Intrinsic value of Dominion Midstream Partners - DM

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$28.50

  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 DM 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 2.4

 

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, %
  19.19
  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
  441
  706
  1,090
  1,630
  2,366
  3,337
  4,588
  6,159
  8,087
  10,406
  13,143
  16,321
  19,954
  24,051
  28,616
  33,647
  39,140
  45,086
  51,475
  58,299
  65,545
  73,205
  81,271
  89,736
  98,597
  107,853
  117,504
  127,555
  138,012
  148,885
  160,186
Variable operating expenses, $m
 
  322
  481
  704
  1,009
  1,411
  1,929
  2,579
  3,377
  4,336
  5,469
  6,755
  8,258
  9,954
  11,844
  13,926
  16,199
  18,660
  21,305
  24,129
  27,128
  30,298
  33,636
  37,140
  40,807
  44,638
  48,632
  52,792
  57,120
  61,621
  66,298
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
  224
  322
  481
  704
  1,009
  1,411
  1,929
  2,579
  3,377
  4,336
  5,469
  6,755
  8,258
  9,954
  11,844
  13,926
  16,199
  18,660
  21,305
  24,129
  27,128
  30,298
  33,636
  37,140
  40,807
  44,638
  48,632
  52,792
  57,120
  61,621
  66,298
Operating income, $m
  217
  384
  609
  926
  1,357
  1,927
  2,660
  3,580
  4,710
  6,069
  7,674
  9,566
  11,695
  14,097
  16,772
  19,721
  22,941
  26,426
  30,171
  34,170
  38,417
  42,907
  47,634
  52,596
  57,790
  63,215
  68,871
  74,762
  80,892
  87,265
  93,888
EBITDA, $m
  274
  853
  1,318
  1,971
  2,860
  4,035
  5,548
  7,447
  9,778
  12,582
  15,892
  19,734
  24,126
  29,080
  34,600
  40,684
  47,325
  54,514
  62,240
  70,490
  79,252
  88,514
  98,266
  108,502
  119,216
  130,407
  142,076
  154,229
  166,873
  180,020
  193,685
Interest expense (income), $m
  10
  11
  65
  145
  257
  410
  611
  871
  1,196
  1,596
  2,077
  2,645
  3,304
  4,058
  4,907
  5,854
  6,898
  8,037
  9,270
  10,595
  12,011
  13,513
  15,102
  16,775
  18,531
  20,369
  22,288
  24,290
  26,375
  28,544
  30,799
Earnings before tax, $m
  236
  373
  544
  781
  1,100
  1,517
  2,048
  2,710
  3,514
  4,473
  5,597
  6,921
  8,391
  10,039
  11,865
  13,867
  16,043
  18,389
  20,901
  23,575
  26,407
  29,393
  32,532
  35,821
  39,259
  42,846
  46,583
  50,472
  54,517
  58,721
  63,090
Tax expense, $m
  6
  101
  147
  211
  297
  410
  553
  732
  949
  1,208
  1,511
  1,869
  2,266
  2,711
  3,204
  3,744
  4,332
  4,965
  5,643
  6,365
  7,130
  7,936
  8,784
  9,672
  10,600
  11,568
  12,577
  13,628
  14,720
  15,855
  17,034
Net income, $m
  112
  273
  397
  570
  803
  1,107
  1,495
  1,978
  2,565
  3,265
  4,086
  5,052
  6,126
  7,329
  8,661
  10,123
  11,711
  13,424
  15,258
  17,209
  19,277
  21,457
  23,749
  26,149
  28,659
  31,278
  34,006
  36,845
  39,797
  42,866
  46,055

