Intrinsic value of Black Stone Minerals - BSM

Previous Close

$18.11

  Intrinsic Value

$0.93

stock screener

  Rating & Target

str. sell

-95%

Previous close

$18.11

 
Intrinsic value

$0.93

 
Up/down potential

-95%

 
Rating

str. sell

We calculate the intrinsic value of BSM 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 3.5

 

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, %
  -33.59
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  261
  418
  645
  965
  1,400
  1,975
  2,715
  3,645
  4,786
  6,158
  7,779
  9,659
  11,809
  14,234
  16,936
  19,914
  23,164
  26,683
  30,465
  34,503
  38,792
  43,325
  48,099
  53,109
  58,354
  63,831
  69,543
  75,492
  81,681
  88,116
  94,804
Variable operating expenses, $m
 
  520
  803
  1,201
  1,743
  2,459
  3,381
  4,538
  5,959
  7,667
  9,684
  12,026
  14,703
  17,722
  21,085
  24,792
  28,840
  33,221
  37,929
  42,957
  48,296
  53,940
  59,883
  66,121
  72,650
  79,470
  86,581
  93,987
  101,692
  109,704
  118,031
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
  233
  520
  803
  1,201
  1,743
  2,459
  3,381
  4,538
  5,959
  7,667
  9,684
  12,026
  14,703
  17,722
  21,085
  24,792
  28,840
  33,221
  37,929
  42,957
  48,296
  53,940
  59,883
  66,121
  72,650
  79,470
  86,581
  93,987
  101,692
  109,704
  118,031
Operating income, $m
  27
  -102
  -158
  -236
  -343
  -484
  -665
  -893
  -1,173
  -1,509
  -1,906
  -2,367
  -2,893
  -3,487
  -4,149
  -4,879
  -5,675
  -6,537
  -7,464
  -8,453
  -9,504
  -10,615
  -11,784
  -13,012
  -14,297
  -15,639
  -17,038
  -18,495
  -20,012
  -21,588
  -23,227
EBITDA, $m
  129
  61
  95
  142
  206
  290
  399
  535
  703
  904
  1,142
  1,419
  1,734
  2,090
  2,487
  2,924
  3,402
  3,919
  4,474
  5,067
  5,697
  6,363
  7,064
  7,799
  8,570
  9,374
  10,213
  11,086
  11,995
  12,940
  13,923
Interest expense (income), $m
  7
  12
  21
  34
  52
  77
  110
  152
  205
  270
  349
  441
  549
  672
  811
  965
  1,135
  1,321
  1,522
  1,738
  1,969
  2,214
  2,474
  2,746
  3,033
  3,333
  3,646
  3,972
  4,312
  4,666
  5,034
Earnings before tax, $m
  20
  -114
  -179
  -270
  -395
  -561
  -775
  -1,045
  -1,378
  -1,779
  -2,255
  -2,808
  -3,442
  -4,159
  -4,960
  -5,844
  -6,810
  -7,858
  -8,986
  -10,192
  -11,473
  -12,829
  -14,258
  -15,758
  -17,330
  -18,971
  -20,684
  -22,468
  -24,324
  -26,255
  -28,261
Tax expense, $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
Net income, $m
  20
  -114
  -179
  -270
  -395
  -561
  -775
  -1,045
  -1,378
  -1,779
  -2,255
  -2,808
  -3,442
  -4,159
  -4,960
  -5,844
  -6,810
  -7,858
  -8,986
  -10,192
  -11,473
  -12,829
  -14,258
  -15,758
  -17,330
  -18,971
  -20,684
  -22,468
  -24,324
  -26,255
  -28,261

