Intrinsic value of Enable Midstream Partners - ENBL

Previous Close

$15.61

  Intrinsic Value

$4.49

stock screener

  Rating & Target

str. sell

-71%

  Value-price divergence*

+5%

Previous close

$15.61

 
Intrinsic value

$4.49

 
Up/down potential

-71%

 
Rating

str. sell

 
Value-price divergence*

+5%

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

We calculate the intrinsic value of ENBL 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 6.8

 

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, %
  -6.04
  18.30
  16.97
  15.77
  14.70
  13.73
  12.85
  12.07
  11.36
  10.73
  10.15
  9.64
  9.17
  8.76
  8.38
  8.04
  7.74
  7.46
  7.22
  7.00
  6.80
  6.62
  6.46
  6.31
  6.18
  6.06
  5.95
  5.86
  5.77
  5.70
  5.63
Revenue, $m
  2,272
  2,688
  3,144
  3,640
  4,175
  4,748
  5,358
  6,005
  6,687
  7,404
  8,156
  8,942
  9,762
  10,617
  11,506
  12,432
  13,394
  14,394
  15,433
  16,512
  17,635
  18,801
  20,015
  21,278
  22,593
  23,962
  25,389
  26,877
  28,428
  30,047
  31,738
Variable operating expenses, $m
 
  3,478
  4,068
  4,710
  5,402
  6,144
  6,933
  7,770
  8,653
  9,581
  10,553
  11,570
  12,632
  13,738
  14,889
  16,087
  17,332
  18,625
  19,970
  21,367
  22,819
  24,329
  25,899
  27,534
  29,235
  31,007
  32,853
  34,778
  36,786
  38,881
  41,069
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
  1,887
  3,478
  4,068
  4,710
  5,402
  6,144
  6,933
  7,770
  8,653
  9,581
  10,553
  11,570
  12,632
  13,738
  14,889
  16,087
  17,332
  18,625
  19,970
  21,367
  22,819
  24,329
  25,899
  27,534
  29,235
  31,007
  32,853
  34,778
  36,786
  38,881
  41,069
Operating income, $m
  385
  -790
  -924
  -1,070
  -1,227
  -1,396
  -1,575
  -1,765
  -1,966
  -2,177
  -2,398
  -2,629
  -2,870
  -3,121
  -3,383
  -3,655
  -3,938
  -4,232
  -4,537
  -4,855
  -5,185
  -5,528
  -5,884
  -6,256
  -6,642
  -7,045
  -7,464
  -7,902
  -8,358
  -8,834
  -9,331
EBITDA, $m
  723
  -378
  -442
  -512
  -587
  -668
  -753
  -844
  -940
  -1,041
  -1,147
  -1,257
  -1,373
  -1,493
  -1,618
  -1,748
  -1,883
  -2,024
  -2,170
  -2,322
  -2,479
  -2,643
  -2,814
  -2,992
  -3,177
  -3,369
  -3,570
  -3,779
  -3,997
  -4,225
  -4,462
Interest expense (income), $m
  0
  105
  127
  151
  177
  205
  235
  267
  301
  337
  375
  415
  456
  500
  545
  592
  641
  691
  744
  799
  856
  915
  977
  1,041
  1,107
  1,177
  1,249
  1,324
  1,403
  1,485
  1,570
Earnings before tax, $m
  314
  -895
  -1,051
  -1,221
  -1,404
  -1,601
  -1,810
  -2,033
  -2,267
  -2,514
  -2,773
  -3,044
  -3,326
  -3,621
  -3,928
  -4,247
  -4,578
  -4,923
  -5,281
  -5,654
  -6,040
  -6,443
  -6,861
  -7,296
  -7,750
  -8,221
  -8,713
  -9,226
  -9,761
  -10,318
  -10,901
Tax expense, $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
Net income, $m
  312
  -895
  -1,051
  -1,221
  -1,404
  -1,601
  -1,810
  -2,033
  -2,267
  -2,514
  -2,773
  -3,044
  -3,326
  -3,621
  -3,928
  -4,247
  -4,578
  -4,923
  -5,281
  -5,654
  -6,040
  -6,443
  -6,861
  -7,296
  -7,750
  -8,221
  -8,713
  -9,226
  -9,761
  -10,318
  -10,901

