Intrinsic value of Alon USA Energy - ALJ

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$12.79

  Intrinsic Value

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  Value-price divergence*

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$12.79

 
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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of ALJ stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 1.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -9.80
  29.30
  26.87
  24.68
  22.71
  20.94
  19.35
  17.91
  16.62
  15.46
  14.41
  13.47
  12.63
  11.86
  11.18
  10.56
  10.00
  9.50
  9.05
  8.65
  8.28
  7.95
  7.66
  7.39
  7.15
  6.94
  6.74
  6.57
  6.41
  6.27
  6.14
Revenue, $m
  3,913
  5,060
  6,419
  8,003
  9,821
  11,878
  14,177
  16,716
  19,495
  22,509
  25,753
  29,223
  32,913
  36,817
  40,932
  45,254
  49,781
  54,511
  59,446
  64,587
  69,936
  75,499
  81,281
  87,290
  93,535
  100,025
  106,771
  113,786
  121,083
  128,677
  136,583
Variable operating expenses, $m
 
  1,830
  2,320
  2,891
  3,546
  4,287
  5,115
  6,031
  7,032
  8,118
  9,288
  10,532
  11,861
  13,268
  14,751
  16,309
  17,940
  19,645
  21,424
  23,276
  25,204
  27,209
  29,293
  31,459
  33,709
  36,048
  38,479
  41,007
  43,637
  46,374
  49,223
Fixed operating expenses, $m
 
  2,693
  2,760
  2,829
  2,900
  2,972
  3,047
  3,123
  3,201
  3,281
  3,363
  3,447
  3,533
  3,621
  3,712
  3,805
  3,900
  3,997
  4,097
  4,200
  4,305
  4,412
  4,523
  4,636
  4,752
  4,870
  4,992
  5,117
  5,245
  5,376
  5,510
Total operating expenses, $m
  3,981
  4,523
  5,080
  5,720
  6,446
  7,259
  8,162
  9,154
  10,233
  11,399
  12,651
  13,979
  15,394
  16,889
  18,463
  20,114
  21,840
  23,642
  25,521
  27,476
  29,509
  31,621
  33,816
  36,095
  38,461
  40,918
  43,471
  46,124
  48,882
  51,750
  54,733
Operating income, $m
  -67
  537
  1,339
  2,284
  3,376
  4,619
  6,015
  7,563
  9,262
  11,110
  13,103
  15,244
  17,518
  19,927
  22,469
  25,140
  27,940
  30,869
  33,925
  37,111
  40,427
  43,878
  47,466
  51,196
  55,074
  59,106
  63,300
  67,662
  72,201
  76,927
  81,850
EBITDA, $m
  79
  723
  1,574
  2,574
  3,731
  5,047
  6,524
  8,163
  9,960
  11,915
  14,024
  16,282
  18,687
  21,234
  23,922
  26,747
  29,708
  32,804
  36,035
  39,403
  42,910
  46,558
  50,351
  54,295
  58,395
  62,657
  67,090
  71,701
  76,499
  81,495
  86,698
Interest expense (income), $m
  62
  58
  111
  173
  246
  329
  424
  529
  645
  773
  911
  1,060
  1,219
  1,388
  1,567
  1,755
  1,954
  2,161
  2,378
  2,604
  2,840
  3,085
  3,340
  3,605
  3,881
  4,167
  4,464
  4,774
  5,095
  5,430
  5,778
Earnings before tax, $m
  -127
  479
  1,228
  2,110
  3,130
  4,290
  5,591
  7,034
  8,617
  10,337
  12,192
  14,185
  16,300
  18,539
  20,902
  23,385
  25,987
  28,708
  31,547
  34,506
  37,587
  40,793
  44,126
  47,591
  51,194
  54,940
  58,835
  62,888
  67,106
  71,497
  76,072
Tax expense, $m
  -47
  129
  332
  570
  845
  1,158
  1,510
  1,899
  2,327
  2,791
  3,292
  3,830
  4,401
  5,006
  5,643
  6,314
  7,016
  7,751
  8,518
  9,317
  10,149
  11,014
  11,914
  12,850
  13,822
  14,834
  15,886
  16,980
  18,119
  19,304
  20,539
Net income, $m
  -83
  350
  897
  1,541
  2,285
  3,131
  4,082
  5,135
  6,290
  7,546
  8,900
  10,355
  11,899
  13,534
  15,258
  17,071
  18,970
  20,957
  23,029
  25,190
  27,439
  29,779
  32,212
  34,741
  37,371
  40,106
  42,950
  45,908
  48,987
  52,193
  55,533

