NEW YORK (TheStreet) -- Plains All American Pipelines (PAA) shares are up 3.19% in afternoon trading on Thursday as the oil pipeline manufacturer continues to face the fallout from the oil spill in California that has dumped over 100,000 gallons of crude, a fifth of which has already reached the Pacific Ocean.
A pipeline manufactured by the company burst about 20 miles west of Santa Barbara and spilled down a drainage pipe into the ocean on Tuesday before responders were able to shut off the oil flow and plug the leak.
The pipeline has been in use since 1991, transporting oil from an Exxon Mobil (XOM) facility not far from the spill site.
Cleanup crews and volunteers are currently clearing the oil from the beach on the California shore and rescuing injured birds who have been affected by the oil that has spread more than nine miles from the shore.
TheStreet Ratings team rates PLAINS ALL AMER PIPELNE -LP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate PLAINS ALL AMER PIPELNE -LP (PAA) a BUY. This is driven by multiple 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 largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is somewhat low, currently at 1.00, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
- PAA, with its decline in revenue, underperformed when compared the industry average of 38.3%. Since the same quarter one year prior, revenues fell by 49.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The gross profit margin for PLAINS ALL AMER PIPELNE -LP is currently extremely low, coming in at 9.32%. Regardless of PAA's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 4.76% trails the industry average.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, PLAINS ALL AMER PIPELNE -LP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- You can view the full analysis from the report here: PAA Ratings Report