Intrinsic value of Crestwood Equity Partners - CEQP

Previous Close

$27.55

  Intrinsic Value

$7.65

stock screener

  Rating & Target

str. sell

-72%

Previous close

$27.55

 
Intrinsic value

$7.65

 
Up/down potential

-72%

 
Rating

str. sell

We calculate the intrinsic value of CEQP 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  -4.25
  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
  2,521
  4,034
  6,232
  9,320
  13,523
  19,078
  26,228
  35,206
  46,228
  59,484
  75,133
  93,299
  114,067
  137,489
  163,584
  192,346
  223,745
  257,735
  294,262
  333,267
  374,692
  418,481
  464,589
  512,982
  563,637
  616,546
  671,717
  729,173
  788,953
  851,110
  915,714
Variable operating expenses, $m
 
  7,337
  11,325
  16,927
  24,551
  34,630
  47,601
  63,888
  83,882
  107,931
  136,320
  169,254
  206,929
  249,419
  296,759
  348,936
  405,896
  467,559
  533,823
  604,583
  679,730
  759,168
  842,814
  930,603
  1,022,497
  1,118,480
  1,218,567
  1,322,798
  1,431,244
  1,544,003
  1,661,202
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
  2,588
  7,337
  11,325
  16,927
  24,551
  34,630
  47,601
  63,888
  83,882
  107,931
  136,320
  169,254
  206,929
  249,419
  296,759
  348,936
  405,896
  467,559
  533,823
  604,583
  679,730
  759,168
  842,814
  930,603
  1,022,497
  1,118,480
  1,218,567
  1,322,798
  1,431,244
  1,544,003
  1,661,202
Operating income, $m
  -67
  -3,304
  -5,093
  -7,607
  -11,029
  -15,552
  -21,373
  -28,682
  -37,654
  -48,446
  -61,186
  -75,955
  -92,862
  -111,930
  -133,175
  -156,590
  -182,152
  -209,824
  -239,561
  -271,315
  -305,039
  -340,688
  -378,225
  -417,622
  -458,860
  -501,934
  -546,849
  -593,625
  -642,291
  -692,894
  -745,488
EBITDA, $m
  163
  -2,975
  -4,596
  -6,874
  -9,974
  -14,071
  -19,345
  -25,966
  -34,096
  -43,873
  -55,415
  -68,813
  -84,130
  -101,405
  -120,652
  -141,865
  -165,023
  -190,093
  -217,034
  -245,802
  -276,355
  -308,651
  -342,659
  -378,351
  -415,712
  -454,735
  -495,427
  -537,804
  -581,894
  -627,738
  -675,387
Interest expense (income), $m
  122
  93
  170
  281
  438
  651
  934
  1,297
  1,753
  2,312
  2,985
  3,780
  4,702
  5,757
  6,946
  8,272
  9,732
  11,326
  13,052
  14,907
  16,888
  18,991
  21,215
  23,556
  26,014
  28,586
  31,273
  34,074
  36,992
  40,027
  43,184
Earnings before tax, $m
  -192
  -3,397
  -5,263
  -7,888
  -11,467
  -16,203
  -22,306
  -29,978
  -39,407
  -50,759
  -64,172
  -79,735
  -97,565
  -117,687
  -140,121
  -164,862
  -191,884
  -221,150
  -252,613
  -286,222
  -321,927
  -359,679
  -399,440
  -441,178
  -484,874
  -530,520
  -578,122
  -627,699
  -679,283
  -732,921
  -788,672
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
  -216
  -3,397
  -5,263
  -7,888
  -11,467
  -16,203
  -22,306
  -29,978
  -39,407
  -50,759
  -64,172
  -79,735
  -97,565
  -117,687
  -140,121
  -164,862
  -191,884
  -221,150
  -252,613
  -286,222
  -321,927
  -359,679
  -399,440
  -441,178
  -484,874
  -530,520
  -578,122
  -627,699
  -679,283
  -732,921
  -788,672

