Pembina Pipeline (PPL) AI Stock Analysis

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Pembina Pipeline

(TSX:PPL)

71Outperform

Pembina Pipeline is well-positioned with strong financial performance and strategic growth initiatives. Although technical indicators suggest caution in the short term, the company's robust profitability, reasonable valuation, and positive earnings call support a solid overall stock score.

Positive Factors

Earnings Performance

Strong Q4/24 results with a record $1,254M adj. EBITDA, well above consensus $1,128M.

Financial Health

Analyst recommends PPL shares with an Outperform rating given the positive free cash flow position and strong balance sheet.

Growth Strategy

PPL unveiled a suite of potential new organic-growth projects not yet in valuation, including gas power for a data center, straddle plant, and de-ethanizer.

Negative Factors

Guidance Concerns

The 2025 EBITDA guide was a tad soft, approximately 3% below consensus.

Regulatory Challenges

The CER review of Alliance tolls could weigh on shares in the near-term, especially after the recent unfavorable recontracting outcome.

Pembina Pipeline (PPL) vs. S&P 500 (SPY)

Market Cap

$30.70B

Dividend Yield5.46%

Average Volume (3M)4.66M

Price to Earnings (P/E)17.6

Beta (1Y)0.78

Revenue Growth-19.86%

EPS Growth0.18%

CountryCA

Employees2,997

SectorEnergy

Sector Strength62

IndustryOil & Gas Midstream

Share Statistics

EPS (TTM)3.00

Shares Outstanding580,595,000

10 Day Avg. Volume3,646,360

30 Day Avg. Volume4,658,989

Financial Highlights & Ratios

PEG Ratio97.80

Price to Book (P/B)N/A

Price to Sales (P/S)4.38

Price to Cash Flow (P/CF)9.20

P/FCF Ratio12.10

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

C$62.10

Price Target Upside19.98% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering9

Pembina Pipeline Business Overview & Revenue Model

Company DescriptionPembina Pipeline Corporation is a leading transportation and midstream service provider in North America, operating primarily in the oil and gas sector. The company is headquartered in Calgary, Alberta, and offers a range of services including the transportation, storage, and processing of hydrocarbons. Pembina operates an extensive network of pipelines and facilities that serve various segments of the energy industry, providing essential infrastructure for the efficient and safe movement of crude oil, natural gas, and natural gas liquids (NGLs).

How the Company Makes MoneyPembina Pipeline Corporation generates revenue through a diversified business model that includes fee-based earnings from its pipeline transportation services, midstream processing, and storage solutions. The company charges fees for the transportation of crude oil, natural gas, and NGLs across its pipeline network, which is often underpinned by long-term contracts with producers and shippers. In addition to transportation fees, Pembina earns income from processing and fractionation services, where it separates and processes NGLs into marketable products. The company also capitalizes on its storage facilities, providing storage solutions for producers and marketers. Its revenue streams are further enhanced by strategic partnerships and joint ventures, which expand its service offerings and geographic reach, contributing to a stable and growing financial performance.

Pembina Pipeline Financial Statement Overview

Summary

Pembina Pipeline shows solid financial health despite recent revenue declines. The company maintains strong profitability and efficient cash flow generation, supported by a stable balance sheet. Continued revenue growth will be crucial for sustaining financial stability.

Income Statement

Positive

Pembina Pipeline shows a strong gross profit margin with consistent EBIT and EBITDA margins, indicating efficient cost management. However, the company experienced a significant revenue decline from 2022 to 2023, affecting overall revenue growth negatively. Net profit margin remains robust, reflecting solid profitability.

Balance Sheet

Positive

The company's debt-to-equity ratio remains manageable, indicating a balanced capital structure, although there was an increase in total debt. Return on Equity (ROE) is strong, signifying effective use of equity to generate profits. The equity ratio is stable, demonstrating solid financial foundation and asset management.

