Plains All American Pipeline (PAA): Assessing Current Valuation and Future Potential for Investors

Plains All American Pipeline (PAA) recently closed at $16.82, drawing attention as investors weigh the company’s long-term performance in light of recent share price fluctuations. Its year-over-year returns and growth metrics offer a few points worth considering.

See our latest analysis for Plains All American Pipeline.

While Plains All American Pipeline’s share price has seen some minor dips in recent sessions, what stands out is its steady long-term momentum. The stock’s 1-year total shareholder return is modest, but its 3-year figure of over 90% underscores solid compounding for investors willing to ride out the noise.

If you’re looking to expand your radar beyond midstream energy, now’s an ideal time to discover fast growing stocks with high insider ownership.

With shares still trading well below analyst price targets and recent growth outpacing revenue, the question now is whether Plains All American Pipeline is an undervalued opportunity or if the market has already factored in all future gains.

Most Popular Narrative: 18.9% Undervalued

Plains All American Pipeline’s latest price sits well below the most widely-followed fair value estimate, setting the stage for a debate about how much future growth is already priced in. With the narrative’s valuation showing a significant gap to today’s share price, the details behind that figure demand a closer look.

Strong strategic positioning in the Permian Basin and the ability to acquire further interests in key pipelines (such as BridgeTex), paired with ongoing population and economic growth in North America, provide a resilient volume foundation and upward revenue trajectory.

Read the complete narrative.

Want to see why analysts are betting on this company’s long-term earnings expansion? The narrative is built around rising profits and a bold forecast for margins and cash flows. Find out what is driving the consensus price target and which financial levers could push shares higher than expected.

Result: Fair Value of $20.74 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, risks remain, including long-term energy transition pressures and industry overcapacity. Both of these factors could challenge Plains All American Pipeline's earnings and outlook.

Find out about the key risks to this Plains All American Pipeline narrative.

Another View: A Look at Market Multiples

While the discounted cash flow approach signals Plains All American Pipeline is undervalued, using the market’s standard price-to-earnings ratio tells a different story. Currently, its P/E of 25.6x is notably higher than the industry average of 13.4x and even above the peer average of 19.6x. This premium suggests investors are paying a lot for future earnings, and the gap to the fair ratio of 21.6x highlights some valuation risk. Is the market too optimistic, or is there upside others have missed?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Plains All American Pipeline Narrative

If you have a different perspective or prefer hands-on analysis, you can easily craft your own data-driven story in just a few minutes. Do it your way.

A great starting point for your Plains All American Pipeline research is our analysis highlighting 3 key rewards and 4 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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