In This Article:
Based on Plains All American Pipeline LP.’s (NYSE:PAA) earnings update in December 2017, it seems that analyst forecasts are fairly optimistic, as a 22.31% increase in profits is expected in the upcoming year, compared with the past 5-year average growth rate of -6.83%. Presently, with earnings at US$685.00M, we should see this growing to US$837.81M by 2019. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Plains All American Pipeline in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here. Check out our latest analysis for Plains All American Pipeline
How will Plains All American Pipeline perform in the near future?
The longer term view from the 10 analysts covering PAA is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
From the current net income level of US$685.00M and the final forecast of US$1.26B by 2021, the annual rate of growth for PAA’s earnings is 21.34%. EPS reaches $1.95 in the final year of forecast compared to the current $0.96 EPS today. The bottom-line growth seems to be caused by reduction in costs rather than purely top-line expansion as earnings is increasing at a faster rate. In 2021, PAA’s profit margin will have expanded from 2.61% to 3.97%.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Plains All American Pipeline, I’ve put together three relevant factors you should further research:
-
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
-
Valuation: What is Plains All American Pipeline worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Plains All American Pipeline is currently mispriced by the market.
-
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Plains All American Pipeline? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.