PAA
Plains All American Pipeline, L.P.
$24.45
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Mild
·
Conviction
Fair Value
Trading 10.7% below fair value
You pay
$24.45
Bear
$21.91
Fair
$27.38
Bull
$32.86
Bear
$21.91
-10.4%
$1.91 × 12x P/E
Fair
$27.38
+12.0%
$1.91 × 15x P/E
Bull
$32.86
+34.4%
$1.91 × 18x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
12.8x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $24.57 from 42 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $27.38 per share.
Warnings
The company pays out 98% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples