Friday, March 6, 2009

Pembina Pipelines 2

One positive thing to say right off on this stock is that there is lots of insider buying and very little insider selling on this stock (TSX-PIF.UN). This is quite different from Inter Pipeline I reviewed earlier this week. A positive thing is that this company says that it will maintain its current distribution through to 2013. It will also become a taxable corporation in 2010. I have updated my spreadsheet with more estimates today.

First, I will look at the ratios on the spreadsheet to see if this stock is currently a good buying. The good things I see is that the yield is now 12%, and the 5 year average is only 7.9% and the P/E is currently at only 10.5% compared to the 5 year average of 19%. Also, the P/BV (Price/Book Value) Ratio is currently only 1.95 compared to the 5 year average of 2.31. When looking at the Graham Price, the current stock price is lower than the 2008 Graham Price of $13.25 and current stock price is lower than the potential Graham Price of $13.31, if analysts are right about what the earnings would be in 2009. There is no guarantee than any suggested future earnings will be accurate.

The next thing I want to note is that the Globe Investor site gives this stock a 5 star rating. The stock has stability ratings of SR-2 and STA-2L. Stability ratings are from 1 to 7, with 1 being the highest rating. This stock is considered a medium risk. In looking at the ratings for this stock, they are Strong Buy, Hold or Sell. The consensus rating is a Hold. (See my site for information on analyst ratings.) This is a very wide range of ratings as there is no Buy ratings and no Underperform ratings.

Even though analysts seem to expect that the distributable income, earnings and cash flow will be higher next year, they are still not giving this stock much in the way of a Buy rating. Pembina has pipelines for heavy oils going from the oil sands projects to refineries. There are worries about possible delays or cancellations in oil sands projects and how any such delays or cancellations will affect Pembina. I also have worries about the very low liquidity ratio of only .48. This means that the current assets cannot cover the current liabilities.

This is the biggest Pipeline Income Fund in Canada. It is a utility. It is engaged in the transportation of light conventional and synthetic crude oil, condensate and natural gas liquids in Western Canada. Its web site is See my spreadsheet on this company at I have also updated my index spreadsheet at for the stocks on my web site.

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 for a list of the stocks for which I have put up spreadsheets on my web site.

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