Intrinsic value of EnLink Midstream - ENLC

Previous Close

$16.10

  Intrinsic Value

$0.47

stock screener

  Rating & Target

str. sell

-97%

  Value-price divergence*

-113%

Previous close

$16.10

 
Intrinsic value

$0.47

 
Up/down potential

-97%

 
Rating

str. sell

 
Value-price divergence*

-113%

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

We calculate the intrinsic value of ENLC 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 2.9

 

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, %
  -4.49
  48.50
  44.15
  40.24
  36.71
  33.54
  30.69
  28.12
  25.81
  23.73
  21.85
  20.17
  18.65
  17.29
  16.06
  14.95
  13.96
  13.06
  12.25
  11.53
  10.88
  10.29
  9.76
  9.28
  8.86
  8.47
  8.12
  7.81
  7.53
  7.28
  7.05
Revenue, $m
  4,252
  6,314
  9,102
  12,764
  17,450
  23,303
  30,454
  39,016
  49,085
  60,731
  74,002
  88,926
  105,512
  123,750
  143,621
  165,094
  188,135
  212,707
  238,773
  266,301
  295,265
  325,643
  357,425
  390,608
  425,197
  461,211
  498,675
  537,624
  578,104
  620,170
  663,886
Variable operating expenses, $m
 
  8,089
  11,593
  16,195
  22,084
  29,440
  38,426
  49,188
  61,841
  76,476
  93,155
  111,757
  132,600
  155,521
  180,493
  207,479
  236,436
  267,316
  300,074
  334,670
  371,069
  409,247
  449,189
  490,890
  534,360
  579,620
  626,702
  675,651
  726,524
  779,390
  834,328
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
  4,927
  8,089
  11,593
  16,195
  22,084
  29,440
  38,426
  49,188
  61,841
  76,476
  93,155
  111,757
  132,600
  155,521
  180,493
  207,479
  236,436
  267,316
  300,074
  334,670
  371,069
  409,247
  449,189
  490,890
  534,360
  579,620
  626,702
  675,651
  726,524
  779,390
  834,328
Operating income, $m
  -675
  -1,775
  -2,491
  -3,431
  -4,634
  -6,137
  -7,973
  -10,171
  -12,756
  -15,746
  -19,153
  -22,830
  -27,088
  -31,771
  -36,872
  -42,385
  -48,301
  -54,609
  -61,301
  -68,369
  -75,805
  -83,604
  -91,763
  -100,283
  -109,163
  -118,409
  -128,027
  -138,027
  -148,419
  -159,219
  -170,443
EBITDA, $m
  -171
  -1,034
  -1,490
  -2,090
  -2,857
  -3,815
  -4,986
  -6,388
  -8,037
  -9,944
  -12,117
  -14,560
  -17,276
  -20,262
  -23,516
  -27,032
  -30,804
  -34,827
  -39,095
  -43,603
  -48,345
  -53,319
  -58,523
  -63,956
  -69,620
  -75,516
  -81,650
  -88,028
  -94,656
  -101,543
  -108,701
Interest expense (income), $m
  134
  138
  310
  541
  845
  1,234
  1,720
  2,314
  3,024
  3,860
  4,827
  5,928
  7,167
  8,544
  10,058
  11,707
  13,489
  15,402
  17,441
  19,605
  21,890
  24,294
  26,816
  29,454
  32,208
  35,079
  38,069
  41,178
  44,411
  47,771
  51,263
Earnings before tax, $m
  -884
  -1,914
  -2,801
  -3,972
  -5,480
  -7,371
  -9,693
  -12,485
  -15,780
  -19,606
  -23,980
  -28,759
  -34,256
  -40,315
  -46,930
  -54,092
  -61,790
  -70,011
  -78,743
  -87,974
  -97,695
  -107,898
  -118,579
  -129,736
  -141,371
  -153,488
  -166,096
  -179,205
  -192,831
  -206,990
  -221,705
Tax expense, $m
  4
  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
  -460
  -1,914
  -2,801
  -3,972
  -5,480
  -7,371
  -9,693
  -12,485
  -15,780
  -19,606
  -23,980
  -28,759
  -34,256
  -40,315
  -46,930
  -54,092
  -61,790
  -70,011
  -78,743
  -87,974
  -97,695
  -107,898
  -118,579
  -129,736
  -141,371
  -153,488
  -166,096
  -179,205
  -192,831
  -206,990
  -221,705

