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Pembina Pipeline Corp
PPL-T
BUY ON WEAKNESS
Nov 06, 2024
Stock price when the opinion was issued
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Canadian infrastructure name. She owns for income in client portfolios. Robust business model. Often has long-term, take-or-pay contracts; visible cashflow stream. Guided that it can grow EBITDA (cashflows) by single digits over next few years. She'd expect dividend increases to reflect that.
Stock's pulled back with underlying commodity prices. Should have lower volatility than energy producers. Yield is 5.3%.
It holds a dominant position in the natural gas and LNG market. It has less leverage than some other pipelines and is self-funding from free cash flow. It has entered into a joint venture for a data base to be built on their land. Has a good dividend of 5 to 5 1/2% and the risk/reward is quite attractive. A comment was made that the telecoms are lagging even with falling interest rates.
Integrated across the entire value chain, from well head to end user. Earns revenue every step of the way for gas and oil molecules. 80-90% of earnings are contracted, and that's what the dividend is based on. Working on really big (for them) LNG export facility off coast of BC.
Likes growth. Good operator, very little commodity price exposure, consistent earnings, very safe dividend. Long-term buy and hold. Yield is 5.4%, and the dividend continues to rise.
PPL fell recently on news of lower tolls, but this of course comes with the territory of a regulated business. Considering its valuation, stability, cash flow and dividends, we would be comfortable buying a full position for income primarily and some long term growth potential.
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Loves it. Income name mainly, with some earnings growth. Probably the worst performer of the group over the last year. Does have midstream infrastructure, so assets aren't as bulletproof as those of an ENB. ENB is always his first choice, though PPL has better long-term growth outlook. He'd buy here.
PPL is up 4% this year and 25% over 52 weeks. It's 18X earnings with a 3.23% dividend that has shown decent recent growth. Debt is high as is common in the sector, but OK earnings growth is expected over the next two years. Cash flow is high and stable, though we would like to see higher free cash flow conversion. The share count has declined over the past six years with buybacks. All in, we would consider it OK. Fundamentals and sector outlook are fine. It is priced well. We would not expect huge growth here, but we would consider it decent for income and potential growth over time.
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It is the third largest mid-streamer in Canada. He owns all three but considers this one the most attractive of them. Has the largest infrastructure in the Montney region. It is positioned to participate in the increase of LNG exports from the BC coast. Its dividend is 5 1/2% with a payout ratio that is more conservative as well as having a healthier balance sheet than the other two. It is the same price as a year ago. Buy 13 Hold 6 Sell 0
(Analysts’ price target is $60.01)Still her favourite pipeline, especially at these levels. Best growth trajectory, and in best strategic position to handle growth in nat gas shipping with LNG Canada. Alliance Pipeline pricing has been an overhang. This is the one to own based on dividend growth, yield, and capex plan.
EPS of 60c did miss estimates of 75c; revenue of $1.84B also missed estimates ($2.11B). EBITDA of $1.01B missed estimates by 4%. Pembina's 4Q Ebitda may expand by high-single digits, assuming it reaches the midpoint of narrowed guidance of C4.23-$4.33 billion. Contributions from increased stakes in Alliance Pipeline and Aux Sable will likely be the primary drivers, outweighing pressure on lower re-contracted tolls on the Cochin pipeline system. The narrower differential between US Gulf Coast and western Canadian condensate could continue to limit interruptible volume on Cochin. The Marketing segment may be little changed again as the fully consolidated Aux Sable asset and improved NGL margin -- partly due to weak natural gas prices -- buoy Ebitda. Capital spending in 4Q could be similar to 3Q's $262 million, supporting free-cash-flow generation to cover the dividend. It is up 24% this year, but could continue to benefit from lower interest rates. The quarter was clearly not perfect, but with its valuation and 4.9% dividend we would not necessarily see it as a sell if one wants sector exposure.
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