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  40
  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
  7,187
  6,533
  10,094
  15,096
  21,903
  30,902
  42,483
  57,025
  74,877
  96,348
  121,696
  151,118
  184,757
  222,694
  264,962
  311,548
  362,405
  417,460
  476,625
  539,802
  606,898
  677,825
  752,508
  830,891
  912,938
  998,637
  1,087,999
  1,181,062
  1,277,889
  1,378,566
  1,483,207
Adjusted assets (=assets-cash), $m
  7,147
  6,533
  10,094
  15,096
  21,903
  30,902
  42,483
  57,025
  74,877
  96,348
  121,696
  151,118
  184,757
  222,694
  264,962
  311,548
  362,405
  417,460
  476,625
  539,802
  606,898
  677,825
  752,508
  830,891
  912,938
  998,637
  1,087,999
  1,181,062
  1,277,889
  1,378,566
  1,483,207
Revenue / Adjusted assets
  0.062
  0.108
  0.108
  0.108
  0.108
  0.108
  0.108
  0.108
  0.108
  0.108
  0.108
  0.108
  0.108
  0.108
  0.108
  0.108
  0.108
  0.108
  0.108
  0.108
  0.108
  0.108
  0.108
  0.108
  0.108
  0.108
  0.108
  0.108
  0.108
  0.108
  0.108
Average production assets, $m
  4,704
  4,396
  6,792
  10,157
  14,737
  20,792
  28,584
  38,368
  50,380
  64,827
  81,882
  101,679
  124,312
  149,837
  178,277
  209,622
  243,841
  280,884
  320,692
  363,201
  408,345
  456,068
  506,317
  559,056
  614,261
  671,923
  732,049
  794,666
  859,815
  927,554
  997,961
Working capital, $m
  22
  11
  17
  26
  38
  53
  73
  99
  129
  166
  210
  261
  319
  385
  458
  538
  626
  721
  824
  933
  1,049
  1,171
  1,300
  1,436
  1,578
  1,726
  1,880
  2,041
  2,208
  2,382
  2,563
Total debt, $m
  793
  1,866
  4,145
  7,346
  11,703
  17,462
  24,874
  34,181
  45,606
  59,348
  75,570
  94,401
  115,929
  140,209
  167,261
  197,076
  229,624
  264,860
  302,725
  343,159
  386,100
  431,493
  479,290
  529,455
  581,965
  636,813
  694,005
  753,565
  815,534
  879,967
  946,937
Total liabilities, $m
  4,401
  4,181
  6,460
  9,661
  14,018
  19,777
  27,189
  36,496
  47,921
  61,663
  77,885
  96,716
  118,244
  142,524
  169,576
  199,391
  231,939
  267,175
  305,040
  345,474
  388,415
  433,808
  481,605
  531,770
  584,280
  639,128
  696,320
  755,880
  817,849
  882,282
  949,252
Total equity, $m
  2,786
  2,352
  3,634
  5,434
  7,885
  11,125
  15,294
  20,529
  26,956
  34,685
  43,810
  54,403
  66,512
  80,170
  95,386
  112,157
  130,466
  150,286
  171,585
  194,329
  218,483
  244,017
  270,903
  299,121
  328,658
  359,509
  391,680
  425,182
  460,040
  496,284
  533,954
Total liabilities and equity, $m
  7,187
  6,533
  10,094
  15,095
  21,903
  30,902
  42,483
  57,025
  74,877
  96,348
  121,695
  151,119
  184,756
  222,694
  264,962
  311,548
  362,405
  417,461
  476,625
  539,803
  606,898
  677,825
  752,508
  830,891
  912,938
  998,637
  1,088,000
  1,181,062
  1,277,889
  1,378,566
  1,483,206
Debt-to-equity ratio
  0.285
  0.790
  1.140
  1.350
  1.480
  1.570
  1.630
  1.670
  1.690
  1.710
  1.720
  1.740
  1.740
  1.750
  1.750
  1.760
  1.760
  1.760
  1.760
  1.770
  1.770
  1.770
  1.770
  1.770
  1.770
  1.770
  1.770
  1.770
  1.770
  1.770
  1.770
Adjusted equity ratio
  0.390
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  112
  273
  397
  570
  803
  1,107
  1,495
  1,978
  2,565
  3,265
  4,086
  5,052
  6,126
  7,329
  8,661
  10,123
  11,711
  13,424
  15,258
  17,209
  19,277
  21,457
  23,749
  26,149
  28,659
  31,278
  34,006
  36,845
  39,797
  42,866
  46,055
Depreciation, amort., depletion, $m
  57
  469
  709
  1,045
  1,503
  2,109
  2,888
  3,866
  5,068
  6,512
  8,218
  10,168
  12,431
  14,984
  17,828
  20,962
  24,384
  28,088
  32,069
  36,320
  40,835