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  10
  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
  1,129
  1,792
  2,769
  4,141
  6,009
  8,477
  11,654
  15,643
  20,541
  26,431
  33,384
  41,456
  50,684
  61,091
  72,686
  85,466
  99,418
  114,521
  130,751
  148,083
  166,489
  185,946
  206,434
  227,936
  250,444
  273,954
  298,468
  323,998
  350,560
  378,179
  406,885
Adjusted assets (=assets-cash), $m
  1,119
  1,792
  2,769
  4,141
  6,009
  8,477
  11,654
  15,643
  20,541
  26,431
  33,384
  41,456
  50,684
  61,091
  72,686
  85,466
  99,418
  114,521
  130,751
  148,083
  166,489
  185,946
  206,434
  227,936
  250,444
  273,954
  298,468
  323,998
  350,560
  378,179
  406,885
Revenue / Adjusted assets
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
Average production assets, $m
  992
  1,587
  2,452
  3,668
  5,321
  7,508
  10,321
  13,854
  18,192
  23,408
  29,566
  36,715
  44,887
  54,104
  64,373
  75,692
  88,048
  101,424
  115,798
  131,147
  147,448
  164,680
  182,825
  201,868
  221,802
  242,623
  264,333
  286,943
  310,468
  334,928
  360,351
Working capital, $m
  8
  -3
  -5
  -8
  -11
  -16
  -22
  -29
  -38
  -49
  -62
  -77
  -94
  -114
  -135
  -159
  -185
  -213
  -244
  -276
  -310
  -347
  -385
  -425
  -467
  -511
  -556
  -604
  -653
  -705
  -758
Total debt, $m
  316
  558
  910
  1,404
  2,076
  2,965
  4,109
  5,545
  7,308
  9,428
  11,931
  14,837
  18,159
  21,906
  26,080
  30,681
  35,703
  41,141
  46,984
  53,223
  59,849
  66,854
  74,229
  81,970
  90,073
  98,536
  107,362
  116,552
  126,115
  136,057
  146,392
Total liabilities, $m
  403
  645
  997
  1,491
  2,163
  3,052
  4,196
  5,632
  7,395
  9,515
  12,018
  14,924
  18,246
  21,993
  26,167
  30,768
  35,790
  41,228
  47,071
  53,310
  59,936
  66,941
  74,316
  82,057
  90,160
  98,623
  107,449
  116,639
  126,202
  136,144
  146,479
Total equity, $m
  726
  1,147
  1,772
  2,650
  3,845
  5,425
  7,459
  10,012
  13,146
  16,916
  21,366
  26,532
  32,438
  39,098
  46,519
  54,698
  63,627
  73,293
  83,681
  94,773
  106,553
  119,006
  132,118
  145,879
  160,284
  175,330
  191,020
  207,359
  224,359
  242,034
  260,406
Total liabilities and equity, $m
  1,129
  1,792
  2,769
  4,141
  6,008
  8,477
  11,655
  15,644
  20,541
  26,431
  33,384
  41,456
  50,684
  61,091
  72,686
  85,466
  99,417
  114,521
  130,752
  148,083
  166,489
  185,947
  206,434
  227,936
  250,444
  273,953
  298,469
  323,998
  350,561
  378,178
  406,885
Debt-to-equity ratio
  0.435
  0.490
  0.510
  0.530
  0.540
  0.550
  0.550
  0.550
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
Adjusted equity ratio
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  20
  -114
  -179
  -270
  -395
  -561
  -775
  -1,045
  -1,378
  -1,779
  -2,255
  -2,808
  -3,442
  -4,159
  -4,960
  -5,844
  -6,810
  -7,858
  -8,986
  -10,192
  -11,473
  -12,829
  -14,258
  -15,758
  -17,330
  -18,971
  -20,684
  -22,468
  -24,324
  -26,255
  -28,261
Depreciation, amort., depletion, $m
  102
  164
  253
  378
  549
  774
  1,064
  1,428
  1,875
  2,413
  3,048
  3,785
  4,628
  5,578
  6,636
  7,803
  9,077
  10,456
  11,938
  13,520
  15,201
  16,977
  18,848
  20,811
  22,866
  25,013
  27,251
  29,582
  32,007
  34,529
  37,150
Funds from operations, $m
  143
  50
  74
  108
  154
  213
  289