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  136
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  2,095
  2,553
  3,239
  4,038
  4,955
  5,993
  7,153
  8,434
  9,836
  11,357
  12,994
  14,744
  16,606
  18,576
  20,652
  22,832
  25,116
  27,503
  29,993
  32,587
  35,286
  38,092
  41,010
  44,042
  47,192
  50,467
  53,870
  57,410
  61,091
  64,923
  68,912
Adjusted assets (=assets-cash), $m
  1,959
  2,553
  3,239
  4,038
  4,955
  5,993
  7,153
  8,434
  9,836
  11,357
  12,994
  14,744
  16,606
  18,576
  20,652
  22,832
  25,116
  27,503
  29,993
  32,587
  35,286
  38,092
  41,010
  44,042
  47,192
  50,467
  53,870
  57,410
  61,091
  64,923
  68,912
Revenue / Adjusted assets
  1.997
  1.982
  1.982
  1.982
  1.982
  1.982
  1.982
  1.982
  1.982
  1.982
  1.982
  1.982
  1.982
  1.982
  1.982
  1.982
  1.982
  1.982
  1.982
  1.982
  1.982
  1.982
  1.982
  1.982
  1.982
  1.982
  1.982
  1.982
  1.982
  1.982
  1.982
Average production assets, $m
  1,391
  1,796
  2,279
  2,841
  3,487
  4,217
  5,033
  5,934
  6,921
  7,991
  9,142
  10,374
  11,684
  13,070
  14,531
  16,065
  17,672
  19,352
  21,103
  22,928
  24,827
  26,802
  28,855
  30,988
  33,205
  35,509
  37,904
  40,394
  42,984
  45,680
  48,487
Working capital, $m
  25
  -101
  -128
  -160
  -196
  -238
  -284
  -334
  -390
  -450
  -515
  -584
  -658
  -736
  -819
  -905
  -996
  -1,090
  -1,189
  -1,292
  -1,399
  -1,510
  -1,626
  -1,746
  -1,871
  -2,000
  -2,135
  -2,276
  -2,422
  -2,574
  -2,732
Total debt, $m
  528
  974
  1,520
  2,157
  2,888
  3,715
  4,640
  5,661
  6,778
  7,990
  9,295
  10,690
  12,174
  13,744
  15,399
  17,136
  18,957
  20,859
  22,843
  24,910
  27,062
  29,299
  31,624
  34,040
  36,551
  39,161
  41,874
  44,694
  47,629
  50,682
  53,862
Total liabilities, $m
  1,574
  2,035
  2,581
  3,218
  3,949
  4,776
  5,701
  6,722
  7,839
  9,051
  10,356
  11,751
  13,235
  14,805
  16,460
  18,197
  20,018
  21,920
  23,904
  25,971
  28,123
  30,360
  32,685
  35,101
  37,612
  40,222
  42,935
  45,755
  48,690
  51,743
  54,923
Total equity, $m
  521
  518
  657
  820
  1,006
  1,217
  1,452
  1,712
  1,997
  2,305
  2,638
  2,993
  3,371
  3,771
  4,192
  4,635
  5,099
  5,583
  6,089
  6,615
  7,163
  7,733
  8,325
  8,940
  9,580
  10,245
  10,936
  11,654
  12,402
  13,179
  13,989
Total liabilities and equity, $m
  2,095
  2,553
  3,238
  4,038
  4,955
  5,993
  7,153
  8,434
  9,836
  11,356
  12,994
  14,744
  16,606
  18,576
  20,652
  22,832
  25,117
  27,503
  29,993
  32,586
  35,286
  38,093
  41,010
  44,041
  47,192
  50,467
  53,871
  57,409
  61,092
  64,922
  68,912
Debt-to-equity ratio
  1.013
  1.880
  2.310
  2.630
  2.870
  3.050
  3.200
  3.310
  3.390
  3.470
  3.520
  3.570
  3.610
  3.640
  3.670
  3.700
  3.720
  3.740
  3.750
  3.770
  3.780
  3.790
  3.800
  3.810
  3.820
  3.820
  3.830
  3.840
  3.840
  3.850
  3.850
Adjusted equity ratio
  0.197
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -83
  350
  897
  1,541
  2,285
  3,131
  4,082
  5,135
  6,290
  7,546
  8,900
  10,355
  11,899
  13,534
  15,258
  17,071
  18,970
  20,957
  23,029
  25,190
  27,439
  29,779
  32,212
  34,741
  37,371
  40,106
  42,950
  45,908
  48,987
  52,193
  55,533
Depreciation, amort., depletion, $m
