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Plains All American (PAA) Up 23.3% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Plains All American Pipeline (PAA - Free Report) . Shares have added about 23.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Plains All American due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Plains All American Q1 Earnings & Revenues Top Mark

Plains All American Pipeline, L.P. reported first-quarter 2021 adjusted earnings of 25 cents per unit, which surpassed the Zacks Consensus Estimate by a penny. However, the bottom line declined 54.5% from the year-ago figure.

For the quarter under review, the partnership reported GAAP earnings of 51 cents per unit against a loss of $3.98 in the year-ago period.

Total Revenues

Total revenues of $8.38 billion surpassed the Zacks Consensus Estimate of $7.3 billion by 14.8%. Further, the top line improved 1.4% from $8.27 billion reported a year ago.

Highlights of the Release

For the quarter under review, Plains All American’s total costs and expenses were $7,857 million, down 28.8% year over year. This reduction was owing to lower field operating costs, and general and administrative expenses. The firm’s operating income was $526 million against operating loss of $2,773 million in the prior-year quarter.

Total adjusted EBTIDA for the quarter was $546 million, down 31% from the year-ago period.

Net interest expenses decreased 0.9% year over year to $107 million.

Segmental Performance

In the Transportation segment, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $388 million decreased 12% from the year-ago figure, primarily due to lower tariff volumes in multiple areas served, primarily driven by the impact of excess pipeline capacity in most regions of the country.

In the Facilities segment, adjusted EBITDA summed $171 million, down 19% from the year-ago figure. This fall was primarily due to the impact of asset sales and reduced NGL intersegment fee structure based on market conditions.

The Supply and Logistics segment reported adjusted EBITDA of ($13) million against $141 million in first-quarter 2020.

Financial Update

As of Mar 31, 2021, current assets were $4,424 million compared with $3,665 million at 2020-end.

As of Mar 31, 2021, Plains All American had a long-term debt of $9,338 million compared with $9,382 million on Dec 31, 2020.

As of the same date, its long-term debt-to-total book capitalization was 48%, down from 49% at 2020-end.

Guidance

Plains All American expects 2021 adjusted net income to be 98 cents per unit. The partnership retained 2021 adjusted EBITDA expectation of $2,150 million.

Plains All American lowered its 2021 investment and maintenance capital guidance by $65 million, or 10%. The firm is on track to achieve its asset divestiture target of $750 million.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -7.89% due to these changes.

VGM Scores

At this time, Plains All American has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Plains All American has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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