Plains All American to Report Q1 Earnings: How to Play the Stock?

Plains All American Pipeline, L.P. PAA is expected to report an improvement in its top and bottom line when it reports first-quarter 2025 results on May 9, before the market opens. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

The Zacks Consensus Estimate for PAA’s first-quarter revenues is pegged at $13.12 billion, indicating a 9.35% increase from the year-ago reported figure.

The consensus estimate for earnings is pegged at 43 cents per unit. The Zacks Consensus Estimate for PAA’s first-quarter earnings indicates a 4.88% increase from the year-ago reported figure.

PAA’s Surprise History

Plains All American Pipeline missed the Zacks Consensus Estimate for earnings in two of the trailing four quarters while surpassing in the other two quarters, resulting in an average positive surprise of 3.47%.

What the Zacks Model Unveils

Our model doesn’t  conclusively predicts a likely earnings beat for Plains All American Pipeline this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you can see below.

Plains All American Pipeline, L.P. Price and EPS Surprise

Plains All American Pipeline, L.P. price-eps-surprise | Plains All American Pipeline, L.P. Quote

You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Earnings ESP: PAA has an Earnings ESP of -4.05%.

Zacks Rank: Energy Transfer currently carries a Zacks Rank #3.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Some companies in the same sector, like Veren Inc. VRN, Granite Ridge Resources, Inc. GRNT and Calumet, Inc. CLMT, have the correct combination of both factors for an earnings surprise this season. VRN, GRNT and CLMT have an Earnings ESP of +13.79%, +2.50% and +15.32%, respectively. VRN currently carries a Zacks Rank of 2, while GRNT and CLMT carry a Zacks Rank of 3 each.

Factors Likely to Have Shaped PAA’s Q1 Earnings

Plains All American Pipelines manages a vast network of pipelines and storage facilities strategically located in major North American oil-producing regions such as the Permian Basin, Bakken, and Eagle Ford. These assets are crucial for supporting the expanding U.S. energy sector, enabling the efficient transportation of crude oil to key distribution centers and export terminals. The flow of hydrocarbon through the extensive pipelines and storage facilities is expected to boost first-quarter earnings.

A major share of PAA’s cash flow is generated through fee-based contracts, offering consistent and predictable income streams that are largely insulated from short-term swings in oil prices. These long-term agreements help cushion the impact of commodity market volatility and underpin reliable distributions to unitholders. This is going to have a positive impact on the firm’s earnings.

The first-quarter earnings of the firm are expected to benefit from the contributions made by the firm in the last few years. The bolt-on acquisitions extended and expanded the pipeline operation of PAA and enjoyed the benefits of the synergies of the merger.

PAA has prioritized strengthening its financial position by lowering debt levels, minimizing non-critical capital expenditures, and enhancing operational efficiency. These efforts have led to meaningful progress in reducing leverage and improved margins of the firm.

PAA Stock Trading a Discount

Plains All American Pipelines units are somewhat inexpensive on a relative basis, with its current trailing 12-month Enterprise Value/Earnings before Interest Tax Depreciation and Amortization (EV/EBITDA TTM) being 8.8X compared with the industry average of 11.4X.

PAA Stock’s Price Performance

PAA’s units have declined 1.6% in the past six months compared with the industry’s 8.2% loss.

Investment Thesis

Plains All American Pipeline is a leading midstream energy company with a strategically positioned network of pipelines and storage facilities spanning key oil-producing regions in North America. Its infrastructure plays an important role in transporting and storing crude oil, efficiently linking upstream producers with downstream markets, refineries and export hubs.

PAA benefits from its long-term, fee-based contracts, which represent the bulk of its cash flow. This contract-oriented model ensures stable earnings and minimizes exposure to fluctuations in short-term commodity prices.

PAA is exposed to uncertainty around regulations and shifting environmental policies that may create obstacles for new pipeline projects and ongoing operations. Rising competition from other pipeline companies and alternative transport solutions could constrain the growth prospects of PAA in certain regions.

Wrapping Up

PAA is poised to benefit from strategic joint ventures, ongoing debt reduction, its dominant position in the Permian Basin, and the divestiture of non-core assets, all of which will contribute to driving its future performance.

Plains All American Pipeline’s long-term outlook is promising given its well-spread assets in major hydrocarbon production regions and focus on expanding operations through organic or inorganic methods.

Those who already own this Zacks Rank #3 stock would do well to retain it in their portfolio.

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This article originally published on Zacks Investment Research (zacks.com).

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