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  205
  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
  10,276
  14,963
  21,569
  30,247
  41,351
  55,220
  72,165
  92,456
  116,315
  143,911
  175,360
  210,726
  250,028
  293,246
  340,333
  391,218
  445,817
  504,044
  565,813
  631,046
  699,680
  771,667
  846,979
  925,611
  1,007,577
  1,092,917
  1,181,693
  1,273,990
  1,369,916
  1,469,598
  1,573,189
Adjusted assets (=assets-cash), $m
  10,071
  14,963
  21,569
  30,247
  41,351
  55,220
  72,165
  92,456
  116,315
  143,911
  175,360
  210,726
  250,028
  293,246
  340,333
  391,218
  445,817
  504,044
  565,813
  631,046
  699,680
  771,667
  846,979
  925,611
  1,007,577
  1,092,917
  1,181,693
  1,273,990
  1,369,916
  1,469,598
  1,573,189
Revenue / Adjusted assets
  0.422
  0.422
  0.422
  0.422
  0.422
  0.422
  0.422
  0.422
  0.422
  0.422
  0.422
  0.422
  0.422
  0.422
  0.422
  0.422
  0.422
  0.422
  0.422
  0.422
  0.422
  0.422
  0.422
  0.422
  0.422
  0.422
  0.422
  0.422
  0.422
  0.422
  0.422
Average production assets, $m
  7,119
  10,570
  15,237
  21,367
  29,211
  39,009
  50,979
  65,314
  82,168
  101,663
  123,879
  148,862
  176,626
  207,158
  240,421
  276,367
  314,938
  356,071
  399,706
  445,788
  494,273
  545,127
  598,330
  653,877
  711,781
  772,067
  834,781
  899,982
  967,747
  1,038,165
  1,111,345
Working capital, $m
  -115
  -474
  -683
  -957
  -1,309
  -1,748
  -2,284
  -2,926
  -3,681
  -4,555
  -5,550
  -6,669
  -7,913
  -9,281
  -10,772
  -12,382
  -14,110
  -15,953
  -17,908
  -19,973
  -22,145
  -24,423
  -26,807
  -29,296
  -31,890
  -34,591
  -37,401
  -40,322
  -43,358
  -46,513
  -49,791
Total debt, $m
  3,295
  7,379
  12,888
  20,126
  29,387
  40,953
  55,086
  72,008
  91,907
  114,922
  141,150
  170,645
  203,423
  239,468
  278,738
  321,176
  366,712
  415,273
  466,788
  521,192
  578,433
  638,470
  701,281
  766,859
  835,219
  906,393
  980,432
  1,057,408
  1,137,410
  1,220,545
  1,306,940
Total liabilities, $m
  8,395
  12,479
  17,988
  25,226
  34,487
  46,053
  60,186
  77,108
  97,007
  120,022
  146,250
  175,745
  208,523
  244,568
  283,838
  326,276
  371,812
  420,373
  471,888
  526,292
  583,533
  643,570
  706,381
  771,959
  840,319
  911,493
  985,532
  1,062,508
  1,142,510
  1,225,645
  1,312,040
Total equity, $m
  1,881
  2,484
  3,580
  5,021
  6,864
  9,167
  11,979
  15,348
  19,308
  23,889
  29,110
  34,980
  41,505
  48,679
  56,495
  64,942
  74,006
  83,671
  93,925
  104,754
  116,147
  128,097
  140,599
  153,651
  167,258
  181,424
  196,161
  211,482
  227,406
  243,953
  261,149
Total liabilities and equity, $m
  10,276
  14,963
  21,568
  30,247
  41,351
  55,220
  72,165
  92,456
  116,315
  143,911
  175,360
  210,725
  250,028
  293,247
  340,333
  391,218
  445,818
  504,044
  565,813
  631,046
  699,680
  771,667
  846,980
  925,610
  1,007,577
  1,092,917
  1,181,693
  1,273,990
  1,369,916
  1,469,598
  1,573,189
Debt-to-equity ratio
  1.752
  2.970
  3.600
  4.010
  4.280
  4.470
  4.600
  4.690
  4.760
  4.810
  4.850
  4.880
  4.900
  4.920
  4.930
  4.950
  4.960
  4.960
  4.970
  4.980
  4.980
  4.980
  4.990
  4.990
  4.990
  5.000
  5.000
  5.000
  5.000
  5.000
  5.000
Adjusted equity ratio
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166
  0.166

