Intrinsic value of Arc Logistics Partners - ARCX

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$14.93

  Intrinsic Value

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  Value-price divergence*

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

We calculate the intrinsic value of ARCX 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 0.3

 

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, %
  28.05
  12.50
  11.75
  11.08
  10.47
  9.92
  9.43
  8.99
  8.59
  8.23
  7.91
  7.62
  7.35
  7.12
  6.91
  6.72
  6.54
  6.39
  6.25
  6.13
  6.01
  5.91
  5.82
  5.74
  5.66
  5.60
  5.54
  5.48
  5.44
  5.39
  5.35
Revenue, $m
  105
  92
  103
  115
  126
  139
  152
  166
  180
  195
  210
  226
  243
  260
  278
  297
  316
  337
  358
  379
  402
  426
  451
  477
  504
  532
  561
  592
  624
  658
  693
Variable operating expenses, $m
 
  48
  53
  58
  64
  70
  76
  83
  90
  97
  104
  108
  115
  124
  132
  141
  150
  160
  170
  180
  191
  202
  214
  227
  239
  253
  267
  281
  297
  313
  329
Fixed operating expenses, $m
 
  33
  34
  34
  35
  36
  37
  38
  39
  40
  41
  42
  43
  44
  45
  46
  48
  49
  50
  51
  52
  54
  55
  56
  58
  59
  61
  62
  64
  65
  67
Total operating expenses, $m
  83
  81
  87
  92
  99
  106
  113
  121
  129
  137
  145
  150
  158
  168
  177
  187
  198
  209
  220
  231
  243
  256
  269
  283
  297
  312
  328
  343
  361
  378
  396
Operating income, $m
  22
  12
  16
  22
  27
  33
  39
  45
  52
  58
  65
  77
  84
  92
  101
  109
  118
  128
  138
  148
  159
  170
  182
  194
  206
  220
  234
  248
  264
  280
  297
EBITDA, $m
  53
  40
  47
  56
  64
  73
  82
  92
  103
  113
  124
  136
  148
  160
  173
  187
  201
  216
  231
  247
  264
  281
  299
  318
  338
  359
  380
  403
  427
  452
  478
Interest expense (income), $m
  8
  8
  10
  11
  13
  15
  17
  19
  21
  23
  25
  28
  30
  33
  35
  38
  41
  44
  47
  50
  54
  57
  61
  64
  68
  73
  77
  81
  86
  91
  96
Earnings before tax, $m
  22
  3
  7
  10
  14
  18
  22
  26
  31
  35
  40
  49
  54
  60
  65
  71
  78
  84
  91
  98
  105
  113
  121
  129
  138
  147
  157
  167
  178
  189
  201
Tax expense, $m
  0
  1
  2
  3
  4
  5
  6
  7
  8
  10
  11
  13
  15
  16
  18
  19
  21
  23
  25
  26
  28
  30
  33
  35
  37
  40
  42
  45
  48
  51
  54
Net income, $m
  15
  3
  5
  8
  10
  13
  16
  19
  22
  26
  29
  36
  40
  44
  48
  52
  57
  61
  66
  71
  77
  82
  88
  94
  101
  108
  115
  122
  130
  138
  146

