Plains All American Pipeline (PAA) shares have moved steadily in recent days. After tracking the stock’s performance this month, investors are weighing how its longer-term returns and income growth compare with other midstream energy companies.
Plains All American Pipeline has seen its share price tick up lately, and over the past year the 7.1% total shareholder return highlights a healthy combination of current yield and gradual capital appreciation. This momentum builds on its impressive three- and five-year total returns, reminding investors that income and steady growth can go hand in hand.
With shares trading below analyst targets and solid earnings growth, the question for investors is clear: Is Plains All American Pipeline undervalued at today’s levels, or is the market accurately reflecting its long-term prospects?
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Most Popular Narrative: 14.5% Undervalued
The most widely followed narrative places Plains All American Pipeline’s fair value far above its recent close, suggesting meaningful upside according to future projections. Here is a key driver behind this viewpoint.
“The divestiture of the Canadian NGL business and redeployment of ~$3 billion in proceeds will allow Plains to focus on higher-growth and higher-return U.S. crude oil assets, supporting stable throughput and cash flow, which can drive revenue and long-term earnings growth. 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.”
Want to know what bold forecasts are powering this ambitious valuation? The stage is set by projections of earnings acceleration and profit margins rarely seen in this sector. Find out how far analysts think growth and profitability can go. See which numbers truly separate this outlook from the rest.
However, uncertainties such as slower than expected Permian growth or execution missteps on acquisitions could quickly challenge the bullish outlook for Plains All American Pipeline.
While some see big upside for Plains All American Pipeline, our take on simple valuation measures adds complexity. Its price-to-earnings ratio sits at 16.8x, higher than the US Oil and Gas industry average of 13.2x, but somewhat below the peer average of 18.1x. The market’s fair ratio could move toward 19.9x, suggesting room to run but also pricing risk if sentiment shifts.
Build Your Own Plains All American Pipeline Narrative
If you’d rather crunch the numbers yourself or see things from a different angle, you can build your own 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 2 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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Through its subsidiaries, engages in the pipeline transportation, terminaling, storage, and gathering of crude oil and natural gas liquids (NGL) in the United States and Canada.