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  2
  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
  4,449
  7,114
  10,991
  16,437
  23,849
  33,648
  46,258
  62,092
  81,531
  104,910
  132,510
  164,548
  201,176
  242,484
  288,508
  339,235
  394,611
  454,559
  518,981
  587,773
  660,832
  738,061
  819,381
  904,730
  994,068
  1,087,383
  1,184,687
  1,286,020
  1,391,451
  1,501,075
  1,615,015
Adjusted assets (=assets-cash), $m
  4,447
  7,114
  10,991
  16,437
  23,849
  33,648
  46,258
  62,092
  81,531
  104,910
  132,510
  164,548
  201,176
  242,484
  288,508
  339,235
  394,611
  454,559
  518,981
  587,773
  660,832
  738,061
  819,381
  904,730
  994,068
  1,087,383
  1,184,687
  1,286,020
  1,391,451
  1,501,075
  1,615,015
Revenue / Adjusted assets
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
  0.567
Average production assets, $m
  3,417
  5,466
  8,444
  12,628
  18,323
  25,851
  35,540
  47,704
  62,639
  80,601
  101,806
  126,420
  154,560
  186,297
  221,657
  260,629
  303,174
  349,231
  398,725
  451,577
  507,707
  567,041
  629,518
  695,090
  763,728
  835,420
  910,177
  988,030
  1,069,031
  1,153,254
  1,240,792
Working capital, $m
  36
  56
  87
  130
  189
  267
  367
  493
  647
  833
  1,052
  1,306
  1,597
  1,925
  2,290
  2,693
  3,132
  3,608
  4,120
  4,666
  5,246
  5,859
  6,504
  7,182
  7,891
  8,632
  9,404
  10,208
  11,045
  11,916
  12,820
Total debt, $m
  1,525
  2,781
  4,611
  7,181
  10,680
  15,305
  21,257
  28,730
  37,906
  48,941
  61,968
  77,090
  94,378
  113,876
  135,599
  159,542
  185,680
  213,975
  244,382
  276,852
  311,336
  347,788
  386,171
  426,455
  468,623
  512,668
  558,595
  606,424
  656,188
  707,931
  761,710
Total liabilities, $m
  2,102
  3,358
  5,188
  7,758
  11,257
  15,882
  21,834
  29,307
  38,483
  49,518
  62,545
  77,667
  94,955
  114,453
  136,176
  160,119
  186,257
  214,552
  244,959
  277,429
  311,913
  348,365
  386,748
  427,032
  469,200
  513,245
  559,172
  607,001
  656,765
  708,508
  762,287
Total equity, $m
  2,347
  3,756
  5,803
  8,679
  12,592
  17,766
  24,424
  32,785
  43,048
  55,393
  69,966
  86,881
  106,221
  128,032
  152,332
  179,116
  208,355
  240,007
  274,022
  310,344
  348,919
  389,696
  432,633
  477,697
  524,868
  574,138
  625,515
  679,019
  734,686
  792,568
  852,728
Total liabilities and equity, $m
  4,449
  7,114
  10,991
  16,437
  23,849
  33,648
  46,258
  62,092
  81,531
  104,911
  132,511
  164,548
  201,176
  242,485
  288,508
  339,235
  394,612
  454,559
  518,981
  587,773
  660,832
  738,061
  819,381
  904,729
  994,068
  1,087,383
  1,184,687
  1,286,020
  1,391,451
  1,501,076
  1,615,015
Debt-to-equity ratio
  0.650
  0.740
  0.790
  0.830
  0.850
  0.860
  0.870
  0.880
  0.880
  0.880
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
Adjusted equity ratio
  0.527
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528
  0.528

