Intrinsic value of Blueknight Energy Partners G.P. - BKEP

Previous Close

$5.70

  Intrinsic Value

$0.13

stock screener

  Rating & Target

str. sell

-98%

  Value-price divergence*

-98%

Previous close

$5.70

 
Intrinsic value

$0.13

 
Up/down potential

-98%

 
Rating

str. sell

 
Value-price divergence*

-98%

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

We calculate the intrinsic value of BKEP 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 0.2

 

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, %
  -1.67
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
  4.87
Revenue, $m
  177
  181
  186
  191
  197
  203
  210
  217
  226
  234
  243
  253
  264
  275
  287
  300
  313
  327
  342
  357
  374
  392
  410
  429
  450
  471
  494
  518
  543
  569
  597
Variable operating expenses, $m
 
  167
  171
  176
  181
  187
  193
  200
  208
  216
  224
  233
  242
  253
  263
  275
  287
  300
  314
  328
  343
  359
  376
  394
  413
  433
  454
  475
  498
  523
  548
Fixed operating expenses, $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
Total operating expenses, $m
  171
  167
  171
  176
  181
  187
  193
  200
  208
  216
  224
  233
  242
  253
  263
  275
  287
  300
  314
  328
  343
  359
  376
  394
  413
  433
  454
  475
  498
  523
  548
Operating income, $m
  6
  14
  15
  15
  16
  16
  17
  17
  18
  19
  19
  21
  22
  23
  23
  25
  26
  27
  28
  29
  31
  32
  34
  35
  37
  39
  40
  42
  44
  47
  49
EBITDA, $m
  37
  46
  47
  48
  50
  52
  53
  55
  57
  59
  62
  64
  67
  70
  73
  76
  79
  83
  87
  91
  95
  99
  104
  109
  114
  120
  125
  131
  138
  144
  151
Interest expense (income), $m
  12
  14
  13
  14
  14
  15
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  29
  30
  32
  33
  35
  36
  38
  40
  42
  44
Earnings before tax, $m
  -5
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  4
  5
Tax expense, $m
  0
  0
  0
  0
  0
  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
Net income, $m
  -5
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  3