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  6
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  11,212
  13,240
  15,487
  17,930
  20,565
  23,388
  26,394
  29,579
  32,940
  36,472
  40,175
  44,047
  48,088
  52,299
  56,682
  61,240
  65,979
  70,904
  76,022
  81,341
  86,870
  92,618
  98,596
  104,818
  111,294
  118,039
  125,068
  132,397
  140,040
  148,017
  156,345
Adjusted assets (=assets-cash), $m
  11,206
  13,240
  15,487
  17,930
  20,565
  23,388
  26,394
  29,579
  32,940
  36,472
  40,175
  44,047
  48,088
  52,299
  56,682
  61,240
  65,979
  70,904
  76,022
  81,341
  86,870
  92,618
  98,596
  104,818
  111,294
  118,039
  125,068
  132,397
  140,040
  148,017
  156,345
Revenue / Adjusted assets
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
  0.203
Average production assets, $m
  10,457
  12,369
  14,468
  16,750
  19,212
  21,849
  24,657
  27,633
  30,772
  34,073
  37,532
  41,149
  44,924
  48,858
  52,952
  57,211
  61,638
  66,239
  71,021
  75,989
  81,154
  86,524
  92,109
  97,921
  103,972
  110,273
  116,840
  123,686
  130,827
  138,278
  146,059
Working capital, $m
  34
  32
  38
  44
  50
  57
  64
  72
  80
  89
  98
  107
  117
  127
  138
  149
  161
  173
  185
  198
  212
  226
  240
  255
  271
  288
  305
  323
  341
  361
  381
Total debt, $m
  2,993
  3,615
  4,302
  5,050
  5,856
  6,720
  7,639
  8,614
  9,643
  10,724
  11,857
  13,041
  14,278
  15,566
  16,908
  18,303
  19,753
  21,260
  22,826
  24,453
  26,145
  27,904
  29,733
  31,637
  33,619
  35,683
  37,834
  40,076
  42,415
  44,856
  47,405
Total liabilities, $m
  3,430
  4,052
  4,739
  5,487
  6,293
  7,157
  8,076
  9,051
  10,080
  11,161
  12,294
  13,478
  14,715
  16,003
  17,345
  18,740
  20,190
  21,697
  23,263
  24,890
  26,582
  28,341
  30,170
  32,074
  34,056
  36,120
  38,271
  40,513
  42,852
  45,293
  47,842
Total equity, $m
  7,782
  9,189
  10,748
  12,443
  14,272
  16,231
  18,317
  20,528
  22,860
  25,312
  27,882
  30,569
  33,373
  36,295
  39,337
  42,501
  45,790
  49,208
  52,760
  56,451
  60,287
  64,277
  68,426
  72,743
  77,238
  81,919
  86,797
  91,883
  97,188
  102,724
  108,504
Total liabilities and equity, $m
  11,212
  13,241
  15,487
  17,930
  20,565
  23,388
  26,393
  29,579
  32,940
  36,473
  40,176
  44,047
  48,088
  52,298
  56,682
  61,241
  65,980
  70,905
  76,023
  81,341
  86,869
  92,618
  98,596
  104,817
  111,294
  118,039
  125,068
  132,396
  140,040
  148,017
  156,346
Debt-to-equity ratio
  0.385
  0.390
  0.400
  0.410
  0.410
  0.410
  0.420
  0.420
  0.420
  0.420
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
Adjusted equity ratio
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694
  0.694