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -460
  -1,914
  -2,801
  -3,972
  -5,480
  -7,371
  -9,693
  -12,485
  -15,780
  -19,606
  -23,980
  -28,759
  -34,256
  -40,315
  -46,930
  -54,092
  -61,790
  -70,011
  -78,743
  -87,974
  -97,695
  -107,898
  -118,579
  -129,736
  -141,371
  -153,488
  -166,096
  -179,205
  -192,831
  -206,990
  -221,705
Depreciation, amort., depletion, $m
  504
  741
  1,001
  1,341
  1,777
  2,321
  2,986
  3,783
  4,719
  5,802
  7,036
  8,270
  9,813
  11,509
  13,357
  15,354
  17,497
  19,782
  22,206
  24,766
  27,460
  30,285
  33,241
  36,327
  39,543
  42,893
  46,377
  49,999
  53,764
  57,676
  61,741
Funds from operations, $m
  699
  -1,172
  -1,800
  -2,631
  -3,702
  -5,050
  -6,706
  -8,702
  -11,061
  -13,804
  -16,943
  -20,489
  -24,443
  -28,806
  -33,573
  -38,739
  -44,294
  -50,229
  -56,537
  -63,208
  -70,235
  -77,613
  -85,339
  -93,410
  -101,828
  -110,595
  -119,719
  -129,206
  -139,067
  -149,315
  -159,964
Change in working capital, $m
  33
  -155
  -209
  -275
  -351
  -439
  -536
  -642
  -755
  -873
  -995
  -1,119
  -1,244
  -1,368
  -1,490
  -1,610
  -1,728
  -1,843
  -1,955
  -2,065
  -2,172
  -2,278
  -2,384
  -2,489
  -2,594
  -2,701
  -2,810
  -2,921
  -3,036
  -3,155
  -3,279
Cash from operations, $m
  666
  -1,018
  -1,591
  -2,357
  -3,351
  -4,611
  -6,170
  -8,060
  -10,306
  -12,930
  -15,948
  -19,369
  -23,199
  -27,438
  -32,083
  -37,128
  -42,566
  -48,386
  -54,582
  -61,143
  -68,063
  -75,335
  -82,955
  -90,921
  -99,233
  -107,894
  -116,909
  -126,285
  -136,031
  -146,160
  -156,685
Maintenance CAPEX, $m
  0
  -395
  -587
  -846
  -1,187
  -1,623
  -2,167
  -2,832
  -3,629
  -4,565
  -5,648
  -6,882
  -8,270
  -9,813
  -11,509
  -13,357
  -15,354
  -17,497
  -19,782
  -22,206
  -24,766
  -27,460
  -30,285
  -33,241
  -36,327
  -39,543
  -42,893
  -46,377
  -49,999
  -53,764
  -57,676
New CAPEX, $m
  -663
  -3,452
  -4,667
  -6,130
  -7,844
  -9,798
  -11,970
  -14,334
  -16,855
  -19,495
  -22,216
  -24,983
  -27,764
  -30,531
  -33,264
  -35,946
  -38,571
  -41,133
  -43,635
  -46,083
  -48,485
  -50,854
  -53,203
  -55,547
  -57,903
  -60,287
  -62,714
  -65,201
  -67,764
  -70,419
  -73,179
Cash from investing activities, $m
  -1,380
  -3,847
  -5,254
  -6,976
  -9,031
  -11,421
  -14,137
  -17,166
  -20,484
  -24,060
  -27,864
  -31,865
  -36,034
  -40,344
  -44,773
  -49,303
  -53,925
  -58,630
  -63,417
  -68,289
  -73,251
  -78,314
  -83,488
  -88,788
  -94,230
  -99,830
  -105,607
  -111,578
  -117,763
  -124,183
  -130,855
Free cash flow, $m
  -714
  -4,865
  -6,845
  -9,334
  -12,382
  -16,031
  -20,308
  -25,226
  -30,789
  -36,990
  -43,812
  -51,235
  -59,233
  -67,782
  -76,855
  -86,431
  -96,490
  -107,016
  -117,999
  -129,432
  -141,314
  -153,648
  -166,443
  -179,709
  -193,463
  -207,724
  -222,516
  -237,863
  -253,794
  -270,342
  -287,541
Issuance/(repayment) of debt, $m
  226
  4,084
  5,509
  7,238
  9,261
  11,567
  14,132
  16,923
  19,899
  23,015
  26,228
  29,495
  32,778
  36,045
  39,270
  42,438
  45,536
  48,561
  51,515
  54,404
  57,241
  60,037
  62,811
  65,579
  68,360
  71,174
  74,039
  76,976
  80,002
  83,135
  86,395
Issuance/(repurchase) of shares, $m
  168
  2,721
  3,897
  5,413
  7,323
  9,673
  12,506
  15,853
  19,741
  24,187
  29,200
  34,629
  40,780
  47,489
  54,746
  62,539
  70,854
  79,677
  88,996
  98,803
  109,088
  119,848
  131,081
  142,789
  154,977
  167,655
  180,832
  194,526
  208,754
  223,538
  238,901
Cash from financing (excl. dividends), $m  
  893
  6,805
  9,406
  12,651
  16,584
  21,240
  26,638
  32,776
  39,640
  47,202
  55,428
  64,124
  73,558
  83,534
  94,016
  104,977
  116,390
  128,238
  140,511
  153,207
  166,329
  179,885
  193,892
  208,368
  223,337
  238,829
  254,871
  271,502
  288,756
  306,673
  325,296
Total cash flow (excl. dividends), $m
  179
  1,941
  2,562
  3,317
  4,201
  5,209
  6,330
  7,550
  8,850
  10,212
  11,616
  12,890
  14,324
  15,752
  17,162
  18,546
  19,900
  21,222
  22,513
  23,775
  25,015
  26,237
  27,449
  28,659
  29,874
  31,104
  32,356
  33,639
  34,962
  36,331
  37,755
Retained Cash Flow (-), $m
  405
  -2,721
  -3,897
  -5,413
  -7,323
  -9,673
  -12,506
  -15,853
  -19,741
  -24,187
  -29,200
  -34,629
  -40,780
  -47,489
  -54,746
  -62,539
  -70,854
  -79,677
  -88,996
  -98,803
  -109,088
  -119,848
  -131,081
  -142,789
  -154,977
  -167,655
  -180,832
  -194,526
  -208,754
  -223,538
  -238,901
Prev. year cash balance distribution, $m
 
