Intrinsic value of Enable Midstream Partners - ENBL

Previous Close

$14.67

  Intrinsic Value

$4.41

stock screener

  Rating & Target

str. sell

-70%

  Value-price divergence*

-21%

Previous close

$14.67

 
Intrinsic value

$4.41

 
Up/down potential

-70%

 
Rating

str. sell

 
Value-price divergence*

-21%

*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 6.5

 

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, %
  -6.04
  30.80
  28.22
  25.90
  23.81
  21.93
  20.23
  18.71
  17.34
  16.11
  15.00
  14.00
  13.10
  12.29
  11.56
  10.90
  10.31
  9.78
  9.30
  8.87
  8.49
  8.14
  7.82
  7.54
  7.29
  7.06
  6.85
  6.67
  6.50
  6.35
  6.22
Revenue, $m
  2,272
  2,972
  3,810
  4,797
  5,939
  7,242
  8,707
  10,336
  12,129
  14,082
  16,194
  18,460
  20,878
  23,443
  26,152
  29,004
  31,994
  35,124
  38,391
  41,797
  45,344
  49,033
  52,869
  56,856
  60,999
  65,304
  69,779
  74,431
  79,269
  84,303
  89,543
Variable operating expenses, $m
 
  3,845
  4,931
  6,208
  7,686
  9,371
  11,267
  13,375
  15,694
  18,222
  20,955
  23,887
  27,016
  30,335
  33,841
  37,531
  41,401
  45,450
  49,678
  54,086
  58,675
  63,449
  68,413
  73,572
  78,933
  84,504
  90,294
  96,314
  102,575
  109,088
  115,868
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
  3,845
  4,931
  6,208
  7,686
  9,371
  11,267
  13,375
  15,694
  18,222
  20,955
  23,887
  27,016
  30,335
  33,841
  37,531
  41,401
  45,450
  49,678
  54,086
  58,675
  63,449
  68,413
  73,572
  78,933
  84,504
  90,294
  96,314
  102,575
  109,088
  115,868
Operating income, $m
  385
  -874
  -1,120
  -1,410
  -1,746
  -2,129
  -2,560
  -3,039
  -3,566
  -4,140
  -4,761
  -5,427
  -6,138
  -6,892
  -7,689
  -8,527
  -9,406
  -10,326
  -11,287
  -12,288
  -13,331
  -14,416
  -15,544
  -16,716
  -17,934
  -19,199
  -20,515
  -21,883
  -23,305
  -24,785
  -26,326
EBITDA, $m
  723
  -418
  -536
  -674
  -835
  -1,018
  -1,224
  -1,453
  -1,705
  -1,980
  -2,277
  -2,595
  -2,935
  -3,296
  -3,677
  -4,078
  -4,498
  -4,938
  -5,398
  -5,877
  -6,375
  -6,894
  -7,433
  -7,994
  -8,576
  -9,182
  -9,811
  -10,465
  -11,145
  -11,853
  -12,590
Interest expense (income), $m
  0
  105
  141
  186
  238
  298
  367
  444
  530
  625
  728
  839
  959
  1,086
  1,222
  1,364
  1,515
  1,673
  1,838
  2,010
  2,190
  2,377
  2,572
  2,774
  2,984
  3,203
  3,430
  3,666
  3,912
  4,167
  4,432
Earnings before tax, $m
  314
  -978
  -1,262
  -1,596
  -1,984
  -2,427
  -2,927
  -3,483
  -4,096
  -4,765
  -5,489
  -6,266
  -7,097
  -7,978
  -8,910
  -9,892
  -10,921
  -11,999
  -13,125
  -14,299
  -15,521
  -16,793
  -18,115
  -19,490
  -20,918
  -22,402
  -23,945
  -25,549
  -27,217
  -28,952
  -30,758
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
  -978
  -1,262
  -1,596
  -1,984
  -2,427
  -2,927
  -3,483
  -4,096
  -4,765
  -5,489
  -6,266
  -7,097
  -7,978
  -8,910
  -9,892
  -10,921
  -11,999
  -13,125
  -14,299
  -15,521
  -16,793
  -18,115
  -19,490
  -20,918
  -22,402
  -23,945
  -25,549
  -27,217
  -28,952
  -30,758

