DCF Studio

    PPL.TO · TOR · Energy

    Pembina Pipeline Corporation

    Also onConsensus Drift

    Implied value per share

    CAD 10.97

    Market price

    CAD 66.51

    Implied upside

    -83.5%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    NoteRisk-free rate is an assumption: CAD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    CAD 10.97-83.5%
    Exit multiple
    CAD 18.03-72.9%
    Market price
    CAD 66.51

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CAD). Outflows negative.

    0bn1bn2bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayCAD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueCAD 6.8bnCAD 6.0bnCAD 5.2bnCAD 4.6bnCAD 4.0bn-12.5%
    EBITCAD 2.3bnCAD 2.0bnCAD 1.7bnCAD 1.5bnCAD 1.3bn-12.5%
    NOPATCAD 1.9bnCAD 1.6bnCAD 1.4bnCAD 1.2bnCAD 1.1bn-12.5%
    Add depreciation & amortisationCAD 692.8mCAD 606.2mCAD 530.4mCAD 464.1mCAD 406.1m-12.5%
    Less capital expenditureCAD -643.1mCAD -562.7mCAD -492.3mCAD -430.8mCAD -376.9m-12.5%
    Less increase in working capitalCAD -38.7mCAD -33.8mCAD -29.6mCAD -25.9mCAD -22.7m-12.5%
    Free cashflow to firmCAD 1.9bnCAD 1.6bnCAD 1.4bnCAD 1.2bnCAD 1.1bn-12.5%
    Discount factor0.96820.90760.85070.79750.7475-
    Present valueCAD 1.8bnCAD 1.5bnCAD 1.2bnCAD 995.9mCAD 816.8m-18.0%
    Present Value Of The ForecastCAD 6.3bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate3.30%CAD assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta0.799Reported 0.700, pulled toward 1.0 (Blume)
    Cost of equity7.69%Risk-free + beta x equity risk premium
    Cost of debt4.60%Interest expense / average total debt
    Market capitalisationCAD 38.7bn74.4% of capital
    Total debtCAD 13.3bn25.6% of capital, book value as a proxy
    Tax rate18.9%Effective, capped at statutory
    WACC6.68%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareCAD 10.97

    69% of EV

    Forecast FCFF, final year
    CAD 1.1bn
    Capex at depreciation, working capital in reinvestment
    CAD 1.1bn
    Less reinvestment at g/ROIC (30.3% of NOPAT)
    CAD -329.4m
    Capitalised
    CAD 756.8m
    ROIC (reported)
    8.2%
    Terminal value, undiscounted
    CAD 18.6bn
    Terminal value, discounted
    CAD 13.9bn
    Enterprise value
    CAD 20.2bn
    Less net debt
    CAD 13.2bn
    Equity value
    CAD 7.0bn

    Exit at 14.1x EBITDA

    Value per shareCAD 18.03

    74% of EV

    Terminal value, undiscounted
    CAD 24.6bn
    Terminal value, discounted
    CAD 18.4bn
    Enterprise value
    CAD 24.7bn
    Less net debt
    CAD 13.2bn
    Equity value
    CAD 11.5bn

    Spread between methods: 49%.

    Sensitivity

    Value per share (CAD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    4.68%25.8529.6235.0843.7559.71
    5.68%15.8117.3119.2621.9125.73
    6.68%9.6210.2310.9711.8813.06
    7.68%5.415.625.846.106.41
    8.68%2.522.582.652.722.79

    Outlined: this model. Green text: above today's price of 66.51. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year-12.5%9.8%+22.3pp
    EBIT margin33.6%92.5%+58.9pp
    Discount rate6.7%3.8%-2.8pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.