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  312
  -895
  -1,051
  -1,221
  -1,404
  -1,601
  -1,810
  -2,033
  -2,267
  -2,514
  -2,773
  -3,044
  -3,326
  -3,621
  -3,928
  -4,247
  -4,578
  -4,923
  -5,281
  -5,654
  -6,040
  -6,443
  -6,861
  -7,296
  -7,750
  -8,221
  -8,713
  -9,226
  -9,761
  -10,318
  -10,901
Depreciation, amort., depletion, $m
  338
  412
  482
  558
  640
  728
  822
  921
  1,026
  1,136
  1,251
  1,372
  1,497
  1,629
  1,765
  1,907
  2,055
  2,208
  2,367
  2,533
  2,705
  2,884
  3,070
  3,264
  3,466
  3,676
  3,895
  4,123
  4,361
  4,609
  4,869
Funds from operations, $m
  753
  -483
  -569
  -662
  -764
  -872
  -989
  -1,112
  -1,242
  -1,378
  -1,522
  -1,672
  -1,829
  -1,992
  -2,163
  -2,340
  -2,524
  -2,715
  -2,914
  -3,121
  -3,335
  -3,559
  -3,791
  -4,032
  -4,284
  -4,546
  -4,819
  -5,103
  -5,400
  -5,709
  -6,032
Change in working capital, $m
  32
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  12
  13
  13
  14
  15
  15
  16
  16
  17
  18
  19
  19
  20
Cash from operations, $m
  721
  -488
  -574
  -668
  -770
  -879
  -996
  -1,119
  -1,250
  -1,387
  -1,531
  -1,682
  -1,839
  -2,003
  -2,173
  -2,351
  -2,535
  -2,727
  -2,926
  -3,133
  -3,349
  -3,573
  -3,805
  -4,048
  -4,300
  -4,562
  -4,836
  -5,121
  -5,418
  -5,729
  -6,053
Maintenance CAPEX, $m
  0
  -349
  -412
  -482
  -558
  -640
  -728
  -822
  -921
  -1,026
  -1,136
  -1,251
  -1,372
  -1,497
  -1,629
  -1,765
  -1,907
  -2,055
  -2,208
  -2,367
  -2,533
  -2,705
  -2,884
  -3,070
  -3,264
  -3,466
  -3,676
  -3,895
  -4,123
  -4,361
  -4,609
New CAPEX, $m
  -383
  -1,913
  -2,099
  -2,282
  -2,462
  -2,637
  -2,808
  -2,976
  -3,139
  -3,300
  -3,459
  -3,617
  -3,775
  -3,934
  -4,095
  -4,259
  -4,427
  -4,601
  -4,781
  -4,969
  -5,165
  -5,370
  -5,585
  -5,812
  -6,050
  -6,302
  -6,567
  -6,846
  -7,141
  -7,452
  -7,780
Cash from investing activities, $m
  -367
  -2,262
  -2,511
  -2,764
  -3,020
  -3,277
  -3,536
  -3,798
  -4,060
  -4,326
  -4,595
  -4,868
  -5,147
  -5,431
  -5,724
  -6,024
  -6,334
  -6,656
  -6,989
  -7,336
  -7,698
  -8,075
  -8,469
  -8,882
  -9,314
  -9,768
  -10,243
  -10,741
  -11,264
  -11,813
  -12,389
Free cash flow, $m
  354
  -2,749
  -3,085
  -3,433
  -3,790
  -4,157
  -4,532
  -4,917
  -5,310
  -5,713
  -6,126
  -6,550
  -6,985
  -7,434
  -7,897
  -8,375
  -8,870
  -9,383
  -9,916
  -10,470
  -11,046
  -11,648
  -12,275
  -12,930
  -13,614
  -14,329
  -15,078
  -15,862
  -16,682
  -17,541
  -18,442
Issuance/(repayment) of debt, $m
  -37
  622
  688
  747
  806
  864
  920
  975
  1,028
  1,081
  1,133
  1,185
  1,236
  1,288
  1,341
  1,395
  1,450
  1,507
  1,566
  1,628
  1,692
  1,759
  1,829
  1,904
  1,982
  2,064
  2,151
  2,242
  2,339
  2,441
  2,548
Issuance/(repurchase) of shares, $m
  499
  2,308
  2,610
  2,916
  3,233
  3,560
  3,897
  4,243
  4,600
  4,966
  5,343
  5,731
  6,131
  6,543
  6,969
  7,410
  7,867
  8,341
  8,833
  9,345
  9,877
  10,432
  11,010
  11,614
  12,244
  12,903
  13,591
  14,312
  15,065
  15,854
  16,681
Cash from financing (excl. dividends), $m  
  226
  2,930
  3,298
  3,663
  4,039
  4,424
  4,817
  5,218
  5,628
  6,047
  6,476
  6,916
  7,367
  7,831
  8,310
  8,805
  9,317
  9,848
  10,399
  10,973
  11,569
  12,191
  12,839
  13,518
  14,226
  14,967
  15,742
  16,554
  17,404
  18,295
  19,229
Total cash flow (excl. dividends), $m
  580
  180
  212
  231
  249
  267
  284
  301
  318
  334
  350
  366
  382
  398
  414
  431
  448
  465
  484
  503
  522
  543
  565
  588
  612
  637
  664
  692
  722
  754
  787
Retained Cash Flow (-), $m
  -263
  -2,308
  -2,610
  -2,916
  -3,233
  -3,560
  -3,897
  -4,243
  -4,600
  -4,966
  -5,343
  -5,731
  -6,131
  -6,543
  -6,969
  -7,410
  -7,867
  -8,341
  -8,833
  -9,345
  -9,877
  -10,432
  -11,010
  -11,614
  -12,244
  -12,903
  -13,591
  -14,312
  -15,065
  -15,854
  -16,681
Prev. year cash balance distribution, $m
 
