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Pembina Pipeline Corp PBA

Rating as of

Morningstar’s Analysis

Valuation
Currency in USD
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

We've Downgraded Pembina to No Moat, While Q2 Results Show It Continues to Chase Growth

Stephen Ellis Sector Strategist

Analyst Note

| Stephen Ellis |

We are downgrading Pembina’s moat to none from narrow. We think it has largely grown via acquisition and paid too much for the acquired assets. A material part of the justification and premium for the recent deals was future potential projects, specifically high-profile petrochemicals and LNG efforts totaling about CAD 9 billion-CAD 10 billion in capital, have since been shelved due to poor commercial potential. As a result, Pembina has returns on invested capital that are below its cost of capital considering its bloated asset base and associated goodwill. For similar reasons (overpayment for acquisitions and a continued propensity to do so), we've also downgraded our capital allocation rating to poor from standard.

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Company Profile

Business Description

Pembina Pipeline is midstream company serving the Canadian and North American ( primarily Bakken) markets with an integrated product portfolio. The firm has 3.1 million barrels per day of hydrocarbon pipelines, 6.1 billion cubic feet per day of gas processing capacity, as well as assets across fractionation, storage, and propane exports.

Contact
585 - 8th Avenue S.W., Suite 4000
Calgary, AB, T2P 1G1, Canada
T +1 403 231-7500
Sector Energy
Industry Oil & Gas Midstream
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 2,623