  45,607
  50,632
  55,906
  61,426
  67,192
  73,205
  79,467
  85,981
  92,755
  99,796
Funds from operations, $m
  292
  742
  1,106
  1,615
  2,306
  3,216
  4,383
  5,844
  7,633
  9,778
  12,303
  15,220
  18,557
  22,312
  26,489
  31,085
  36,095
  41,512
  47,327
  53,530
  60,111
  67,064
  74,380
  82,055
  90,085
  98,470
  107,211
  116,311
  125,779
  135,622
  145,851
Change in working capital, $m
  3
  4
  6
  9
  12
  16
  20
  25
  31
  37
  44
  51
  58
  66
  73
  81
  88
  95
  102
  109
  116
  123
  129
  135
  142
  148
  154
  161
  167
  174
  181
Cash from operations, $m
  289
  1,501
  1,100
  1,607
  2,294
  3,201
  4,363
  5,819
  7,602
  9,741
  12,260
  15,169
  18,499
  22,247
  26,416
  31,005
  36,008
  41,417
  47,225
  53,420
  59,995
  66,941
  74,251
  81,920
  89,943
  98,322
  107,056
  116,151
  125,611
  135,448
  145,671
Maintenance CAPEX, $m
  0
  -275
  -440
  -679
  -1,016
  -1,474
  -2,079
  -2,858
  -3,837
  -5,038
  -6,483
  -8,188
  -10,168
  -12,431
  -14,984
  -17,828
  -20,962
  -24,384
  -28,088
  -32,069
  -36,320
  -40,835
  -45,607
  -50,632
  -55,906
  -61,426
  -67,192
  -73,205
  -79,467
  -85,981
  -92,755
New CAPEX, $m
  -1,277
  -1,648
  -2,396
  -3,365
  -4,580
  -6,055
  -7,792
  -9,784
  -12,012
  -14,447
  -17,055
  -19,797
  -22,633
  -25,526
  -28,440
  -31,345
  -34,219
  -37,043
  -39,808
  -42,508
  -45,145
  -47,722
  -50,250
  -52,739
  -55,205
  -57,662
  -60,127
  -62,617
  -65,149
  -67,740
  -70,407
Cash from investing activities, $m
  -2,123
  -1,923
  -2,836
  -4,044
  -5,596
  -7,529
  -9,871
  -12,642
  -15,849
  -19,485
  -23,538
  -27,985
  -32,801
  -37,957
  -43,424
  -49,173
  -55,181
  -61,427
  -67,896
  -74,577
  -81,465
  -88,557
  -95,857
  -103,371
  -111,111
  -119,088
  -127,319
  -135,822
  -144,616
  -153,721
  -163,162
Free cash flow, $m
  -1,834
  -422
  -1,736
  -2,438
  -3,302
  -4,328
  -5,508
  -6,823
  -8,247
  -9,744
  -11,278
  -12,816
  -14,302
  -15,710
  -17,007
  -18,168
  -19,173
  -20,010
  -20,672
  -21,157
  -21,469
  -21,615
  -21,605
  -21,451
  -21,167
  -20,766
  -20,263
  -19,671
  -19,004
  -18,273
  -17,491
Issuance/(repayment) of debt, $m
  57
  1,565
  2,279
  3,201
  4,357
  5,759
  7,412
  9,307
  11,425
  13,742
  16,222
  18,831
  21,529
  24,280
  27,051
  29,815
  32,549
  35,235
  37,865
  40,434
  42,941
  45,393
  47,797
  50,165
  52,510
  54,847
  57,192
  59,560
  61,969
  64,433
  66,970
Issuance/(repurchase) of shares, $m
  1,862
  0
  739
  1,037
  1,396
  1,808
  2,265
  2,752
  3,248
  3,732
  4,181
  4,577
  4,884
  5,088
  5,172
  5,124
  4,933
  4,595
  4,106
  3,468
  2,682
  1,756
  694
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  1,885
  1,565
  3,018
  4,238
  5,753
  7,567
  9,677
  12,059
  14,673
  17,474
  20,403
  23,408
  26,413
  29,368
  32,223
  34,939
  37,482
  39,830
  41,971
  43,902
  45,623
  47,149
  48,491
  50,165
  52,510
  54,847
  57,192
  59,560
  61,969
  64,433
  66,970
Total cash flow (excl. dividends), $m
  51
  1,143
  543
  763
  1,055
  1,431
  1,904
  2,483
  3,179
  3,997
  4,944
  6,015
  7,226
  8,570
  10,044
  11,647
  13,375
  15,225
  17,193
  19,276
  21,472
  23,778
  26,192
  28,714
  31,343
  34,081
  36,929
  39,889
  42,965
  46,160
  49,479
Retained Cash Flow (-), $m
  -1,283
  -878
  -1,282
  -1,801
  -2,451
  -3,240
  -4,169
  -5,235
  -6,427
  -7,730
  -9,125
  -10,592
  -12,110
  -13,657
  -15,216
  -16,771
  -18,309
  -19,820
  -21,299
  -22,744
  -24,154
  -25,534
  -26,886
  -28,218
  -29,537
  -30,852
  -32,170
  -33,503
  -34,857
  -36,244
  -37,671
Prev. year cash balance distribution, $m
 