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  3
  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
  376
  381
  391
  402
  414
  428
  442
  458
  475
  493
  513
  533
  556
  579
  604
  631
  659
  688
  719
  753
  787
  824
  863
  904
  947
  992
  1,040
  1,090
  1,143
  1,198
  1,257
Adjusted assets (=assets-cash), $m
  373
  381
  391
  402
  414
  428
  442
  458
  475
  493
  513
  533
  556
  579
  604
  631
  659
  688
  719
  753
  787
  824
  863
  904
  947
  992
  1,040
  1,090
  1,143
  1,198
  1,257
Revenue / Adjusted assets
  0.475
  0.475
  0.476
  0.475
  0.476
  0.474
  0.475
  0.474
  0.476
  0.475
  0.474
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.476
  0.474
  0.475
  0.476
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
Average production assets, $m
  320
  327
  335
  345
  355
  367
  379
  393
  407
  423
  439
  457
  476
  496
  518
  541
  565
  590
  617
  645
  675
  707
  740
  775
  812
  851
  892
  935
  980
  1,027
  1,078
Working capital, $m
  1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
Total debt, $m
  325
  318
  327
  337
  348
  360
  373
  387
  402
  419
  436
  455
  475
  496
  519
  542
  568
  594
  623
  652
  684
  717
  752
  788
  827
  868
  911
  956
  1,004
  1,054
  1,106
Total liabilities, $m
  350
  343
  352
  362
  373
  385
  398
  412
  427
  444
  461
  480
  500
  521
  544
  567
  593
  619
  648
  677
  709
  742
  777
  813
  852
  893
  936
  981
  1,029
  1,079
  1,131
Total equity, $m
  26
  38
  39
  40
  41
  43
  44
  46
  47
  49
  51
  53
  56
  58
  60
  63
  66
  69
  72
  75
  79
  82
  86
  90
  95
  99
  104
  109
  114
  120
  126
Total liabilities and equity, $m
  376
  381
  391
  402
  414
  428
  442
  458
  474
  493
  512
  533
  556
  579
  604
  630
  659
  688
  720
  752
  788
  824
  863
  903
  947
  992
  1,040
  1,090
  1,143
  1,199
  1,257
Debt-to-equity ratio
  12.500
  8.340
  8.360
  8.380
  8.400
  8.420
  8.430
  8.450
  8.470
  8.490
  8.510
  8.530
  8.550
  8.570
  8.590
  8.600
  8.620
  8.640
  8.650
  8.670
  8.680
  8.700
  8.710
  8.720
  8.740
  8.750
  8.760
  8.770
  8.780
  8.790
  8.800
Adjusted equity ratio
  0.062
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -5
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  3
Depreciation, amort., depletion, $m
  31
  32
  32
  33
  34
  35
  37
  38
  39
  41
  42
  44
  45
  47
  49
  51
  54
  56
  59
  61
  64
  67
  70
  74
  77
  81
  85
  89
  93
  98
  103
Funds from operations, $m
  54
  32
  33
  34
  35
  37
  38
  39
  41
  42
  44
  45
  47
  49
  51
  53
  56
  58
  61
  64
  67
  70
  73
  76
  80
  84
  88
  92
  96
  101
  106
Change in working capital, $m
  1
  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 operations, $m
  53
  32
  33
  34
  35
  37
  38
  39
  41
  42
  44
  45
  47
  49
  51
  54
  56
  58
  61
  64
  67
  70
  73
  77
  80
  84
  88
  92
  97
  101
  106
Maintenance CAPEX, $m
  0
  -30
  -31
  -32
  -33
  -34
  -35
  -36
  -37
  -39
  -40
  -42
  -44
  -45
  -47
  -49
  -51
  -54
  -56
  -59
  -61
  -64
  -67
  -70
  -74
  -77
  -81
  -85
  -89
  -93
  -98
New CAPEX, $m
  -20
  -7
  -8
  -9
  -10
  -11
  -12
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -27
  -28
  -30
  -32
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -48
  -50
Cash from investing activities, $m
  -160
  -37
  -39
  -41
  -43
  -45
  -47
  -50
  -52
  -55
  -57
  -60
  -63
  -65
  -68
  -72
  -75
  -79
  -83
  -87
  -91
  -96
  -100
  -105
  -111
  -116
  -122
  -128
  -134
  -141
  -148
Free cash flow, $m
  -107
  -6
  -6
  -7
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -30
  -32
  -34
  -36
  -38
  -40
  -42
Issuance/(repayment) of debt, $m
  79
  -7
  9
  10
  11
  12
  13
  14
  15
  16
  18
  19
  20
  21
  22
  24
  25
  27
  28
  30
  31
  33
  35
  37
  39
  41
  43
  45
  48
  50
  53
Issuance/(repurchase) of shares, $m
  76
  15
  0
  0
  0
  0
  0
  0
  0
  1
  1
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
Cash from financing (excl. dividends), $m  
  154
  8
  9
  10
  11
  12
  13
  14
  15
  17
  19
  19
  20
  21
  23
  25
  26
  28
  29
  31
  32
  34
  36
  38
  41
  43
  45
  47
  50
  52
  55
Total cash flow (excl. dividends), $m
  47
  2
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  13
Retained Cash Flow (-), $m
  61
  -15
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
Prev. year cash balance distribution, $m
 
  3
  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
 
  -10
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  8
Discount rate, %
 
  12.70
  13.34
  14.00
  14.70
  15.44
  16.21
  17.02
  17.87
  18.76
  19.70
  20.69
  21.72
  22.81
  23.95
  25.15
  26.40
  27.72
  29.11
  30.56
  32.09
  33.70
  35.38
  37.15
  39.01
  40.96
  43.01
  45.16
  47.41
  49.79
  52.27
PV of cash for distribution, $m
 
  -9
  1
  1
  1
  1
  1
  1
  1
  1
  1
  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
  93.2
  93.2
  93.1
  93.1
  93.0
  93.0
  92.9
  92.8
  92.6
  92.5
  92.4
  92.4
  92.3
  92.2
  92.0
  91.9
  91.8
  91.6
  91.5
  91.3
  91.2
  91.0
  90.8
  90.6
  90.4
  90.2
  90.0
  89.8
  89.6
  89.4

Blueknight Energy Partners, L.P. is a master limited partnership company. The Company manages its operations through four segments: asphalt terminaling services, crude oil terminaling and storage services, crude oil pipeline services, and crude oil trucking and producer field services. Asphalt terminaling services segment operations generally consist of fee based activities associated with providing storage, terminaling and throughput services for asphalt product and residual fuel oil. Crude oil terminaling and storage segment operations generally consist of fee based activities associated with providing storage, terminaling, and throughput services for crude oil. Crude oil pipeline services segment operations generally consist of fee-based activity associated with transporting crude oil products on pipelines. Crude oil trucking and producer field services segment operations generally consist of fee-based activity associated with transporting crude oil products on trucks.

