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Is Plains All American Pipeline Stock a Good Bargain?

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Jan. 8 2019, Updated 2:10 p.m. ET

Plains All American Pipeline

Plains All American Pipeline (PAA) stock offers an upside potential of 21% compared to the median target price of $28.2. Currently, Plains All American Pipeline is trading at $23.3. Among the 24 analysts that track Plains All American Pipeline, six analysts recommended a “strong buy,” 11 recommended a “buy,” and seven recommended a “hold.”

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Valuation

Plains All American Pipeline is trading at an EV-to-EBITDA multiple of 10.0x, which is lower than its peers’ average. The five-year historical average valuation is close to 15x. Analysts expect earnings growth of 11% from Plains All American Pipeline in 2019—higher than many of its bigger peers. Plains All American Pipeline appears to have an attractive valuation compared to its historical average and its estimated earnings growth.

Plains All American Pipeline offers a distribution yield of 5.3%, which is lower than MLPs’ (AMLP) average of 8.6%. Plains All American slashed its quarterly dividend twice in the last two years to finance its expansion projects.

Analysts have given ONEOK (OKE) a median target price of $71.3 compared to its current market price of $57.6, which implies an estimated upside of ~24% going forward. ONEOK is trading at a forward valuation of 12.3x, which is higher than its peers’ average.

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