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
  14,639
  18,770
  23,632
  29,258
  35,673
  42,892
  50,917
  59,747
  69,369
  79,772
  90,936
  102,846
  115,482
  128,829
  142,875
  157,608
  173,023
  189,119
  205,899
  223,369
  241,544
  260,440
  280,079
  300,488
  321,696
  343,739
  366,656
  390,490
  415,287
  441,098
Adjusted assets (=assets-cash), $m
  11,206
  14,639
  18,770
  23,632
  29,258
  35,673
  42,892
  50,917
  59,747
  69,369
  79,772
  90,936
  102,846
  115,482
  128,829
  142,875
  157,608
  173,023
  189,119
  205,899
  223,369
  241,544
  260,440
  280,079
  300,488
  321,696
  343,739
  366,656
  390,490
  415,287
  441,098
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
  13,676
  17,536
  22,077
  27,333
  33,326
  40,070
  47,567
  55,816
  64,805
  74,523
  84,953
  96,079
  107,884
  120,353
  133,474
  147,238
  161,639
  176,676
  192,352
  208,673
  225,652
  243,305
  261,652
  280,717
  300,530
  321,123
  342,532
  364,798
  387,963
  412,076
Working capital, $m
  34
  36
  46
  58
  71
  87
  104
  124
  146
  169
  194
  222
  251
  281
  314
  348
  384
  421
  461
  502
  544
  588
  634
  682
  732
  784
  837
  893
  951
  1,012
  1,075
Total debt, $m
  2,993
  4,043
  5,307
  6,794
  8,516
  10,479
  12,688
  15,144
  17,845
  20,790
  23,973
  27,390
  31,034
  34,900
  38,985
  43,283
  47,791
  52,508
  57,433
  62,568
  67,914
  73,476
  79,258
  85,267
  91,512
  98,002
  104,747
  111,760
  119,053
  126,641
  134,539
Total liabilities, $m
  3,430
  4,480
  5,744
  7,231
  8,953
  10,916
  13,125
  15,581
  18,282
  21,227
  24,410
  27,827
  31,471
  35,337
  39,422
  43,720
  48,228
  52,945
  57,870
  63,005
  68,351
  73,913
  79,695
  85,704
  91,949
  98,439
  105,184
  112,197
  119,490
  127,078
  134,976
Total equity, $m
  7,782
  10,160
  13,027
  16,400
  20,305
  24,757
  29,767
  35,337
  41,464
  48,142
  55,361
  63,110
  71,375
  80,145
  89,408
  99,155
  109,380
  120,078
  131,249
  142,894
  155,018
  167,632
  180,746
  194,375
  208,538
  223,257
  238,555
  254,459
  271,000
  288,209
  306,122
Total liabilities and equity, $m
  11,212
  14,640
  18,771
  23,631
  29,258
  35,673
  42,892
  50,918
  59,746
  69,369
  79,771
  90,937
  102,846
  115,482
  128,830
  142,875
  157,608
  173,023
  189,119
  205,899
  223,369
  241,545
  260,441
  280,079
  300,487
  321,696
  343,739
  366,656
  390,490
  415,287
  441,098
Debt-to-equity ratio
  0.385
  0.400
  0.410
  0.410
  0.420
  0.420
  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
  0.440
  0.440
  0.440
  0.440
  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
  -978
  -1,262
  -1,596
  -1,984
  -2,427
  -2,927
  -3,483
  -4,096
  -4,765
  -5,489
  -6,266
  -7,097
  -7,978
  -8,910
  -9,892
  -10,921
  -11,999
  -13,125
  -14,299
  -15,521
  -16,793
  -18,115
  -19,490
  -20,918
  -22,402
  -23,945
  -25,549
  -27,217
  -28,952
  -30,758
Depreciation, amort., depletion, $m
  338
  456
  585
  736
  911
  1,111
  1,336
  1,586
  1,861
  2,160
  2,484
  2,832
  3,203
  3,596
  4,012
  4,449
  4,908
  5,388
  5,889
  6,412
  6,956
  7,522
  8,110
  8,722
  9,357
  10,018
  10,704
  11,418
  12,160
  12,932
  13,736
Funds from operations, $m
  753
  -523
  -677
  -860
  -1,073
  -1,316
  -1,591
  -1,897
  -2,235
  -2,605
  -3,004
  -3,435
  -3,894
  -4,382
  -4,899
  -5,442
  -6,013
  -6,611
