Inter Pipeline Fund 2

I said yesterday that I would see what analysts are saying about this stock (TSX-IPL.UN)today. All the analysts I reviewed seems to feel that the earnings for 2008 will be higher than 2006, the last year a profit was made. Some expect 2009 to be lower than 2008 and some expect they will be the same. Analysts are giving this stock, ratings from Strong Buy to Hold, with the average rating being Buy. I also note that there is insider selling on this stock, but there does not seem to be any insider buying.

Looking at the charts, this stock has done better than the TSX and the Energy Trust Index for the year to date and 1 year periods. For the 5 year period, it has done as well as the Energy Trust Index, but not done as well as the TSX. For the 10 year period, it has done almost as well as the TSX, but both this stock and the TSX has done worse than the Energy Trust Index.

I notice that the Globe has given this stock a 3 start rating and Pembina Pipelines (TSX-PIF.UN) a 5 star rating. Also, the stability ratings on this stock are SR3 and STA-3M. I notice that other pipelines have stability ratings in the 2 range, with Pembina having ratings of SR2 and STA-2L. These ratings are on a 1 to 7 scale, with 1 being the highest stability level.

The positive things I see with the latest quarterly report is that the payout ratio will be about 65% in 2008 compared to the 5 year average of 98%; the yield will be about 12% and greater than the 5 year average of 8.5%; the P/E is about 8.5 and lower than the 5 year average of 17.5 and the P/Cash Flow ratio is 5.3 and lower than the 5 year average of 11.5.

The negative things I see are that the Current Asset/Current Liability Ratio is .71 and the Asset/Liability Ratio is 1.37. These are low and this is not good at a time when credit is hard to come by. In the best of times, you would like to see these ratio at 1.50. Also, the Accrual Ratio is even higher in this quarterly report at 13.32. Anything over 5 for this ratio is high.

They have four lines of business: Conventional Oil Pipelines, Oil sands transportation, NGL extraction and Bulk liquid storage. Inter Pipelines have four petroleum pipeline systems in Alberta and Saskatchewan, transporting approximately 20% of western Canada’s conventional oil production. They have Canada’s largest oil sands gathering business. They are Canada’s largest ethane production business, processing over 40% of all natural gas exported from the province of Alberta. They do bulk liquid storage of petroleum and petrochemical in Europe and they are the largest independent storage provider in the United Kingdom. Its web site is www.interpipelinefund.com. See my spreadsheet at www.spbrunner.com/stocks/ipl.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.