  29
  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
 
  294
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  496
  1,806
  3,230
  4,759
  6,387
  8,108
  9,916
  11,808
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
 
  282
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  32
  92
  126
  139
  137
  125
  108
  89
Current shareholders' claim on cash, %
  100
  100.0
  83.3
  70.5
  60.6
  52.9
  46.8
  42.0
  38.1
  35.0
  32.6
  30.5
  28.9
  27.5
  26.4
  25.6
  24.9
  24.3
  23.9
  23.6
  23.4
  23.3
  23.2
  23.2
  23.2
  23.2
  23.2
  23.2
  23.2
  23.2
  23.2

Dominion Midstream Partners, LP owns liquefied natural gas (LNG) import, storage, regasification, and transportation assets. It owns and operates LNG facility located on the Chesapeake Bay in Lusby, Maryland; and has approximately 136 miles of natural gas pipeline that connects its LNG facility to interstate natural gas pipelines. The company also operates interstate pipelines in South Carolina and southeastern Georgia comprising natural gas system consisting of approximately 1,500 miles of transmission pipeline and 5 compressor stations with approximately 34,500 installed compressor horsepower. In addition, it owns and operates a 416-mile interstate natural gas pipeline from the United States-Canadian border at Waddington, New York through the state of Connecticut to South Commack, Long Island, New York and continuing on from Northport, Long Island, New York through the Long Island Sound to Hunts Point, Bronx, New York providing service to local gas distribution companies, electric utilities, and electric power generators, as well as marketers and other end users through interconnecting pipelines and exchanges. Further, the company operates 2,667 miles of natural gas transportation pipelines that interconnect with other pipelines, including 10 miles of owned by a third party; and offers wellhead automation and measurement services for Rockies oil and gas producers. Dominion Midstream GP, LLC serves as a general partner of the company. The company was founded in 2000 and is headquartered in Richmond, Virginia. Dominion Midstream Partners, LP is a subsidiary of Dominion Resources, Inc.