  383
  498
  634
  793
  977
  1,185
  1,418
  1,677
  1,959
  2,267
  2,598
  2,952
  3,329
  3,728
  4,148
  4,590
  5,053
  5,537
  6,041
  6,567
  7,114
  7,683
  8,274
  8,888
Change in working capital, $m
  -54
  -1
  -2
  -3
  -3
  -5
  -6
  -7
  -9
  -11
  -13
  -15
  -17
  -19
  -22
  -24
  -26
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -50
  -51
  -54
Cash from operations, $m
  197
  51
  76
  111
  157
  218
  295
  391
  507
  645
  806
  992
  1,202
  1,438
  1,698
  1,983
  2,293
  2,626
  2,982
  3,361
  3,762
  4,184
  4,628
  5,093
  5,579
  6,085
  6,613
  7,162
  7,732
  8,326
  8,942
Maintenance CAPEX, $m
  0
  -102
  -164
  -253
  -378
  -549
  -774
  -1,064
  -1,428
  -1,875
  -2,413
  -3,048
  -3,785
  -4,628
  -5,578
  -6,636
  -7,803
  -9,077
  -10,456
  -11,938
  -13,520
  -15,201
  -16,977
  -18,848
  -20,811
  -22,866
  -25,013
  -27,251
  -29,582
  -32,007
  -34,529
New CAPEX, $m
  -222
  -595
  -865
  -1,215
  -1,654
  -2,186
  -2,814
  -3,533
  -4,337
  -5,217
  -6,158
  -7,148
  -8,173
  -9,217
  -10,269
  -11,318
  -12,356
  -13,376
  -14,374
  -15,349
  -16,301
  -17,232
  -18,145
  -19,043
  -19,934
  -20,821
  -21,711
  -22,610
  -23,524
  -24,460
  -25,423
Cash from investing activities, $m
  -222
  -697
  -1,029
  -1,468
  -2,032
  -2,735
  -3,588
  -4,597
  -5,765
  -7,092
  -8,571
  -10,196
  -11,958
  -13,845
  -15,847
  -17,954
  -20,159
  -22,453
  -24,830
  -27,287
  -29,821
  -32,433
  -35,122
  -37,891
  -40,745
  -43,687
  -46,724
  -49,861
  -53,106
  -56,467
  -59,952
Free cash flow, $m
  -25
  -647
  -953
  -1,357
  -1,875
  -2,517
  -3,293
  -4,206
  -5,259
  -6,447
  -7,765
  -9,204
  -10,755
  -12,407
  -14,149
  -15,971
  -17,867
  -19,827
  -21,848
  -23,926
  -26,060
  -28,248
  -30,494
  -32,798
  -35,166
  -37,602
  -40,111
  -42,699
  -45,374
  -48,141
  -51,010
Issuance/(repayment) of debt, $m
  250
  242
  352
  494
  672
  889
  1,144
  1,436
  1,763
  2,120
  2,503
  2,906
  3,322
  3,747
  4,174
  4,601
  5,023
  5,437
  5,843
  6,239
  6,626
  7,005
  7,376
  7,741
  8,103
  8,463
  8,825
  9,191
  9,562
  9,943
  10,334
Issuance/(repurchase) of shares, $m
  -46
  545
  804
  1,148
  1,590
  2,141
  2,808
  3,598
  4,512
  5,549
  6,705
  7,974
  9,348
  10,820
  12,381
  14,023
  15,739
  17,524
  19,374
  21,284
  23,253
  25,282
  27,370
  29,520
  31,735
  34,017
  36,373
  38,807
  41,324
  43,930
  46,633
Cash from financing (excl. dividends), $m  
  203
  787
  1,156
  1,642
  2,262
  3,030
  3,952
  5,034
  6,275
  7,669
  9,208
  10,880
  12,670
  14,567
  16,555
  18,624
  20,762
  22,961
  25,217
  27,523
  29,879
  32,287
  34,746
  37,261
  39,838
  42,480
  45,198
  47,998
  50,886
  53,873
  56,967
Total cash flow (excl. dividends), $m
  179
  141
  203
  285
  388
  512
  659
  828
  1,016
  1,222
  1,443
  1,675
  1,915
  2,160
  2,406
  2,652
  2,895
  3,134
  3,368
  3,597
  3,820
  4,038
  4,252
  4,463
  4,671
  4,879
  5,088
  5,298
  5,513
  5,732
  5,957
Retained Cash Flow (-), $m
  185
  -545
  -804
  -1,148
  -1,590
  -2,141
  -2,808
  -3,598
  -4,512
  -5,549
  -6,705
  -7,974
  -9,348
  -10,820
  -12,381
  -14,023
  -15,739
  -17,524
  -19,374
  -21,284
  -23,253
  -25,282
  -27,370
  -29,520
  -31,735
  -34,017
  -36,373
  -38,807
  -41,324
  -43,930
  -46,633
Prev. year cash balance distribution, $m
 
