• If you are wondering whether Plains GP Holdings at around US$24.46 still offers value or if most of the opportunity is already priced in, the starting point is to look closely at what the market is paying for its fundamentals.
• The stock has delivered returns of 3.3% over the past week, 10.2% over the last month, 26.0% year to date and 23.4% over the past year, with a very large 3 year gain and a 272.0% return over 5 years that may shape current expectations and risk views.
• Recent headlines around Plains GP Holdings have focused on its role in the US energy infrastructure space and how investor interest in midstream operators is affecting trading activity. Commentary has also highlighted how changes in sentiment toward energy assets and income focused securities are feeding into how investors think about the stock.
• On Simply Wall St's valuation checks Plains GP Holdings scores 5 out of 6. This sets the stage to compare different ways of assessing its value today and then finish with a broader framework at the end of the article for understanding when those valuation signals really matter.

Approach 1: Plains GP Holdings Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model works by taking estimates of the cash Plains GP Holdings might generate in the future and discounting those cash flows back to today to arrive at an estimated intrinsic value per share.

For Plains GP Holdings, Simply Wall St uses a 2 Stage Free Cash Flow to Equity model. The latest twelve month Free Cash Flow is about $2.44b. Analyst estimates and subsequent extrapolations suggest Free Cash Flow of around $1.70b to $1.95b a year between 2026 and 2035, with the 2030 projection at $1.72b. Figures beyond the formal analyst horizon are extrapolated by Simply Wall St rather than taken from direct analyst forecasts.

On this basis, the model arrives at an estimated intrinsic value of $114.87 per share for Plains GP Holdings. Compared with the recent share price around $24.46, this implies a discount of about 78.7%. This indicates that the shares are trading well below the DCF based estimate.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Plains GP Holdings is undervalued by 78.7%. Track this in your watchlist or portfolio, or discover 61 more high quality undervalued stocks.

Approach 2: Plains GP Holdings Price vs Sales

For companies where revenue is a key anchor and earnings can be influenced by accounting or one off items, the P/S ratio is often a useful way to think about value. It tells you how much investors are paying for each dollar of sales, which can be especially helpful for capital intensive businesses.

What counts as a “normal” or “fair” P/S ratio generally reflects what investors expect for growth and how much risk they see in the business. Higher expected growth or lower perceived risk can justify a higher multiple, while slower growth or higher risk usually points to a lower one.

Plains GP Holdings currently trades on a P/S ratio of 0.11x. This sits well below the Oil and Gas industry average of 2.10x and the peer group average of 6.25x. Simply Wall St also provides a proprietary “Fair Ratio” for Plains GP Holdings of 0.60x, which reflects factors such as earnings growth, profit margins, industry, market cap and specific risks.

The Fair Ratio is designed to be more tailored than a simple comparison to peers or the broad industry because it incorporates company specific characteristics that benchmarks alone can miss. Comparing the current 0.11x P/S with the 0.60x Fair Ratio points to the shares trading below that tailored reference level.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Plains GP Holdings Narrative

Earlier it was mentioned that there is an even better way to understand valuation. Narratives make this concrete by letting you attach a clear story about Plains GP Holdings to the numbers you care about, such as your own view of fair value and the revenue, earnings and margin paths that could justify it.

On Simply Wall St's Community page, Narratives help you connect three pieces in one place: the business story, a forward looking financial forecast and the implied fair value. This allows you to quickly compare that fair value with the current share price to decide whether you see Plains GP Holdings as closer to a buy, hold or sell in your own framework without needing to build a full model from scratch.

Because Narratives on the platform are refreshed when new information such as news or earnings is fed into the assumptions, you can also see how different views stack up in real time. These range from more cautious Plains GP Holdings Narratives that point to fair values around US$17.00 to more optimistic ones closer to US$26.00. You can then decide which story, and which set of assumptions, you find most reasonable for your own decision making.

For Plains GP Holdings, here are previews of two leading Plains GP Holdings narratives to help you compare different viewpoints:

Fair value in this bullish narrative: US$26.00

Current price vs this fair value: around 5.9% below the narrative fair value

Assumed revenue growth: 4.9% a year

• Focus on strong Permian production and fee based contracts supporting higher quality earnings and potential margin expansion.
• View that existing pipeline assets and higher credit ratings may support further integration, acquisitions or capital returns.
• Recognition that heavy exposure to oil, regional concentration and rising regulatory and capital demands could pressure future stability and flexibility.

Fair value in this bearish narrative: US$17.00

Current price vs this fair value: around 43.9% above the narrative fair value

Assumed revenue growth: 0.8% a year

• Emphasis on decarbonization, renewables and regulation as headwinds for long term pipeline demand and earnings stability.
• Concern that concentration in the Permian Basin and tighter permitting could cap growth and pressure margins.
• View that the risk of future asset impairments and lower assumed valuation multiples leaves less room for error at higher share prices.

Both narratives use the same public information but arrive at very different fair values. The key step is deciding which set of assumptions about demand, regulation and required return feels closer to how you see Plains GP Holdings.

Do you think there's more to the story for Plains GP Holdings? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.