While Pembina Pipeline Corporation (PMMBF) might not be a household name, it's a significant player in the North American energy infrastructure space. A deep dive into the provided financial data reveals a fascinating trend that appears to have flown under the radar of most analysts: a consistent, strategic reduction in outstanding shares amidst a period of aggressive reinvestment. This seemingly subtle maneuver could unlock substantial value for investors in the coming years.

For those unfamiliar, Pembina Pipeline is a Canadian company specializing in the transportation and processing of hydrocarbons. They own and operate an extensive network of pipelines, gas processing plants, and storage facilities, primarily serving the prolific Western Canadian Sedimentary Basin. While their pink sheet listing (PMMBF) might suggest obscurity, their Canadian listing (PPL) paints a different picture: a company boasting a market capitalization exceeding $20 billion.

<a href="https://www.pembina.com/" alt="Pembina Pipeline Corporation Website">Pembina Pipeline Corporation Website</a>

Declining Outstanding Shares and Aggressive Reinvestment

What's particularly intriguing about Pembina's recent financial performance is their commitment to reinvesting in growth while simultaneously decreasing the number of outstanding shares. Looking back to 2018, when Pembina had over 1 billion outstanding shares, we see a deliberate and consistent reduction in this number. By 2023, they have managed to cut their outstanding shares nearly in half, hovering around 550 million.

This reduction hasn't happened by accident. Pembina has been actively repurchasing shares, demonstrating their confidence in the company's future prospects. This strategy, often referred to as a share buyback program, serves to increase the ownership stake of existing shareholders. In essence, each remaining share represents a larger slice of the overall pie.

Simultaneously, Pembina has been aggressively investing in expanding its infrastructure. Their financial statements show substantial capital expenditures, particularly in the "property, plant, and equipment" category, which have consistently exceeded their depreciation expenses. This indicates a focus on building new assets and expanding their operational footprint.

<a href="https://www.sedar.com/" alt="SEDAR - System for Electronic Document Analysis and Retrieval (Canadian public company filings)">SEDAR Filings for Pembina Pipeline Corporation</a>

The Potential for Explosive EPS Growth

Now, here's where things get really interesting. Imagine a scenario where Pembina continues its current trajectory of reducing outstanding shares while their reinvestment strategy bears fruit, driving revenue and earnings higher. In this scenario, earnings per share (EPS) would experience a double boost – driven upwards by both increasing earnings and a shrinking share count.

Hypothetical Scenario:

Note: This is a hypothetical scenario for illustrative purposes. Actual results may vary.

As you can see, in this scenario, Pembina's EPS could grow by over 55% in just three years. This is the power of combining share buybacks with revenue and earnings growth.

Conclusion

Pembina's commitment to returning value to shareholders through share repurchases, combined with their strategic investments in a vital sector, positions them uniquely in the energy landscape. While many analysts might be focused on short-term market fluctuations, the long-term potential embedded in Pembina's strategic approach could prove to be a hidden gem for savvy investors.

"Fun Fact: The Western Canadian Sedimentary Basin, where Pembina operates, is one of the largest petroleum-producing regions in the world. It covers an area of approximately 1.4 million square kilometers and contains vast reserves of oil and natural gas. Learn More [https://www.nrcan.gc.ca/our-natural-resources/energy-sources-distribution/crude-oil/western-canadian-sedimentary-basin/20536]"