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -216
  -3,397
  -5,263
  -7,888
  -11,467
  -16,203
  -22,306
  -29,978
  -39,407
  -50,759
  -64,172
  -79,735
  -97,565
  -117,687
  -140,121
  -164,862
  -191,884
  -221,150
  -252,613
  -286,222
  -321,927
  -359,679
  -399,440
  -441,178
  -484,874
  -530,520
  -578,122
  -627,699
  -679,283
  -732,921
  -788,672
Depreciation, amort., depletion, $m
  230
  329
  497
  733
  1,055
  1,480
  2,028
  2,715
  3,559
  4,574
  5,772
  7,142
  8,732
  10,525
  12,523
  14,725
  17,128
  19,731
  22,527
  25,513
  28,684
  32,036
  35,566
  39,271
  43,148
  47,199
  51,422
  55,821
  60,397
  65,156
  70,101
Funds from operations, $m
  404
  -3,068
  -4,766
  -7,155
  -10,412
  -14,723
  -20,278
  -27,263
  -35,848
  -46,185
  -58,400
  -72,593
  -88,833
  -107,162
  -127,598
  -150,137
  -174,755
  -201,420
  -230,086
  -260,710
  -293,243
  -327,643
  -363,874
  -401,907
  -441,726
  -483,321
  -526,700
  -571,878
  -618,886
  -667,766
  -718,571
Change in working capital, $m
  58
  21
  31
  43
  59
  78
  100
  126
  154
  186
  219
  254
  291
  328
  365
  403
  440
  476
  511
  546
  580
  613
  646
  677
  709
  741
  772
  804
  837
  870
  904
Cash from operations, $m
  346
  -3,089
  -4,797
  -7,198
  -10,471
  -14,801
  -20,379
  -27,389
  -36,002
  -46,371
  -58,619
  -72,847
  -89,123
  -107,490
  -127,964
  -150,539
  -175,195
  -201,895
  -230,598
  -261,256
  -293,823
  -328,256
  -364,519
  -402,585
  -442,435
  -484,062
  -527,472
  -572,682
  -619,723
  -668,636
  -719,475
Maintenance CAPEX, $m
  0
  -193
  -309
  -477
  -713
  -1,035
  -1,461
  -2,008
  -2,695
  -3,539
  -4,554
  -5,752
  -7,142
  -8,732
  -10,525
  -12,523
  -14,725
  -17,128
  -19,731
  -22,527
  -25,513
  -28,684
  -32,036
  -35,566
  -39,271
  -43,148
  -47,199
  -51,422
  -55,821
  -60,397
  -65,156
New CAPEX, $m
  -101
  -2,049
  -2,979
  -4,184
  -5,695
  -7,528
  -9,688
  -12,165
  -14,935
  -17,962
  -21,205
  -24,614
  -28,140
  -31,737
  -35,360
  -38,972
  -42,545
  -46,057
  -49,495
  -52,852
  -56,130
  -59,334
  -62,477
  -65,572
  -68,637
  -71,692
  -74,757
  -77,853
  -81,001
  -84,223
  -87,539
Cash from investing activities, $m
  867
  -2,242
  -3,288
  -4,661
  -6,408
  -8,563
  -11,149
  -14,173
  -17,630
  -21,501
  -25,759
  -30,366
  -35,282
  -40,469
  -45,885
  -51,495
  -57,270
  -63,185
  -69,226
  -75,379
  -81,643
  -88,018
  -94,513
  -101,138
  -107,908
  -114,840
  -121,956
  -129,275
  -136,822
  -144,620
  -152,695
Free cash flow, $m
  1,213
  -5,331
  -8,084
  -11,860
  -16,879
  -23,364
  -31,527
  -41,562
  -53,632
  -67,872
  -84,378
  -103,213
  -124,406
  -147,959
  -173,849
  -202,035
  -232,465
  -265,081
  -299,823
  -336,634
  -375,465
  -416,274
  -459,033
  -503,723
  -550,343
  -598,903
  -649,428
  -701,958
  -756,545
  -813,256
  -872,169
Issuance/(repayment) of debt, $m
  -973
  1,258
  1,830
  2,571
  3,499
  4,625
  5,952
  7,474
  9,175
  11,035
  13,027
  15,122
  17,288
  19,498
  21,723
  23,943
  26,138
  28,295
  30,407
  32,470
  34,484
  36,452
  38,383
  40,285
  42,168
  44,045
  45,927
  47,829
  49,763
  51,743
  53,780
Issuance/(repurchase) of shares, $m
  0
  4,806
  7,310
  10,764
  15,380
  21,377
  28,964
  38,338
  49,671
  63,103
  78,745
  96,651
  116,904
  139,498
  164,422
  191,645
  221,123
  252,803
  286,628
  322,545
  360,501
  400,456
  442,377
  486,242
  532,045
  579,790
  629,499
  681,203
  734,951
  790,803
  848,833
Cash from financing (excl. dividends), $m  
  -992
  6,064
  9,140
  13,335
  18,879
  26,002
  34,916
  45,812
  58,846
  74,138
  91,772
  111,773
  134,192
  158,996
  186,145
  215,588
  247,261
  281,098
  317,035
  355,015
  394,985
  436,908
  480,760
  526,527
  574,213
  623,835
  675,426
  729,032
  784,714
  842,546
  902,613
Total cash flow (excl. dividends), $m
  221
  733
  1,056
  1,475
  2,000
  2,638
  3,389
  4,250
  5,214
  6,267
  7,394
  8,560
  9,786
  11,037
  12,297
  13,553
  14,796
  16,017
  17,212
  18,380
  19,520
  20,634
  21,727
  22,804
  23,870
  24,932
  25,998
  27,075
  28,169
  29,290
  30,443
Retained Cash Flow (-), $m
  416
  -4,806
  -7,310
  -10,764
  -15,380
  -21,377
  -28,964
  -38,338
  -49,671
  -63,103
  -78,745
  -96,651
  -116,904
  -139,498
  -164,422
  -191,645
  -221,123
  -252,803
  -286,628
  -322,545
  -360,501
  -400,456
  -442,377
  -486,242
  -532,045
  -579,790
  -629,499
  -681,203
  -734,951
  -790,803
  -848,833
Prev. year cash balance distribution, $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 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
 