  146
  186
  234
  290
  355
  428
  510
  600
  698
  805
  921
  1,037
  1,168
  1,307
  1,453
  1,607
  1,767
  1,935
  2,110
  2,293
  2,483
  2,680
  2,885
  3,099
  3,320
  3,551
  3,790
  4,039
  4,298
  4,568
  4,849
Funds from operations, $m
  27
  535
  1,131
  1,831
  2,640
  3,559
  4,591
  5,734
  6,989
  8,351
  9,821
  11,392
  13,067
  14,841
  16,711
  18,677
  20,738
  22,892
  25,140
  27,482
  29,921
  32,459
  35,097
  37,840
  40,692
  43,657
  46,740
  49,948
  53,286
  56,761
  60,381
Change in working capital, $m
  -33
  -23
  -27
  -32
  -36
  -41
  -46
  -51
  -56
  -60
  -65
  -69
  -74
  -78
  -82
  -86
  -91
  -95
  -99
  -103
  -107
  -111
  -116
  -120
  -125
  -130
  -135
  -140
  -146
  -152
  -158
Cash from operations, $m
  60
  553
  1,158
  1,863
  2,676
  3,601
  4,637
  5,785
  7,044
  8,412
  9,886
  11,462
  13,141
  14,919
  16,794
  18,764
  20,828
  22,986
  25,238
  27,585
  30,028
  32,570
  35,213
  37,960
  40,817
  43,787
  46,875
  50,088
  53,432
  56,913
  60,539
Maintenance CAPEX, $m
  0
  -139
  -180
  -228
  -284
  -349
  -422
  -503
  -593
  -692
  -799
  -914
  -1,037
  -1,168
  -1,307
  -1,453
  -1,607
  -1,767
  -1,935
  -2,110
  -2,293
  -2,483
  -2,680
  -2,885
  -3,099
  -3,320
  -3,551
  -3,790
  -4,039
  -4,298
  -4,568
New CAPEX, $m
  -88
  -405
  -483
  -562
  -645
  -730
  -816
  -902
  -986
  -1,070
  -1,152
  -1,232
  -1,310
  -1,386
  -1,461
  -1,534
  -1,607
  -1,679
  -1,752
  -1,825
  -1,899
  -1,975
  -2,053
  -2,133
  -2,217
  -2,304
  -2,395
  -2,490
  -2,590
  -2,696
  -2,807
Cash from investing activities, $m
  -94
  -544
  -663
  -790
  -929
  -1,079
  -1,238
  -1,405
  -1,579
  -1,762
  -1,951
  -2,146
  -2,347
  -2,554
  -2,768
  -2,987
  -3,214
  -3,446
  -3,687
  -3,935
  -4,192
  -4,458
  -4,733
  -5,018
  -5,316
  -5,624
  -5,946
  -6,280
  -6,629
  -6,994
  -7,375
Free cash flow, $m
  -34
  9
  496
  1,072
  1,747
  2,522
  3,399
  4,380
  5,464
  6,650
  7,935
  9,316
  10,794
  12,364
  14,026
  15,776
  17,615
  19,540
  21,551
  23,650
  25,837
  28,112
  30,480
  32,942
  35,501
  38,162
  40,929
  43,807
  46,802
  49,919
  53,165
Issuance/(repayment) of debt, $m
  -36
  462
  547
  637
  731
  827
  924
  1,021
  1,117
  1,212
  1,305
  1,395
  1,484
  1,570
  1,655
  1,738
  1,820
  1,902
  1,984
  2,067
  2,151
  2,237
  2,325
  2,416
  2,511
  2,610
  2,713
  2,821
  2,934
  3,054
  3,179
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -20
  462
  547
  637
  731
  827
  924
  1,021
  1,117
  1,212
  1,305
  1,395
  1,484
  1,570
  1,655
  1,738
  1,820
  1,902
  1,984
  2,067
  2,151
  2,237
  2,325
  2,416
  2,511
  2,610
  2,713
  2,821
  2,934
  3,054
  3,179
Total cash flow (excl. dividends), $m
  -55
  471
  1,043
  1,710
  2,478
  3,349
  4,324
  5,402
  6,582
  7,862
  9,239
  10,711
  12,277
  13,934
  15,681
  17,514
  19,435
  21,442
  23,536
  25,717
  27,988
  30,349
  32,805
  35,358
  38,012
  40,772
  43,642
  46,628
  49,736
  52,972
  56,344
Retained Cash Flow (-), $m
  118
  -117
  -139
  -162
  -186
  -211
  -235
  -260
  -285
  -309
  -332
  -355
  -378
  -400
  -421
  -443
  -464
  -485
  -505
  -526
  -548
  -570
  -592
  -615
  -640
  -665
  -691
  -718
  -747
  -778
  -810
Prev. year cash balance distribution, $m
 