FINANCIAL RATIOS  of  Blueknight Energy Partners G.P. (BKEP)

Valuation Ratios
P/E Ratio -43.3
Price to Sales 1.2
Price to Book 8.3
Price to Tangible Book
Price to Cash Flow 4.1
Price to Free Cash Flow 6.6
Growth Rates
Sales Growth Rate -1.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -52.4%
Cap. Spend. - 3 Yr. Gr. Rate -21%
Financial Strength
Quick Ratio NaN
Current Ratio 0.4
LT Debt to Equity 1250%
Total Debt to Equity 1250%
Interest Coverage 1
Management Effectiveness
Return On Assets 1.9%
Ret/ On Assets - 3 Yr. Avg. 5.4%
Return On Total Capital -1.5%
Ret/ On T. Cap. - 3 Yr. Avg. 2.9%
Return On Equity -8.8%
Return On Equity - 3 Yr. Avg. 9.6%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 92.1%
Gross Margin - 3 Yr. Avg. 30.7%
EBITDA Margin 21.5%
EBITDA Margin - 3 Yr. Avg. 26.5%
Operating Margin 3.4%
Oper. Margin - 3 Yr. Avg. 10.5%
Pre-Tax Margin -2.8%
Pre-Tax Margin - 3 Yr. Avg. 5.3%
Net Profit Margin -2.8%
Net Profit Margin - 3 Yr. Avg. 5.2%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 4.8%
Payout Ratio -940%

BKEP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BKEP stock intrinsic value calculation we used $177 million for the last fiscal year's total revenue generated by Blueknight Energy Partners G.P.. The default revenue input number comes from 2016 income statement of Blueknight Energy Partners G.P.. 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 BKEP stock valuation model: a) initial revenue growth rate of 2.3% 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 12.7%, whose default value for BKEP is calculated based on our internal credit rating of Blueknight Energy Partners G.P., 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 Blueknight Energy Partners G.P..
    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 BKEP stock the variable cost ratio is equal to 92.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for BKEP 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 4.2% for Blueknight Energy Partners G.P..

Corporate tax rate of 27% is the nominal tax rate for Blueknight Energy Partners G.P.. 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 BKEP 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 BKEP are equal to 180.5%.

Life of production assets of 10.5 years is the average useful life of capital assets used in Blueknight Energy Partners G.P. 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 BKEP is equal to -1.1%. 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 - $26 million for Blueknight Energy Partners G.P. - 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 39.535 million for Blueknight Energy Partners G.P. 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 Blueknight Energy Partners G.P. at the current share price and the inputted number of shares is $0.2 billion.

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COMPANY NEWS

▶ Blueknight Declares Quarterly Distributions   [Oct-18-17 05:49PM  Business Wire]
▶ Blueknight Announces Second Quarter 2017 Results   [Aug-01-17 04:46PM  Business Wire]
▶ Blueknight Declares Quarterly Distributions   [Jul-18-17 05:03PM  Business Wire]
▶ Blueknight Announces First Quarter 2017 Results   [May-03-17 04:30PM  Business Wire]
▶ Blueknight Declares Quarterly Distributions   [Apr-18-17 05:13PM  Business Wire]
▶ Blueknight Declares Quarterly Distributions   [05:15PM  Business Wire]
▶ Blueknight Declares Quarterly Distributions   [05:11PM  Business Wire]
▶ [$$] The Add-On Deal Roundup: Oct. 6   [Oct-06-16 06:53PM  at The Wall Street Journal]
▶ Blueknight Declares Quarterly Distributions   [09:00AM  Business Wire]
▶ Blueknight Announces First Quarter 2016 Results   [May-04-16 05:33PM  Business Wire]
▶ Blueknight Declares Quarterly Distributions   [04:38PM  Business Wire]
▶ Blueknight Declares Quarterly Distributions   [04:46PM  Business Wire]
▶ Hedge Funds Arent Crazy About MVC Capital, Inc. (MVC) Anymore   [Nov-24  04:30PM  at Insider Monkey]
Financial statements of BKEP
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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