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Why Pembina Pipeline (PBA) Stock Is Higher Tuesday

Stocks in this article: PBA

NEW YORK (TheStreet) -- Shares of Pembina Pipeline Corp. (PBA) are up 2.38% to $41.81 on Tuesday after the company announced it reached an agreement to proceed with construction of a new 55,000 barrel per day propane-plus fractionator at its Redwater fractionation and storage complex.

The Calgary-based transportation and midstream service provider, which transports conventional and synthetic crude oil and natural gas liquids, said the project, known as RFS III, is expected to cost $400 million and will be the company's third fractionator.

The company says it expects the addition of a third fractionator to bring its fractionation capacity to 210,000 barrels per day.

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Pembina also announced it will begin constructing a new high vapor pressure pipeline lateral that will extend the gathering potential of its Brazeau pipeline.

"Projects like these support our continued focus on expanding our fee-for-service business and integrated service offering, which in turn help drive sustainable dividend growth - and ultimately value for our shareholders - for many years to come," the company said.

TheStreet Ratings team rates PEMBINA PIPELINE CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate PEMBINA PIPELINE CORP (PBA) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 3.1%. Since the same quarter one year prior, revenues rose by 40.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • PEMBINA PIPELINE CORP has improved earnings per share by 36.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. During the past fiscal year, PEMBINA PIPELINE CORP increased its bottom line by earning $1.11 versus $0.87 in the prior year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 62.8% when compared to the same quarter one year prior, rising from $90.30 million to $147.00 million.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • Net operating cash flow has increased to $261.00 million or 13.97% when compared to the same quarter last year. Despite an increase in cash flow, PEMBINA PIPELINE CORP's average is still marginally south of the industry average growth rate of 16.30%.
  • You can view the full analysis from the report here: PBA Ratings Report
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