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Why Is Plains All American (PAA) Down 13.3% Since the Last Earnings Report?

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It has been about a month since the last earnings report for Plains All American Pipeline, L.P. (PAA - Free Report) . Shares have lost about 13.3% in that time frame.

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

Plains All American Lags Q2 Earnings, Revises Guidance

Plains All American Pipeline, L.P. reported second-quarter 2017 adjusted earnings of 21 cents per unit, missing the Zacks Consensus Estimate of 26 cents by 19.2%. The partnership reported loss of 20 cents per unit in the year-ago quarter.

Total Revenue

In the second quarter, the partnership reported total revenue of $ 6,078 million, which missed the Zacks Consensus Estimate of $6,318 million by 3.8%.

However, quarterly revenues were up 28.8% from $4,950 million in the year-ago quarter.

Operational Update

In the quarter under review, Plains All American’s total cost and expenses were $5,821 million, up 21.2% year over year from $4,804 million primarily due to higher purchases and related costs.

The partnership’s operating income increased 75.3% to $257 million from $146 million a year ago.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) came in at $451 million in the second quarter, down 4.9%. The Supply & Logistics segment was a major drag, dropping 172% year on year. This negative impact was partially offset by higher contribution from Transportation (up 9%) and Facilities (up 12%).

Interest expenses increased 11.4% to $127 million from $114 million a year ago.

Financial Update

Current assets as of Jun 30 were $3,528 million, compared with $4,272 million as of Dec 31, 2016.

As of Jun 30, Plains All American had long-term debt of $10,040 million, compared with $10,124 million as of Dec 31, 2016. The total long-term debt-to-total book capitalization ratio at the end of the quarter, including short-term debt was 52%, down from 57% at the end of 2016.

Guidance

Plains All American revised 2017 full-year adjusted EBITDA guidance of $2,075 million from a prior adjusted guidance of $2,260 million.

The partnership revised 2017 expansion capital expenditure projection of $950 million from a prior projection of $900 million. Maintenance capital expenditure guidance of $210 million was revised from a prior guidance of $195 million.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend in fresh estimates. There have been seven revisions lower for the current quarter. In the past month, the consensus estimate has shifted lower by 25.2% due to these changes.

VGM Scores

At this time, Plains All American's stock has an average Growth Score of C, though it is lagging a lot on the momentum front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

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

Our style scores indicate that the stock is more suitable for value investors than growth investors.

Outlook

Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.




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