  -4,073
  -6,254
  -9,289
  -13,380
  -18,739
  -25,575
  -34,088
  -44,457
  -56,837
  -71,351
  -88,091
  -107,118
  -128,461
  -152,125
  -178,092
  -206,327
  -236,786
  -269,416
  -304,165
  -340,982
  -379,822
  -420,650
  -463,438
  -508,175
  -554,858
  -603,501
  -654,128
  -706,781
  -761,513
  -818,390
Discount rate, %
 
  7.20
  7.56
  7.94
  8.33
  8.75
  9.19
  9.65
  10.13
  10.64
  11.17
  11.73
  12.31
  12.93
  13.58
  14.26
  14.97
  15.72
  16.50
  17.33
  18.19
  19.10
  20.06
  21.06
  22.11
  23.22
  24.38
  25.60
  26.88
  28.22
  29.64
PV of cash for distribution, $m
 
  -3,799
  -5,406
  -7,387
  -9,714
  -12,319
  -15,092
  -17,889
  -20,543
  -22,882
  -24,748
  -26,010
  -26,585
  -26,439
  -25,595
  -24,126
  -22,147
  -19,798
  -17,234
  -14,605
  -12,045
  -9,664
  -7,538
  -5,712
  -4,203
  -3,000
  -2,075
  -1,390
  -900
  -563
  -340
Current shareholders' claim on cash, %
  100
  28.7
  8.5
  2.6
  0.8
  0.3
  0.1
  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
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Crestwood Equity Partners LP is a holding company and a master limited partnership (MLP). The Company develops, acquires, owns or controls, and operates assets and operations within the energy midstream sector. The Company's segments include gathering and processing (G&P), which includes its natural gas, crude oil and produced water G&P operations; storage and transportation, which includes its natural gas and crude oil storage and transportation operations, and marketing, supply and logistics, which includes its natural gas liquid (NGL) supply and logistics business, crude oil storage and rail loading facilities and fleet, and salt production business. The Company provides infrastructure solutions to service natural gas and crude oil shale plays across the United States. It owns and operates a portfolio of crude oil and natural gas gathering, processing, storage and transportation assets. Its operating assets are owned by or through its subsidiary, Crestwood Midstream Partners LP.

FINANCIAL RATIOS  of  Crestwood Equity Partners (CEQP)

Valuation Ratios
P/E Ratio -8.9
Price to Sales 0.8
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 5.5
Price to Free Cash Flow 7.8
Growth Rates
Sales Growth Rate -4.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -44.8%
Cap. Spend. - 3 Yr. Gr. Rate -21.9%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 64.9%
Total Debt to Equity 65%
Interest Coverage -1
Management Effectiveness
Return On Assets -1.8%
Ret/ On Assets - 3 Yr. Avg. -7.1%
Return On Total Capital -4.7%
Ret/ On T. Cap. - 3 Yr. Avg. -14.1%
Return On Equity -8.5%
Return On Equity - 3 Yr. Avg. -31.9%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 23.6%
Gross Margin - 3 Yr. Avg. 23.8%
EBITDA Margin 6.3%
EBITDA Margin - 3 Yr. Avg. -18.3%
Operating Margin -2.7%
Oper. Margin - 3 Yr. Avg. -27.3%
Pre-Tax Margin -7.6%
Pre-Tax Margin - 3 Yr. Avg. -31.8%
Net Profit Margin -8.6%
Net Profit Margin - 3 Yr. Avg. -23.5%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. -3.7%
Payout Ratio -101.9%

