Plains All American Pipeline Q3 Earnings: Is NYSE:PAA Cheap at 0.6x Price/Book?

in EARNINGS/INVESTING IDEAS by

Plains All American Pipeline, L.P. (NYSE:PAA) is scheduled to report Q3 earnings results after markets close for trading on November 2, 2020.

The company is expected to report earnings of $0.31/share on revenue of $5.642 billion. The consensus earnings per share (EPS) of $0.31/share is based on a poll of 11 analysts and represents a decline in eps of −39.5% over the same quarter last year, when the company reported earnings of $0.52/share.

The revenue forecast of $5.642 billion based on a poll of 7 analysts implies a year-over-year (YoY) decline in revenue of −28.5%. Last year the company reported $7.886 billion in revenue for the quarter.

Expected to report EPS contraction of −39.5% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $5,641.84 $7,886.00 −28.5%
EPS $0.31 $0.52 −39.5%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and met expectations 1 quarters.

What are your expectations from Plains All American Pipeline, L.P. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.26 $0.25 −2.8% Missed
Q1, 2020 $0.46 $0.55 19.8% Beat
Q4, 2019 $0.49 $0.63 28.5% Beat
Q3, 2019 $0.41 $0.52 25.8% Beat
Q2, 2019 $0.40 $0.67 66.6% Beat
Q1, 2019 $0.58 $0.69 18.3% Beat
Q4, 2018 $0.73 $0.80 10.1% Beat
Q3, 2018 $0.40 $0.43 8.8% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by falling −2.7%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 4, 2020 $8.16 $7.94 −2.7% Decline
May 5, 2020 $8.38 $7.79 −7.0% Decline
February 4, 2020 $16.52 $16.93 2.5% Increase
November 5, 2019 $19.09 $18.74 −1.8% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −3.66, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.66 implies a 0.0% chance of earnings manipulation.

Fundamentals And Technical Analysis

Plains All American Pipeline, L.P. is currently trading at $6.51/share, down −4.5% for the day. The company is trading at approximately 33.4% of its 52-week high of $19.47/share. The company’s stock price is down −18.0% since the last earnings report and down −1.4% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 49.56 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:PAA Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −2.21 and a forward P/E multiple of 4.56.

Plains All American Pipeline, L.P.’s current share price also implies a price-to-book (P/B) multiple of 0.64. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $6.51
P/E Ratio −2.2x
P/E Ratio (Fwd) 4.6x
PEG Ratio 0.0
Total Debt / Total Capital 59.5%
Levered Free Cash Flow $941 million
EV / EBITDA 6.8x

Finbox

Plains All American Pipeline, L.P. is a mid-cap stock with a market capitalization of $4.74 billion and a total enterprise value of $18.038 billion. The company operates in the Energy sector and the Oil, Gas & Consumable Fuels industry.

Plains All American Pipeline, L.P., through its subsidiaries, engages in the transportation, storage, terminalling, and marketing of crude oil, natural gas liquids (NGL), and natural gas in the United States and Canada. The company operates through three segments: Transportation, Facilities, and Supply and Logistics. The Transportation segment transports crude oil and NGL through pipelines, gathering systems, trucks, and barges. As of December 31, 2019, this segment owned and leased 18,535 miles of active crude oil and NGL pipelines and gathering systems; 35 million barrels of active and above-ground tank capacity; 825 trailers; 50 transport and storage barges; and 20 transport tugs. The Facilities segment provides storage, terminalling, and throughput services for crude oil, NGL, and natural gas; and NGL fractionation and isomerization, and natural gas and condensate processing services. As of December 31, 2019, this segment owned and operated approximately 79 million barrels of crude oil storage capacity; 34 million barrels of NGL storage capacity; 63 billion cubic feet of natural gas storage working capacity; 25 billion cubic feet of base gas; seven natural gas processing plants; a condensate processing facility; eight fractionation plants; 30 crude oil and NGL rail terminals; six marine facilities; and approximately 430 miles of active pipelines. The Supply and Logistics segment purchases crude oil at the wellhead, pipeline, terminal, and rail facilities; stores inventory and NGL; purchases NGL from producers, refiners, processors, and other marketers; extracts NGL; resells or exchanges crude oil and NGL; and transports crude oil and NGL on trucks, barges, railcars, pipelines, and vessels. This segment owned 16 million barrels of crude oil and NGL linefill; 4 million barrels of crude oil and NGL linefill; 760 trucks and 900 trailers; and 8,000 crude oil and NGL railcars. The company was founded in 1998 and is headquartered in Houston, Texas.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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