  10
  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
 
  -394
  -601
  -863
  -1,203
  -1,628
  -2,149
  -2,770
  -3,496
  -4,327
  -5,262
  -6,299
  -7,433
  -8,660
  -9,974
  -11,371
  -12,844
  -14,390
  -16,005
  -17,687
  -19,433
  -21,244
  -23,118
  -25,057
  -27,063
  -29,138
  -31,286
  -33,509
  -35,811
  -38,199
  -40,676
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  -378
  -550
  -751
  -990
  -1,262
  -1,560
  -1,872
  -2,185
  -2,485
  -2,759
  -2,991
  -3,172
  -3,293
  -3,349
  -3,338
  -3,264
  -3,131
  -2,948
  -2,723
  -2,469
  -2,197
  -1,918
  -1,642
  -1,378
  -1,134
  -913
  -719
  -554
  -417
  -306
Current shareholders' claim on cash, %
  100
  86.5
  75.7
  66.8
  59.5
  53.4
  48.3
  44.0
  40.3
  37.1
  34.3
  31.9
  29.7
  27.8
  26.1
  24.6
  23.2
  22.0
  20.9
  19.8
  18.9
  18.0
  17.2
  16.5
  15.8
  15.1
  14.5
  13.9
  13.4
  12.8
  12.4

Black Stone Minerals, L.P. is an owner of oil and natural gas mineral interests in the United States. The Company's principal business is maximizing the value of its existing portfolio of mineral and royalty assets through active management and expanding its asset base through acquisitions of additional mineral and royalty interests. As of December 31, 2016, it owned mineral interests in approximately 15.5 million acres, with an average 45.7% ownership interest in that acreage. As of December 31, 2016, it also owned nonparticipating royalty interests in 1.5 million acres and overriding royalty interests in 1.5 million acres. As of December 31, 2016, these non-cost-bearing interests, which it referred to collectively as its mineral and royalty interests, included ownership in 50,000 producing wells. As of December 31, 2016, its mineral and royalty interests were located in 41 states and in 64 onshore basins in the continental United States.

FINANCIAL RATIOS  of  Black Stone Minerals (BSM)

Valuation Ratios
P/E Ratio 172.8
Price to Sales 13.2
Price to Book 4.8
Price to Tangible Book
Price to Cash Flow 17.5
Price to Free Cash Flow -138.3
Growth Rates
Sales Growth Rate -33.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 89.7%
Cap. Spend. - 3 Yr. Gr. Rate 2.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 43.5%
Total Debt to Equity 43.5%
Interest Coverage 4
Management Effectiveness
Return On Assets 2.5%
Ret/ On Assets - 3 Yr. Avg. 2.6%
Return On Total Capital 2%
Ret/ On T. Cap. - 3 Yr. Avg. 2.1%
Return On Equity 2.4%
Return On Equity - 3 Yr. Avg. 3.6%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 79.3%
Gross Margin - 3 Yr. Avg. 83.8%
EBITDA Margin 49.4%
EBITDA Margin - 3 Yr. Avg. 35%
Operating Margin 10.7%
Oper. Margin - 3 Yr. Avg. 6.4%
Pre-Tax Margin 7.7%
Pre-Tax Margin - 3 Yr. Avg. 4.3%
Net Profit Margin 7.7%
Net Profit Margin - 3 Yr. Avg. 4.4%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 910%