FINANCIAL RATIOS  of  Dominion Midstream Partners (DM)

Valuation Ratios
P/E Ratio 25.2
Price to Sales 6.4
Price to Book 1
Price to Tangible Book
Price to Cash Flow 9.8
Price to Free Cash Flow -2.9
Growth Rates
Sales Growth Rate 19.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -0.4%
Cap. Spend. - 3 Yr. Gr. Rate 34.1%
Financial Strength
Quick Ratio 1
Current Ratio 0.3
LT Debt to Equity 26.2%
Total Debt to Equity 28.5%
Interest Coverage 25
Management Effectiveness
Return On Assets 2.2%
Ret/ On Assets - 3 Yr. Avg. 3.1%
Return On Total Capital 4.2%
Ret/ On T. Cap. - 3 Yr. Avg. 5.7%
Return On Equity 5.2%
Return On Equity - 3 Yr. Avg. 6.2%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 90.7%
Gross Margin - 3 Yr. Avg. 85.7%
EBITDA Margin 68.7%
EBITDA Margin - 3 Yr. Avg. 65.4%
Operating Margin 49.2%
Oper. Margin - 3 Yr. Avg. 50.5%
Pre-Tax Margin 53.5%
Pre-Tax Margin - 3 Yr. Avg. 52.7%
Net Profit Margin 25.4%
Net Profit Margin - 3 Yr. Avg. 24.8%
Effective Tax Rate 2.5%
Eff/ Tax Rate - 3 Yr. Avg. 12.1%
Payout Ratio 41.1%

DM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DM stock intrinsic value calculation we used $441 million for the last fiscal year's total revenue generated by Dominion Midstream Partners. The default revenue input number comes from 2016 income statement of Dominion Midstream 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 DM 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 DM is calculated based on our internal credit rating of Dominion Midstream 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 Dominion Midstream 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 DM stock the variable cost ratio is equal to 48.1%.

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 DM 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 3.5% for Dominion Midstream Partners.

Corporate tax rate of 27% is the nominal tax rate for Dominion Midstream 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 DM 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 DM are equal to 623%.

Life of production assets of 10 years is the average useful life of capital assets used in Dominion Midstream 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 DM is equal to 1.6%. 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 - $1503 million for Dominion Midstream 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 82.78 million for Dominion Midstream 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 Dominion Midstream Partners at the current share price and the inputted number of shares is $2.4 billion.


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COMPANY NEWS

▶ Shareholders Add 'Energy' to Dominion's Name   [May-10-17 11:05AM  PR Newswire]
▶ Midstream Stocks: Which Ones Have the Most Bearish Traders?   [May-04-17 03:04PM  Market Realist]
▶ Dominion Midstream meets 1Q profit forecasts   [08:51AM  Associated Press]
▶ Short Interest: Which Midstream Stocks Could Be Bearish?   [Apr-27-17 04:35PM  Market Realist]
▶ Investors Should Watch These Midstream Stocks   [Apr-20-17 11:46AM  Market Realist]
▶ Why These Midstream Stocks Could Be Bearish   [Apr-13-17 02:35PM  Market Realist]
▶ Why These Midstream Stocks Could Mean Trouble   [Apr-06-17 09:06AM  Market Realist]
▶ How Short Interest Could Impact Midstream Stocks   [Mar-27-17 03:50PM  Market Realist]
▶ Why These Midstream Stocks Could Be Bearish   [Mar-21-17 04:48PM  Market Realist]
▶ These Midstream Stocks Have the Highest Short Interest   [Mar-14-17 01:05PM  Market Realist]
▶ These Midstream Stocks Lead in Short Interest   [Mar-07-17 02:05PM  Market Realist]
▶ Dominion Midstream Partners Submits 2016 10-K Filing   [Feb-28-17 01:00PM  PR Newswire]
▶ Do You Own These Bearish Midstream Stocks?   [12:35PM  Market Realist]
▶ [$$] Dominion Resources Warns of Lower Earnings in 2017   [08:25AM  at The Wall Street Journal]
▶ Alerian Index Series December 2016 Index Review   [Dec-09-16 08:30AM  PR Newswire]
▶ Dominion Resources Combines With Questar Corporation   [Sep-16-16 04:30PM  PR Newswire]
Stock chart of DM Financial statements of DM Annual reports of DM
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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