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Plains All American to Gain From Pipelines Projects & Capex

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We have recently issued an updated research report on Plains All American Pipeline, L.P. (PAA - Free Report) . The company delivered third-quarter 2018 adjusted earnings of 43 cents per unit, surpassing the Zacks Consensus Estimate of 37 cents by 16.2%. The bottom line also soared 104.8% from 21 cents in the year-ago period.

Plains All American continues to focus on systematic investments in expanding its existing operations coupled with new pipelines and storage facilities, which will allow the partnership to gain from a rising fossil fuel production.

Plains All American Pipeline, L.P. Price and Consensus

What’s Aiding the Plains All American Stock?

The firm maintains a systematic capital investment strategy to extend its operations through organic growth initiatives. It anticipates the 2018 capex to be $1.95 billion wherein 47.4% of the same will be incurred with regard to Permian projects. Also, the firm has increased its capex program to nearly $1 billion for 2019, of which, 75% of the planned capital expenditure will be spent on Permian projects.

Plains All American is widening its activity in the Permian Basin to capitalize on improving demand. The partnership is progressing with its plan to construct Cactus II pipeline systems and completed the expansion of Sunrise pipeline. It also commenced the latter operation in October. Additionally, the partnership and ExxonMobil (XOM - Free Report) entered into a joint venture for construction of crude oil transportation pipeline from multiple locations in the Permian Basin to the Texas Gulf Coast.

After divesting $1.1 billion non-core assets in 2017, the partnership crossed the target of nearly $700 million asset sale in 2018 by selling non-core assets to the extent of $1.3 billion for further strengthening its core operations and lowering its debt burden. It also reduced its total debt load by $1.8 billion since the third quarter of 2017.

However, intense competition in the midstream space and rising interest rates persistently pose threats to the stock. Legislation and regulatory initiatives related to hydraulic fracturing could lessen domestic production of crude oil and natural gas.

Estimates for Plains All American have been revised upward over the past 30 days. Notably, the Zacks Consensus Estimate for the company’s 2018 and 2019 earnings moved 34.5% and 0.5% north to $1.87 and $2.13 per unit, respectively.

Zacks Rank & Key Picks

Plains All American carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks from the industry are as follows:

TC PipeLines, LP (TCP - Free Report) sports a Zacks Rank 1. The stock has seen the Zacks Consensus Estimate for current-year earnings move 4.4% north over the past 30 days to $4.03.

Enterprise Products Partners L.P. (EPD - Free Report) has a Zacks Rank of 1. The stock has seen the Zacks Consensus Estimate for 2018 earnings being revised 9.1% upward over the past 30 days to $1.80 per unit.

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