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  5
  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
  648
  721
  805
  895
  988
  1,086
  1,189
  1,295
  1,407
  1,522
  1,643
  1,768
  1,898
  2,033
  2,173
  2,319
  2,471
  2,629
  2,793
  2,965
  3,143
  3,329
  3,522
  3,725
  3,936
  4,156
  4,386
  4,627
  4,878
  5,141
  5,416
Adjusted assets (=assets-cash), $m
  643
  721
  805
  895
  988
  1,086
  1,189
  1,295
  1,407
  1,522
  1,643
  1,768
  1,898
  2,033
  2,173
  2,319
  2,471
  2,629
  2,793
  2,965
  3,143
  3,329
  3,522
  3,725
  3,936
  4,156
  4,386
  4,627
  4,878
  5,141
  5,416
Revenue / Adjusted assets
  0.163
  0.128
  0.128
  0.128
  0.128
  0.128
  0.128
  0.128
  0.128
  0.128
  0.128
  0.128
  0.128
  0.128
  0.128
  0.128
  0.128
  0.128
  0.128
  0.128
  0.128
  0.128
  0.128
  0.128
  0.128
  0.128
  0.128
  0.128
  0.128
  0.128
  0.128
Average production assets, $m
  513
  417
  466
  517
  571
  628
  687
  749
  814
  880
  950
  1,022
  1,098
  1,176
  1,257
  1,341
  1,429
  1,520
  1,615
  1,714
  1,818
  1,925
  2,037
  2,154
  2,276
  2,403
  2,536
  2,676
  2,821
  2,973
  3,132
Working capital, $m
  4
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
Total debt, $m
  249
  268
  314
  363
  414
  467
  522
  580
  641
  704
  769
  837
  908
  981
  1,057
  1,136
  1,219
  1,305
  1,394
  1,487
  1,584
  1,684
  1,790
  1,899
  2,014
  2,134
  2,259
  2,389
  2,526
  2,669
  2,818
Total liabilities, $m
  364
  391
  437
  486
  537
  590
  645
  703
  764
  827
  892
  960
  1,031
  1,104
  1,180
  1,259
  1,342
  1,428
  1,517
  1,610
  1,707
  1,807
  1,913
  2,022
  2,137
  2,257
  2,382
  2,512
  2,649
  2,792
  2,941
Total equity, $m
  285
  329
  368
  409
  452
  496
  543
  592
  643
  696
  751
  808
  867
  929
  993
  1,060
  1,129
  1,202
  1,277
  1,355
  1,436
  1,521
  1,610
  1,702
  1,799
  1,899
  2,004
  2,114
  2,229
  2,350
  2,475
Total liabilities and equity, $m
  649
  720
  805
  895
  989
  1,086
  1,188
  1,295
  1,407
  1,523
  1,643
  1,768
  1,898
  2,033
  2,173
  2,319
  2,471
  2,630
  2,794
  2,965
  3,143
  3,328
  3,523
  3,724
  3,936
  4,156
  4,386
  4,626
  4,878
  5,142
  5,416
Debt-to-equity ratio
  0.874
  0.810
  0.850
  0.890
  0.920
  0.940
  0.960
  0.980
  1.000
  1.010
  1.020
  1.040
  1.050
  1.060
  1.060
  1.070
  1.080
  1.090
  1.090
  1.100
  1.100
  1.110
  1.110
  1.120
  1.120
  1.120
  1.130
  1.130
  1.130
  1.140
  1.140
Adjusted equity ratio
  0.435
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  15
  3
  5
  8
  10
  13
  16
  19
  22
  26
  29
  36
  40
  44
  48
  52
  57
  61
  66
  71
  77
  82
  88
  94
  101
  108
  115
  122
  130
  138
  146
Depreciation, amort., depletion, $m
  31
  28
  31
  34
  37
  40
  44
  47
  51
  55
  59
  59
  63
  68
  73
  78
  83
  88
  93
  99
  105
  111
  118
  125
  132
  139
  147
  155
  163
  172
  181
Funds from operations, $m
  53
  31
  36
  41
  47
  53
  60
  66
  73
  81
  88
  95
  103
  112
  120
  130
  139
  149
  160
  170
  182
  194
  206
  219
  232
  246
  261
  277
  293
  310
  328
Change in working capital, $m
  -3
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
Cash from operations, $m
  56
  173
  36
  42
  48
  54
  60
  67
  74
  81
  89
  96
  104
  112
  121
  130
  140
  150
  160
  171
  183
  195
  207
  220
  233
  248
  262
  278
  294
  311
  329
Maintenance CAPEX, $m
  0
  -21
  -24
  -27
  -30
  -33
  -36
  -40
  -43
  -47
  -51
  -55
  -59
  -63
  -68
  -73
  -78
  -83
  -88
  -93
  -99
  -105
  -111
  -118
  -125
  -132
  -139
  -147
  -155
  -163
  -172
New CAPEX, $m
  -24
  -46
  -49
  -52
  -54
  -57
  -59
  -62
  -64
  -67
  -70
  -72
  -75
  -78
  -81
  -84
  -88
  -91
  -95
  -99
  -103
  -107
  -112
  -117
  -122
  -127
  -133
  -139
  -145
  -152
  -159
Cash from investing activities, $m
  -32
  -67
  -73
  -79
  -84
  -90
  -95
  -102
  -107
  -114
  -121
  -127
  -134
  -141
  -149
  -157
  -166
  -174
  -183
  -192
  -202
  -212
  -223
  -235
  -247
  -259
  -272
  -286
  -300
  -315
  -331
Free cash flow, $m
  24
  105
  -37
  -37
  -36
  -36
  -35
  -35
  -34
  -33
  -32
  -32
  -31
  -29
  -28
  -27
  -25
  -24
  -23
  -21
  -20
  -18
  -16
  -15
  -13
  -11
  -10
  -8
  -6
  -4
  -2
Issuance/(repayment) of debt, $m
  23
  42
  46
  48
  51
  53
  56
  58
  60
  63
  65
  68
  71
  73
  76
  79
  82
  86
  89
  93
  97
  101
  105
  110
  115
  120
  125
  131
  137
  143
  149
Issuance/(repurchase) of shares, $m
  0
  0
  29
  29
  28
  27
  27
  25
  24
  23
  21
  21
  19
  18
  16
  14
  12
  10
  8
  6
  4
  2
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  9
  42
  75
  77
  79
  80
  83
  83
  84
  86
  86
  89
  90
  91
  92
  93
  94
  96
  97
  99
  101
  103
  105
  110
  115
  120
  125
  131
  137
  143
  149
Total cash flow (excl. dividends), $m
  33
  147
  9
  12
  14
  17
  20
  23
  27
  30
  34
  36
  40
  44
  48
  53
  57
  62
  67
  72
  77
  83
  89
  95
  101
  108
  115
  123
  130
  139
  147
Retained Cash Flow (-), $m
  15
  -35
  -39
  -41
  -43
  -45
  -47
  -49
  -51
  -53
  -55
  -57
  -59
  -62
  -64
  -67
  -69
  -72
  -75
  -78
  -81
  -85
  -89
  -92
  -96
  -101
  -105
  -110
  -115
  -120
  -126
Prev. year cash balance distribution, $m
 
