Plains All American (PAA): Reassessing Valuation After Portfolio Shift Toward Stable Fee-Based Earnings and Dividend Growth

Plains All American Pipeline (PAA) is reshaping its portfolio with a $3.8 billion sale of Canadian NGL assets and a full buyout of the Epic Crude Oil Pipeline, sharpening its focus on steadier fee-based earnings and dividend growth.

See our latest analysis for Plains All American Pipeline.

These portfolio moves come after a steady run, with the share price at about $17.74 and a modest 30 day share price return of 3.26 percent, while the five year total shareholder return of 211.71 percent shows how patient investors have already been rewarded and indicates that momentum has been more of a slow grind than a surge.

If you like the idea of steady cash generators like Plains but want to see what else is out there, now is a good time to explore fast growing stocks with high insider ownership.

With cash flows getting sturdier, a high yield underpinned by solid coverage, and the stock still trading at a discount to analyst targets, is Plains quietly undervalued, or is the market already baking in this next leg of growth?

Most Popular Narrative Narrative: 13.2% Undervalued

With Plains All American Pipeline last closing at $17.74 against a narrative fair value near $20.44, the gap suggests room for further upside if the long range assumptions hold.

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.

Read the complete narrative.

Curious how modest revenue growth, expanding margins and a lower future earnings multiple can still point to upside from here? The narrative connects those moving parts into one surprisingly optimistic valuation roadmap.

Result: Fair Value of $20.44 (UNDERVALUED)

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

However, a sharper crude oil focus and heavier capital needs could still undermine volumes, margins and free cash flow if Permian growth or recontracting disappoints.

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

Build Your Own Plains All American Pipeline Narrative

If you are not fully convinced by this outlook, or simply prefer to examine the numbers yourself, you can build a custom narrative 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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