Cash Flow

Very Positive

Operating cash flow has consistently covered net income, with a healthy free cash flow that supports future investments and debt repayments. The free cash flow growth rate has been positive, highlighting efficient cash management and operational efficiency.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
7.38B	9.13B	11.61B	8.63B	6.20B
	Gross Profit
3.32B	2.84B	3.12B	2.65B	2.01B
	EBIT
2.28B	2.65B	2.60B	2.12B	1.78B
	EBITDA
3.18B	3.01B	4.00B	2.55B	418.00M
	Net Income Common Stockholders
1.86B	1.78B	2.97B	1.24B	-316.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
141.00M	137.00M	94.00M	43.00M	81.00M
	Total Assets
35.97B	32.62B	31.48B	31.46B	31.42B
	Total Debt
13.32B	11.14B	11.28B	11.96B	11.65B
	Net Debt
13.18B	11.01B	11.18B	11.92B	11.57B
	Total Liabilities
18.46B	16.80B	15.69B	17.09B	16.40B
	Stockholders Equity
17.51B	15.81B	15.73B	14.30B	14.96B
Cash Flow		Free Cash Flow
2.26B	2.03B	2.32B	1.99B	1.22B
	Operating Cash Flow
3.21B	2.63B	2.93B	2.65B	2.25B
	Investing Cash Flow
-3.91B	-789.00M	-154.00M	-1.04B	-1.48B
	Financing Cash Flow
678.00M	-1.80B	-2.72B	-1.67B	-809.00M

Pembina Pipeline Technical Analysis

Technical Analysis Sentiment

Negative

Last Price51.76

Price Trends

50DMA

53.75

Negative

100DMA

53.84

Negative

200DMA

53.40

Negative

Market Momentum

MACD

1.21

Negative

RSI

69.75

Neutral

STOCH

68.71

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:PPL, the sentiment is Negative. The current price of 51.76 is below the 20-day moving average (MA) of 55.99, below the 50-day MA of 53.75, and below the 200-day MA of 53.40, indicating a bearish trend. The MACD of 1.21 indicates Negative momentum. The RSI at 69.75 is Neutral, neither overbought nor oversold. The STOCH value of 68.71 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:PPL.

Pembina Pipeline Peers Comparison

Overall Rating

UnderperformOutperform

Sector (57)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
KEY	78 Outperform	C$9.59B	19.70	17.35%	4.92%	2.89%	14.76%
ALA	76 Outperform	C$10.92B	18.82	7.32%	3.37%	-4.65%	-14.19%
ENB	73 Outperform	C$130.27B	25.53	8.63%	6.32%	24.95%	-17.19%
PPL	71 Outperform	$30.70B	17.61	11.25%	5.46%	-19.86%	0.18%
TRP	71 Outperform	$67.99B	14.78	16.85%	5.66%	5.31%	61.02%
GEI	70 Outperform	$3.37B	22.01	16.36%	8.24%	6.95%	-35.38%
Sector *	57 Neutral	$7.52B	4.07	-3.52%	8.38%	-0.14%	-64.60%

* Energy Sector Average

Performance Comparison

TSE:PPL

Pembina Pipeline

50.38

4.59

10.03%

TSE:TRP

TC Energy

63.50

18.80

42.05%

TSE:ALA

AltaGas

36.55

8.52

30.42%

TSE:GEI

Gibson Energy

20.60

-0.81

-3.77%

TSE:ENB

Enbridge

58.67

13.78

30.69%

TSE:KEY

Keyera Corp.

39.74

6.42

19.27%

Pembina Pipeline Earnings Call Summary

Earnings Call Date: Feb 27, 2025 | % Change Since: -0.20% | Next Earnings Date: May 8, 2025

Earnings Call Sentiment Positive

The earnings call highlighted Pembina's strong financial performance and strategic growth initiatives, including record adjusted EBITDA and cash flows, successful acquisitions, and new project announcements. However, this was slightly tempered by a decrease in fourth-quarter earnings and challenges with Cochin pipeline revenues. Overall, the positive highlights significantly outweigh the lowlights, indicating a strong position moving forward.

