Plains All American Pipeline (PAA) reported earnings earlier this week. It was another solid quarter and shows why this vehicle has been one of the best performing energy MLP's over the past three quarters and is likely to outperform going forward.
Key earnings highlights for PAA:
- Had operating earnings per unit of $1.58, easily beating estimates of $1.40.
- Revenues grew a solid 21% to $9.2B Y/Y.
- EBITDA improved to $382mm from $326mm in same quarter the prior year.
- Raised its quarterly payout to $1.045 per unit, which is up 2% over previous quarter and over 7% Y/Y.
4 reasons PAA offers compelling value at under $79 a share:
- PAA provides a solid 5.3% and has doubled its payouts over the last decade.
- Plains made five acquisitions totaling $2.3B at the end of 2011. The acquisitions bolstered it presence in Canada as well as the Eagle Ford and Permian Basin shale regions. This bodes well for future revenue and cash flow growth.
- Consensus earnings estimates for FY2012 and FY2013 have risen sharply over the last three months and the company sextupled cash flow between FY2009 to FY2011.
- PAA has easily beat earnings estimates the last four quarters as analysts catch up to its earnings power. Global Hunter Securities put an "Accumulate" rating on PAA in April and S&P has a $90 price target and a "Buy" rating on the stock.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in PAA over the next 72 hours.