CEQP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CEQP stock intrinsic value calculation we used $2521 million for the last fiscal year's total revenue generated by Crestwood Equity Partners. The default revenue input number comes from 2016 income statement of Crestwood Equity 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 CEQP 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 7.2%, whose default value for CEQP is calculated based on our internal credit rating of Crestwood Equity 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 Crestwood Equity 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 CEQP stock the variable cost ratio is equal to 182.2%.

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 CEQP 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 6.1% for Crestwood Equity Partners.

Corporate tax rate of 27% is the nominal tax rate for Crestwood Equity 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 CEQP 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 CEQP are equal to 135.5%.

Life of production assets of 17.7 years is the average useful life of capital assets used in Crestwood Equity 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 CEQP is equal to 1.4%. 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 - $2347 million for Crestwood Equity 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 70.155 million for Crestwood Equity 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 Crestwood Equity Partners at the current share price and the inputted number of shares is $1.9 billion.

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COMPANY NEWS

▶ WES, EQM, and CEQP among Gathering MLPs on Barclays Radar   [Jan-25-18 02:45PM  Market Realist]
▶ Barclays Downgraded 9 MLPs Last Week   [01:14PM  Market Realist]
▶ Why USAC Was the Top MLP Last Week   [Jan-22-18 04:50PM  Market Realist]
▶ These 3 Stocks Are Undeniably Cheap   [Jan-21-18 09:15AM  Motley Fool]
▶ A Sneak Peek at Williams Partners Future Throughput Volumes   [Jan-19-18 03:55PM  Market Realist]
▶ MLP Rating Updates for the Week Ending January 12   [Jan-16-18 02:50PM  Market Realist]
▶ Why I Couldn't Resist Buying This Ultra High-Yield Stock   [Jan-11-18 10:34AM  Motley Fool]
▶ MLPs: What to Watch in 2018   [Jan-02-18 01:34PM  Motley Fool]
▶ 3 MLPs to Buy for 2018   [Dec-30-17 10:47AM  Motley Fool]
▶ 2 Cheap Dividend Stocks You Can Buy Right Now   [Dec-23-17 10:31AM  Motley Fool]
▶ Energy Stocks Outperformed Oil and the Broader Market   [Dec-12-17 10:32AM  Market Realist]
▶ Key MLP Ratings Updates as of December 8   [09:03AM  Market Realist]
▶ 4 Top MLP Dividend Stocks to Consider Buying Now   [Nov-29-17 01:20PM  Motley Fool]
▶ 3 Value Stocks for Smart Investors   [Oct-26-17 07:37AM  Motley Fool]
▶ Crestwood moves to eye-popping new space at Crown Center   [09:29AM  American City Business Journals]
▶ These 3 Energy Stocks Are Ridiculously Cheap   [Sep-26-17 10:36AM  Motley Fool]
▶ Crestwood Provides Post-Hurricane Harvey Update   [Sep-05-17 09:00AM  Business Wire]
▶ Crestwood Supports Hurricane Harvey Relief Efforts   [Aug-31-17 01:00PM  Business Wire]
▶ Analysts Updated Their Ratings on These MLPs Last Week   [Aug-08-17 12:28PM  Market Realist]
▶ [$$] Crestwood Pledges Assets to Joint Venture With First Reserve   [May-24-17 02:09PM  The Wall Street Journal]
▶ How Analysts View EnLink Midstream before Its 1Q17 Earnings   [Apr-28-17 10:37AM  Market Realist]
▶ Handle with Care: Whats Volatile in Midstream Now   [Mar-14-17 11:12AM  Market Realist]
▶ Midstream Stocks: How Returns Impact Implied Volatility   [Feb-28-17 11:05AM  Market Realist]
Financial statements of CEQP
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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