  -7,236
  -7,887
  -8,565
  -9,271
  -10,005
  -10,768
  -11,561
  -12,385
  -13,241
  -14,131
  -15,057
  -16,020
  -17,022
Change in working capital, $m
  32
  8
  10
  12
  14
  16
  18
  20
  22
  23
  25
  27
  29
  31
  33
  34
  36
  38
  39
  41
  43
  44
  46
  48
  50
  52
  54
  56
  58
  60
  63
Cash from operations, $m
  721
  -531
  -687
  -872
  -1,087
  -1,332
  -1,609
  -1,917
  -2,257
  -2,628
  -3,030
  -3,462
  -3,923
  -4,413
  -4,931
  -5,477
  -6,049
  -6,649
  -7,275
  -7,928
  -8,608
  -9,315
  -10,051
  -10,816
  -11,611
  -12,436
  -13,295
  -14,187
  -15,115
  -16,080
  -17,085
Maintenance CAPEX, $m
  0
  -349
  -456
  -585
  -736
  -911
  -1,111
  -1,336
  -1,586
  -1,861
  -2,160
  -2,484
  -2,832
  -3,203
  -3,596
  -4,012
  -4,449
  -4,908
  -5,388
  -5,889
  -6,412
  -6,956
  -7,522
  -8,110
  -8,722
  -9,357
  -10,018
  -10,704
  -11,418
  -12,160
  -12,932
New CAPEX, $m
  -383
  -3,220
  -3,859
  -4,541
  -5,256
  -5,993
  -6,743
  -7,498
  -8,248
  -8,990
  -9,718
  -10,430
  -11,126
  -11,805
  -12,469
  -13,121
  -13,764
  -14,401
  -15,037
  -15,675
  -16,321
  -16,979
  -17,653
  -18,347
  -19,066
  -19,813
  -20,593
  -21,409
  -22,266
  -23,166
  -24,113
Cash from investing activities, $m
  -367
  -3,569
  -4,315
  -5,126
  -5,992
  -6,904
  -7,854
  -8,834
  -9,834
  -10,851
  -11,878
  -12,914
  -13,958
  -15,008
  -16,065
  -17,133
  -18,213
  -19,309
  -20,425
  -21,564
  -22,733
  -23,935
  -25,175
  -26,457
  -27,788
  -29,170
  -30,611
  -32,113
  -33,684
  -35,326
  -37,045
Free cash flow, $m
  354
  -4,099
  -5,003
  -5,998
  -7,079
  -8,236
  -9,463
  -10,750
  -12,091
  -13,478
  -14,908
  -16,376
  -17,881
  -19,421
  -20,996
  -22,610
  -24,262
  -25,958
  -27,700
  -29,492
  -31,341
  -33,250
  -35,226
  -37,273
  -39,398
  -41,607
  -43,905
  -46,300
  -48,798
  -51,406
  -54,130
Issuance/(repayment) of debt, $m
  -37
  1,050
  1,264
  1,488
  1,722
  1,963
  2,209
  2,456
  2,702
  2,945
  3,183
  3,416
  3,644
  3,867
  4,084
  4,298
  4,508
  4,717
  4,925
  5,135
  5,346
  5,562
  5,782
  6,010
  6,245
  6,490
  6,745
  7,013
  7,293
  7,588
  7,898
Issuance/(repurchase) of shares, $m
  499
  3,362
  4,129
  4,970
  5,889
  6,879
  7,936
  9,053
  10,223
  11,443
  12,708
  14,015
  15,362
  16,748
  18,173
  19,639
  21,146
  22,697
  24,295
  25,944
  27,646
  29,406
  31,229
  33,119
  35,081
  37,121
  39,243
  41,453
  43,757
  46,161
  48,671
Cash from financing (excl. dividends), $m  
  226
  4,412
  5,393
  6,458
  7,611
  8,842
  10,145
  11,509
  12,925
  14,388
  15,891
  17,431
  19,006
  20,615
  22,257
  23,937
  25,654
  27,414
  29,220
  31,079
  32,992
  34,968
  37,011
  39,129
  41,326
  43,611
  45,988
  48,466
  51,050
  53,749
  56,569
Total cash flow (excl. dividends), $m
  580
  313
  390
  459
  532
  606
  682
  758
  834
  909
  983
  1,055
  1,125
  1,194
  1,261
  1,327
  1,392
  1,457
  1,521
  1,586
  1,651
  1,717
  1,786
  1,856
  1,929
  2,004
  2,083
  2,166
  2,252
  2,343
  2,439
Retained Cash Flow (-), $m
  -263
  -3,362
  -4,129
  -4,970
  -5,889
  -6,879
  -7,936
  -9,053
  -10,223
  -11,443
  -12,708
  -14,015
  -15,362
  -16,748
  -18,173
  -19,639
  -21,146
  -22,697
  -24,295
  -25,944
  -27,646
  -29,406
  -31,229
  -33,119
  -35,081
  -37,121
  -39,243
  -41,453
  -43,757
  -46,161
  -48,671
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
 