  6
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -2,121
  -2,398
  -2,685
  -2,984
  -3,293
  -3,613
  -3,942
  -4,282
  -4,632
  -4,993
  -5,365
  -5,749
  -6,145
  -6,555
  -6,980
  -7,419
  -7,876
  -8,349
  -8,842
  -9,355
  -9,889
  -10,445
  -11,026
  -11,632
  -12,265
  -12,927
  -13,619
  -14,343
  -15,101
  -15,894
Discount rate, %
 
  6.20
  6.51
  6.84
  7.18
  7.54
  7.91
  8.31
  8.72
  9.16
  9.62
  10.10
  10.60
  11.13
  11.69
  12.28
  12.89
  13.53
  14.21
  14.92
  15.67
  16.45
  17.27
  18.14
  19.04
  20.00
  21.00
  22.05
  23.15
  24.30
  25.52
PV of cash for distribution, $m
 
  -1,997
  -2,114
  -2,202
  -2,261
  -2,290
  -2,288
  -2,255
  -2,193
  -2,105
  -1,993
  -1,862
  -1,715
  -1,558
  -1,394
  -1,229
  -1,066
  -910
  -764
  -629
  -509
  -404
  -314
  -239
  -177
  -129
  -91
  -63
  -42
  -27
  -17
Current shareholders' claim on cash, %
  100
  74.6
  56.2
  42.9
  33.0
  25.6
  20.1
  15.9
  12.6
  10.1
  8.1
  6.6
  5.3
  4.4
  3.6
  2.9
  2.4
  2.0
  1.7
  1.4
  1.1
  1.0
  0.8
  0.7
  0.6
  0.5
  0.4
  0.3
  0.3
  0.2
  0.2

Enable Midstream Partners LP owns, operates and develops midstream energy infrastructure assets strategically located to serve its customers. The Company operates in two business segments: Gathering and Processing, and Transportation and Storage. Its gathering and processing segment primarily provides natural gas and crude oil gathering and natural gas processing services to its producer customers. Its transportation and storage segment provides interstate and intrastate natural gas pipeline transportation and storage services primarily to its producer, power plant, Local distribution company (LDC) and industrial end user customers. As of December 31, 2016, the Company owned and operated natural gas and crude oil gathering and natural gas processing assets in five states. As of December 31, 2016, the Company owned and operated interstate and intrastate transportation and storage systems across nine states.