BSM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BSM stock intrinsic value calculation we used $261 million for the last fiscal year's total revenue generated by Black Stone Minerals. The default revenue input number comes from 2016 income statement of Black Stone Minerals. 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 BSM stock valuation model: a) initial revenue growth rate of 60% 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 4.3%, whose default value for BSM is calculated based on our internal credit rating of Black Stone Minerals, 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 Black Stone Minerals.
    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 BSM stock the variable cost ratio is equal to 124.5%.

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 BSM 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 3.7% for Black Stone Minerals.

Corporate tax rate of 27% is the nominal tax rate for Black Stone Minerals. 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 BSM 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 BSM are equal to 380.1%.

Life of production assets of 9.7 years is the average useful life of capital assets used in Black Stone Minerals 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 BSM is equal to -0.8%. 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 - $726 million for Black Stone Minerals - 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 195.965 million for Black Stone Minerals 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 Black Stone Minerals at the current share price and the inputted number of shares is $3.5 billion.

RELATED COMPANIES Price Int.Val. Rating
DMLP Dorchester Min 14.80 0.64  str.sell
VNOM Viper Energy P 22.19 1.20  str.sell
SBR Sabine Royalty 43.60 95.23  str.buy
CRT Cross Timbers 14.38 318.82  str.buy
MVO MV Oil Trust 7.35 32.41  str.buy

COMPANY NEWS

▶ Why BSMs Correlation with Natural Gas Could Fall   [Dec-04-17 09:02AM  Market Realist]
▶ Noble Energy selling more assets in $340M deal   [09:10AM  American City Business Journals]
▶ Black Stone Minerals posts 3Q profit   [Nov-06-17 06:43PM  Associated Press]
▶ Are Institutional Investors Bearish on VNOM and BSM?   [Oct-10-17 10:37AM  Market Realist]
▶ Why High Leverage Is Not a Concern for VNOM and BSM   [Oct-09-17 10:38AM  Market Realist]
▶ Why VNOM Has Higher Margins than BSM   [Oct-06-17 05:36PM  Market Realist]
▶ Behind VNOMs and BSMs Net Royalty Acres   [04:06PM  Market Realist]
▶ Behind Viper Energys Outperformance   [02:07PM  Market Realist]
▶ What Is Black Stone Minerals LPs (BSM) Share Price Doing?   [Sep-15-17 07:31PM  Simply Wall St.]
▶ MLP Winners Last Week   [Aug-15-17 03:54PM  Market Realist]
▶ Black Stone Minerals tops Street 2Q forecasts   [Aug-07-17 11:28PM  Associated Press]
▶ Black Stone Minerals, L.P. Announces Investor Presentation   [Jun-06-17 06:00AM  Business Wire]
▶ Black Stone Minerals tops Street 1Q forecasts   [May-08-17 06:38PM  Associated Press]
▶ Black Stone Minerals misses Street 4Q forecasts   [Feb-27-17 07:25PM  Associated Press]
▶ Is NuVasive, Inc. (NUVA) a Good Stock To Buy?   [Dec-01-16 10:45AM  at Insider Monkey]
▶ Houston energy cos. make CFO changes   [Oct-14-16 09:40AM  at bizjournals.com]
▶ Black Stone Minerals CFO Announces Retirement (BSM)   [Oct-12-16 08:42AM  at Investopedia]
▶ Black Stone Minerals, L.P. Announces Retirement of CFO   [Oct-10-16 05:29PM  Business Wire]
Financial statements of BSM
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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