  -3,044
  -3,738
  -4,510
  -5,357
  -6,273
  -7,254
  -8,294
  -9,389
  -10,534
  -11,725
  -12,960
  -14,236
  -15,554
  -16,912
  -18,312
  -19,754
  -21,241
  -22,774
  -24,358
  -25,995
  -27,689
  -29,443
  -31,263
  -33,153
  -35,117
  -37,160
  -39,288
  -41,505
  -43,818
  -46,232
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
 
  -2,866
  -3,295
  -3,699
  -4,060
  -4,362
  -4,593
  -4,744
  -4,809
  -4,786
  -4,680
  -4,497
  -4,248
  -3,943
  -3,597
  -3,224
  -2,839
  -2,455
  -2,083
  -1,734
  -1,415
  -1,131
  -884
  -676
  -505
  -368
  -262
  -181
  -122
  -80
  -51
Current shareholders' claim on cash, %
  100
  65.8
  44.2
  30.3
  21.1
  15.0
  10.8
  7.9
  5.9
  4.4
  3.4
  2.6
  2.0
  1.6
  1.2
  1.0
  0.8
  0.6
  0.5
  0.4
  0.3
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.1
  0.1
  0.0

Enable Midstream Partners, LP owns, operates, and develops midstream energy infrastructure assets in the United States. It operates in two segments, Gathering and Processing, and Transportation and Storage. The Gathering and Processing segment provides natural gas gathering, processing, and fractionation services in the Anadarko, Arkoma, and Ark-La-Tex basins, as well as crude oil gathering services in the Bakken Shale formation of the Williston Basin for its producer customers. The Transportation and Storage segment offers interstate and intrastate natural gas pipeline transportation and storage services to natural gas producers, utilities, and industrial customers. The company’s natural gas gathering and processing assets are located in Oklahoma, Texas, Arkansas, and Louisiana; crude oil gathering assets are located in North Dakota; and natural gas transportation and storage assets extend from western Oklahoma and the Texas Panhandle to Louisiana, from Louisiana to Illinois, in Oklahoma, and from Louisiana to Alabama. As of December 31, 2016, its portfolio of midstream energy infrastructure assets included approximately 12,900 miles of gathering pipelines; 14 processing plants with 2.5 billion cubic feet per day of processing capacity; approximately 7,800 miles of interstate pipelines; approximately 2,200 miles of intrastate pipelines; and 8 natural gas storage facilities with 85.0 billion cubic feet of storage capacity. The company is based in Oklahoma City, Oklahoma. Enable Midstream Partners, LP is a subsidiary of CenterPoint Energy, Inc.

FINANCIAL RATIOS  of  Enable Midstream Partners (ENBL)

Valuation Ratios
P/E Ratio 20.3
Price to Sales 2.8
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 8.8
Price to Free Cash Flow 18.8
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 30.8% 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 440.959 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 $6.5 billion.

RELATED COMPANIES Price Int.Val. Rating
CNP CenterPoint En 28.95 159.03  str.buy
KMI Kinder Morgan 18.71 5.79  str.sell
OGE OGE Energy 35.65 20.49  sell
ATO Atmos Energy 88.40 39.86  str.sell
SR Spire 76.35 80.52  hold
BWP Boardwalk Pipe 15.15 7.43  str.sell

COMPANY NEWS

▶ 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]
Stock chart of ENBL 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.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.