is headquartered in Calgary, Canada. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/18 23:50
End of Day Share Price2020/02/18 00:00
Earnings2019/09/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.