PBA
Pembina Pipeline Corporation
$48.38
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Mild
·
Conviction
Overvalued
Trading 7.6% above fair value
You pay
$48.38
Bear
$35.97
Fair
$44.97
Bull
$53.95
Bear
$35.97
-25.6%
$2.49 × 12x P/E
Fair
$44.97
-7.1%
$2.49 × 15x P/E
Bull
$53.95
+11.5%
$2.49 × 18x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
19.5x
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 $68.00 from 16 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $44.97 per share.
Warnings
The company's reported profits differ from official accounting profits by 31%. Check what costs are being left out of the adjusted number.
The company pays out 110% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Wall Street's average price target is $68.00 (from 16 analysts). Our estimate is 45% below the consensus -- consider that gap carefully.
Financial statements were converted from CAD into USD using USDCAD at 0.7107 USD per CAD.
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