  6
  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
 
  118
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  3
  5
  7
  10
  13
  16
  18
  21
Discount rate, %
 
  7.50
  7.88
  8.27
  8.68
  9.12
  9.57
  10.05
  10.55
  11.08
  11.63
  12.22
  12.83
  13.47
  14.14
  14.85
  15.59
  16.37
  17.19
  18.05
  18.95
  19.90
  20.89
  21.94
  23.04
  24.19
  25.40
  26.67
  28.00
  29.40
  30.87
PV of cash for distribution, $m
 
  110
  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
Current shareholders' claim on cash, %
  100
  100.0
  91.4
  84.5
  78.7
  74.0
  70.1
  66.8
  64.1
  61.8
  59.9
  58.1
  56.7
  55.5
  54.6
  53.7
  53.1
  52.6
  52.2
  51.9
  51.8
  51.7
  51.7
  51.7
  51.7
  51.7
  51.7
  51.7
  51.7
  51.7
  51.7

Arc Logistics Partners LP engages in the terminalling, storage, throughput, and transloading of crude oil and petroleum products. The company’s energy logistics assets serves various third-party customers, including oil companies, independent refiners, crude oil and petroleum product marketers, distributors, and various industrial manufacturers. Its energy logistics assets consist of 21 terminals in 12 states located in the East Coast, Gulf Coast, Midwest, Rocky Mountains, and West Coast regions of the United States with approximately 7.7 million barrels of crude oil and petroleum product storage capacity; 4 rail transloading facilities with approximately 126,000 barrel per day of throughput capacity; and the liquefied natural gas (LNG) interest in LNG facility, which has 320,000 cubic meters of LNG storage, 1.5 billion cubic feet per day natural gas sendout capacity, and interconnects to natural gas pipeline networks. Arc Logistics GP LLC operates as a general partner of the company. Arc Logistics Partners LP was founded in 2007 and is based in New York, New York.

FINANCIAL RATIOS  of  Arc Logistics Partners (ARCX)

Valuation Ratios
P/E Ratio 19.4
Price to Sales 2.8
Price to Book 1
Price to Tangible Book
Price to Cash Flow 5.2
Price to Free Cash Flow 9.1
Growth Rates
Sales Growth Rate 28%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 84.6%
Cap. Spend. - 3 Yr. Gr. Rate 11.4%
Financial Strength
Quick Ratio NaN
Current Ratio 0.2
LT Debt to Equity 87.4%
Total Debt to Equity 87.4%
Interest Coverage 4
Management Effectiveness
Return On Assets 3.5%
Ret/ On Assets - 3 Yr. Avg. 2.4%
Return On Total Capital 2.8%
Ret/ On T. Cap. - 3 Yr. Avg. 1.5%
Return On Equity 5.1%
Return On Equity - 3 Yr. Avg. 2.6%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 58.1%
EBITDA Margin - 3 Yr. Avg. 45.3%
Operating Margin 21%
Oper. Margin - 3 Yr. Avg. 7.2%
Pre-Tax Margin 21%
Pre-Tax Margin - 3 Yr. Avg. 12.1%
Net Profit Margin 14.3%
Net Profit Margin - 3 Yr. Avg. 7.8%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 226.7%

ARCX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ARCX stock intrinsic value calculation we used $82 million for the last fiscal year's total revenue generated by Arc Logistics Partners. The default revenue input number comes from 2016 income statement of Arc Logistics Partners. 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 ARCX stock valuation model: a) initial revenue growth rate of 12.5% 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 7.5%, whose default value for ARCX is calculated based on our internal credit rating of Arc Logistics Partners, 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 Arc Logistics Partners.
    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 ARCX stock the variable cost ratio is equal to 52.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $32 million in the base year in the intrinsic value calculation for ARCX 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 3.6% for Arc Logistics Partners.

Corporate tax rate of 27% is the nominal tax rate for Arc Logistics Partners. 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 ARCX 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 ARCX are equal to 451.8%.

Life of production assets of 17.3 years is the average useful life of capital assets used in Arc Logistics Partners 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 ARCX is equal to -3.7%. 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 - $300 million for Arc Logistics Partners - 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 19.174 million for Arc Logistics Partners 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 Arc Logistics Partners at the current share price and the inputted number of shares is $0.3 billion.


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COMPANY NEWS

▶ Arc Logistic misses Street 1Q forecasts   [May-05-17 05:02AM  Associated Press]
Stock chart of ARCX Financial statements of ARCX Annual reports of ARCX
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