FINANCIAL RATIOS  of  Enable Midstream Partners (ENBL)

Valuation Ratios
P/E Ratio 21.6
Price to Sales 3
Price to Book 0.9
Price to Tangible Book
Price to Cash Flow 9.4
Price to Free Cash Flow 20
Growth Rates
Sales Growth Rate -6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -55.9%
Cap. Spend. - 3 Yr. Gr. Rate -7.7%
Financial Strength
Quick Ratio NaN
Current Ratio 0.2
LT Debt to Equity 38.5%
Total Debt to Equity 38.5%
Interest Coverage 0
Management Effectiveness
Return On Assets 2.8%
Ret/ On Assets - 3 Yr. Avg. 0.3%
Return On Total Capital 2.9%
Ret/ On T. Cap. - 3 Yr. Avg. 0.3%
Return On Equity 4.1%
Return On Equity - 3 Yr. Avg. 0.4%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 55.2%
Gross Margin - 3 Yr. Avg. 51%
EBITDA Margin 28.7%
EBITDA Margin - 3 Yr. Avg. 11.3%
Operating Margin 16.9%
Oper. Margin - 3 Yr. Avg. 1.6%
Pre-Tax Margin 13.8%
Pre-Tax Margin - 3 Yr. Avg. -0.7%
Net Profit Margin 13.7%
Net Profit Margin - 3 Yr. Avg. -0.5%
Effective Tax Rate 0.3%
Eff/ Tax Rate - 3 Yr. Avg. 0.2%
Payout Ratio 179.8%

ENBL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ENBL stock intrinsic value calculation we used $2272 million for the last fiscal year's total revenue generated by Enable Midstream Partners. The default revenue input number comes from 2016 income statement of Enable 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 ENBL stock valuation model: a) initial revenue growth rate of 18.3% 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 6.2%, whose default value for ENBL is calculated based on our internal credit rating of Enable 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 Enable 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 ENBL stock the variable cost ratio is equal to 129.4%.

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 ENBL 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 Enable Midstream Partners.

Corporate tax rate of 27% is the nominal tax rate for Enable 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 ENBL 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 ENBL are equal to 460.2%.

Life of production assets of 30.9 years is the average useful life of capital assets used in Enable 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 ENBL is equal to 1.2%. 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 - $7782 million for Enable 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 433.761 million for Enable 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 Enable Midstream Partners at the current share price and the inputted number of shares is $6.8 billion.

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COMPANY NEWS

▶ Enable Midstream Completes Acquisition of Align Midstream   [Oct-04-17 04:19PM  Business Wire]
▶ What EnLink Midstream Partners Technical Indicators Show   [Sep-29-17 10:41AM  Market Realist]
▶ Analysts Views on Enable Midstream Partners   [Sep-20-17 07:36AM  Market Realist]
▶ What Enables Current Valuation Indicates   [07:36AM  Market Realist]
▶ A Look at Enables Leverage Position   [Sep-18-17 10:37AM  Market Realist]
▶ Reviewing Enables 2017 Operational and Financial Guidance   [Sep-15-17 10:40AM  Market Realist]
▶ CenterPoint JV to buy Dallas-based midstream company   [Sep-14-17 09:45AM  American City Business Journals]
▶ Enable Midstream Posted Strong 2Q17 Earnings Growth   [Aug-10-17 01:34PM  Market Realist]
▶ CenterPoint Energy Stock: 3 Reasons Bulls Are Excited   [Aug-01-17 09:46AM  Motley Fool]
▶ 3 Dividend Stocks I'd Buy Right Now   [Jul-22-17 07:13AM  Motley Fool]
▶ Where Will CenterPoint Energy Stock Be in 10 Years?   [Jul-11-17 03:08PM  Motley Fool]
▶ DCP Midstreams Short Interest Is the Highest among Its Peers   [Jul-04-17 10:36AM  Market Realist]
▶ A Look into the Shale Exposures of WES, ENLK, ENBL, and DCP   [Jun-30-17 03:06PM  Market Realist]
▶ Midstream Stocks: Returns and Implied Volatilities   [Apr-13-17 01:05PM  Market Realist]
▶ A 4% Yield and a Century of Dividends   [Feb-27-17 11:14AM  GuruFocus.com]
Financial statements of ENBL
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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