  120
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  473
  903
  1,547
  2,291
  3,138
  4,088
  5,142
  6,297
  7,553
  8,907
  10,356
  11,899
  13,535
  15,259
  17,072
  18,971
  20,958
  23,030
  25,191
  27,440
  29,780
  32,213
  34,743
  37,373
  40,107
  42,951
  45,910
  48,989
  52,195
  55,534
Discount rate, %
 
  6.70
  7.04
  7.39
  7.76
  8.14
  8.55
  8.98
  9.43
  9.90
  10.39
  10.91
  11.46
  12.03
  12.63
  13.27
  13.93
  14.63
  15.36
  16.12
  16.93
  17.78
  18.67
  19.60
  20.58
  21.61
  22.69
  23.82
  25.01
  26.26
  27.58
PV of cash for distribution, $m
 
  444
  788
  1,249
  1,700
  2,122
  2,499
  2,816
  3,063
  3,230
  3,314
  3,314
  3,237
  3,090
  2,885
  2,635
  2,355
  2,059
  1,760
  1,471
  1,202
  959
  746
  566
  419
  301
  211
  143
  94
  60
  37
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Alon USA Energy, Inc. refines and markets petroleum products, primarily in the South Central, Southwestern, and Western regions of the United States. It operates in three segments: Refining and Marketing, Asphalt, and Retail. The Refining and Marketing segment operates sour crude oil refinery located in Big Spring, Texas with a crude oil throughput capacity of approximately 73,000 barrels per day (bpd); light sweet crude oil refinery located in Krotz Springs, Louisiana with a crude oil throughput capacity of approximately 74,000 bpd; and heavy crude oil refineries located in Paramount, Bakersfield and Long Beach, California. This segment refines crude oil into petroleum products, such as gasoline, diesel, jet fuel, petrochemicals, petrochemical feedstocks, asphalt, and other petroleum-based products. It also markets motor fuels to third-party distributors under the Alon brand, as well as licenses Alon brand name. The Asphalt segment offers asphalt primarily as paving asphalt to road and materials manufacturers, and as ground tire rubber polymer modified or emulsion asphalt to highway construction/maintenance contractors. The Retail segment operates convenience stores that offer various grades of gasoline, diesel, food products and services, tobacco products, non-alcoholic and alcoholic beverages, and general merchandise, as well as money orders to the public primarily under the 7-Eleven and Alon brands. As of December 31, 2015, this segment operated 309 owned and leased convenience store sites primarily in Central and West Texas, and New Mexico. Alon USA Energy, Inc. was founded in 2000 and is headquartered in Dallas, Texas.

FINANCIAL RATIOS  of  Alon USA Energy (ALJ)

Valuation Ratios
P/E Ratio -11
Price to Sales 0.2
Price to Book 1.8
Price to Tangible Book
Price to Cash Flow 15.3
Price to Free Cash Flow -32.7
Growth Rates
Sales Growth Rate -9.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -35.8%
Cap. Spend. - 3 Yr. Gr. Rate 2.7%
Financial Strength
Quick Ratio 9
Current Ratio 0
LT Debt to Equity 98.3%
Total Debt to Equity 101.3%
Interest Coverage -1
Management Effectiveness
Return On Assets -2.1%
Ret/ On Assets - 3 Yr. Avg. 2.6%
Return On Total Capital -7.4%
Ret/ On T. Cap. - 3 Yr. Avg. 0.1%
Return On Equity -14.3%
Return On Equity - 3 Yr. Avg. 0.1%
Asset Turnover 1.8
Profitability Ratios
Gross Margin 13.9%
Gross Margin - 3 Yr. Avg. 15.1%
EBITDA Margin 2.1%
EBITDA Margin - 3 Yr. Avg. 4.8%
Operating Margin -1.7%
Oper. Margin - 3 Yr. Avg. 2%
Pre-Tax Margin -3.2%
Pre-Tax Margin - 3 Yr. Avg. 0.4%
Net Profit Margin -2.1%
Net Profit Margin - 3 Yr. Avg. -0.1%
Effective Tax Rate 37%
Eff/ Tax Rate - 3 Yr. Avg. 33%
Payout Ratio -51.8%

ALJ stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ALJ stock intrinsic value calculation we used $3913 million for the last fiscal year's total revenue generated by Alon USA Energy. The default revenue input number comes from 2016 income statement of Alon USA Energy. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our ALJ stock valuation model: a) initial revenue growth rate of 29.3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6.7%, whose default value for ALJ is calculated based on our internal credit rating of Alon USA Energy, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Alon USA Energy.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of ALJ stock the variable cost ratio is equal to 36.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $2627 million in the base year in the intrinsic value calculation for ALJ stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 11.4% for Alon USA Energy.

Corporate tax rate of 27% is the nominal tax rate for Alon USA Energy. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the ALJ stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for ALJ are equal to 35.5%.

Life of production assets of 10 years is the average useful life of capital assets used in Alon USA Energy operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for ALJ is equal to -2%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $521 million for Alon USA Energy - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 74.796 million for Alon USA Energy is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Alon USA Energy at the current share price and the inputted number of shares is $1.0 billion.


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Stock chart of ALJ Financial statements of ALJ Annual reports of ALJ
Valuation of Stocks

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