Highlights

Record Financial Performance

Pembina reported record quarterly adjusted EBITDA of $1.254 billion and record quarterly adjusted cash flow from operating activities of $922 million. For the full year, Pembina achieved record annual adjusted EBITDA of $4.408 billion and record full-year adjusted cash flow from operating activities of $3,265 million.

Successful Strategic Acquisitions

Pembina fully consolidated ownership of Alliance and Aux Sable, which contributed to growing volumes and financial performance.

Positive Final Investment Decision on Cedar LNG

Pembina reached a positive final investment decision on the Cedar LNG project, furthering global market access for Canadian natural gas producers.

New Growth Initiatives

Pembina announced a 50% interest in the Greenlight Electricity Centre and secured sole extraction rights from the Yellowhead mainline, both of which are expected to drive future growth and integration.

Strong Contractual Success

Executed incremental contracts or renewed contracts for approximately 170,000 BOE per day of pipeline transportation and additional services across various facilities.

Dividend Increase

Pembina increased the common share dividend by 3.4% while maintaining a strong balance sheet with a debt-to-adjusted EBITDA ratio of 3.5 times.

Lowlights

Decrease in Fourth Quarter Earnings

Fourth quarter earnings decreased by 18% compared to the same period in the prior year, primarily due to unrealized losses on commodity-related derivatives and higher interest expenses.

Challenges with Cochin Pipeline

Lower net revenue on the Cochin pipeline was largely due to lower firm tolls and lower interruptible volumes during the period.

Company Guidance

During the Pembina Pipeline Corporation's fourth quarter 2024 results conference call, the company reported several key financial metrics and operational achievements. Quarterly earnings were $572 million, with record adjusted EBITDA of $1.254 billion and adjusted cash flow from operating activities reaching $922 million, or $1.59 per share. For the full year 2024, Pembina reported earnings of $1.874 billion, record annual adjusted EBITDA of $4.408 billion, and record adjusted cash flow from operating activities of $3.265 billion, or $5.70 per share. These results were attributed to successful acquisitions, growing volumes in the Western Canadian Sedimentary Basin, and a robust performance from the marketing business. Pembina also highlighted strategic initiatives such as the Phase VIII Peace Pipeline expansion and securing a 50,000 barrel per day ethane supply agreement with Dow. The company is progressing with various projects expected to enter service in 2026, including the RFS IV expansion, Wapiti plant expansion, and K3 cogeneration facility, and is planning further developments like the Greenlight Electricity Centre and a new straddle facility on the Yellowhead mainline. The call concluded with a positive outlook for 2025, underscoring Pembina's strong position in the energy sector and its continued growth prospects.

Pembina Pipeline Corporate Events

DividendsFinancial Disclosures

Pembina Pipeline Declares Dividends and Announces Q1 2025 Results Call

Positive

Apr 8, 2025

Pembina Pipeline Corporation has declared quarterly dividends for its preferred shares, with specific payment dates set for various series. This announcement underscores Pembina’s commitment to returning value to its shareholders. Additionally, Pembina will release its first quarter 2025 results on May 8, 2025, followed by a conference call and webcast on May 9, 2025, to discuss the results with investors and stakeholders, highlighting the company’s transparency and engagement with its financial community.

Spark’s Take on TSE:PPL Stock

According to Spark, TipRanks’ AI Analyst, TSE:PPL is a Outperform.

Pembina Pipeline’s strong financial performance and strategic growth initiatives significantly contribute to its high stock score. Despite a recent revenue decline, the company maintains robust profitability and cash flow, supported by strategic acquisitions and growth projects. The technical analysis suggests near-term caution due to possible overbought conditions, while the valuation offers a balanced view with a strong dividend yield. The earnings call reinforced the company’s strong position and future growth prospects.

To see Spark’s full report on TSE:PPL stock, click here.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.