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Plains All American Pipeline LP PAA

Morningstar Rating
$17.94 +0.25 (1.41%)
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Company Report

Plains Is One of the Best Capital Return Stories in US Midstream

We believe the oversupply of Permian oil takeaway capacity, which we expect to persist for years, had a material negative impact on the returns from Plains All American's pipeline network. Higher Permian volumes will help Plains earn the full tariff on more volumes in 2023, as it only earned partial tariffs in 2022 due to the volumes being on partially owned assets. Combined with higher tariffs due to inflation, we are seeing modest EBITDA growth on the oil side. Plains is pursuing a balanced capital allocation approach, including a "no regrets" growth capital investment framework and a thoughtful distribution of its remaining excess cash flow. For example, we think the recent acquisition of the remaining portion of the Northern Midland Basin gathering system from Diamondback is an immediate winner. It is geographically very close to existing joint-venture assets, and it better aligns Plains with a critical Permian producer in Diamondback. The recent addition of Rattler Midstream and LM Energy assets seems to follow a similar playbook.

Price vs Fair Value

PAA is trading at a 2% discount.
Price
$17.69
Fair Value
$27.00
Uncertainty
Medium
1-Star Price
$44.70
5-Star Price
$44.10
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

After several years of difficult decisions, Plains is finally in a position to return more capital to Plains unitholders.

Bears

Lower natural gas liquids pricing is expected to contribute to a decline of $85 million in EBITDA for Plains' natural gas liquids business in 2024.

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News

Trading Information

Previous Close Price
$17.69
Day Range
$17.6518.04
52-Week Range
$12.0719.03
Bid/Ask
$17.80 / $17.89
Market Cap
$12.58 Bil
Volume/Avg
3.4 Mil / 3.5 Mil

Key Statistics

Price/Earnings (Normalized)
12.36
Price/Sales
0.25
Dividend Yield (Trailing)
6.33%
Dividend Yield (Forward)
7.18%
Total Yield
6.33%

Company Profile

Plains All American provides transportation, storage, processing, fractionation, and marketing services for crude oil, refined products, natural gas liquids, liquefied petroleum gas, and related products. Plains' assets span the United States and Alberta, Canada, but are heavily concentrated in the Permian Basin.
Sector
Energy
Industry
Oil & Gas Midstream
Stock Style Box
Mid Value
Total Number of Employees
4,200

Competitors

Valuation

Metric
PAA
ET
TRGP
Price/Earnings (Normalized)
12.3612.5121.97
Price/Book Value
1.531.739.08
Price/Sales
0.250.631.57
Price/Cash Flow
4.884.938.22
Price/Earnings
PAA
ET
TRGP

Financial Strength

Metric
PAA
ET
TRGP
Quick Ratio
0.840.830.58
Current Ratio
0.981.100.79
Interest Coverage
5.203.173.82
Quick Ratio
PAA
ET
TRGP

Profitability

Metric
PAA
ET
TRGP
Return on Assets (Normalized)
3.63%5.62%7.11%
Return on Equity (Normalized)
12.48%21.72%53.57%
Return on Invested Capital (Normalized)
6.19%9.25%11.56%
Return on Assets
PAA
ET
TRGP
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