  205
  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
 
  -576
  -1,336
  -2,096
  -3,122
  -4,464
  -6,176
  -8,303
  -10,891
  -13,975
  -17,584
  -21,740
  -26,455
  -31,737
  -37,585
  -43,993
  -50,954
  -58,455
  -66,484
  -75,027
  -84,073
  -93,611
  -103,632
  -114,131
  -125,103
  -136,551
  -148,476
  -160,887
  -173,792
  -187,207
  -201,146
Discount rate, %
 
  8.80
  9.24
  9.70
  10.19
  10.70
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
  21.18
  22.24
  23.35
  24.52
  25.74
  27.03
  28.38
  29.80
  31.29
  32.85
  34.50
  36.22
PV of cash for distribution, $m
 
  -529
  -1,119
  -1,588
  -2,118
  -2,686
  -3,261
  -3,805
  -4,280
  -4,651
  -4,891
  -4,981
  -4,918
  -4,712
  -4,381
  -3,954
  -3,465
  -2,948
  -2,434
  -1,951
  -1,516
  -1,142
  -833
  -588
  -401
  -265
  -168
  -103
  -61
  -35
  -19
Current shareholders' claim on cash, %
  100
  48.6
  24.1
  12.1
  6.2
  3.2
  1.7
  0.9
  0.5
  0.3
  0.2
  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

EnLink Midstream, LLC gathering, transmission, processing, fractionation, storage, stabilization, brine, and marketing services to producers of natural gas, natural gas liquids, crude oil, and condensate in the United States. Its midstream energy asset network includes approximately 11,000 miles of pipelines; 20 natural gas processing plants; 7 fractionators; barge and rail terminals; product storage facilities; brine disposal wells; and a crude oil trucking fleet. The company was founded in 2013 and is headquartered in Dallas, Texas. EnLink Midstream, LLC is a subsidiary of Devon Energy Corporation.

FINANCIAL RATIOS  of  EnLink Midstream (ENLC)

Valuation Ratios
P/E Ratio -6.3
Price to Sales 0.7
Price to Book 1.5
Price to Tangible Book
Price to Cash Flow 4.4
Price to Free Cash Flow 966.3
Growth Rates
Sales Growth Rate -4.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 15.9%
Cap. Spend. - 3 Yr. Gr. Rate 22.1%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 175.2%
Total Debt to Equity 175.2%
Interest Coverage -6
Management Effectiveness
Return On Assets -3.3%
Ret/ On Assets - 3 Yr. Avg. -1%
Return On Total Capital -8.7%
Ret/ On T. Cap. - 3 Yr. Avg. -4%
Return On Equity -22.1%
Return On Equity - 3 Yr. Avg. -10.2%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 29.1%
Gross Margin - 3 Yr. Avg. 28.4%
EBITDA Margin -5.8%
EBITDA Margin - 3 Yr. Avg. -2.2%
Operating Margin -15.9%
Oper. Margin - 3 Yr. Avg. -11.6%
Pre-Tax Margin -20.8%
Pre-Tax Margin - 3 Yr. Avg. -14.2%
Net Profit Margin -10.8%
Net Profit Margin - 3 Yr. Avg. -5.1%
Effective Tax Rate -0.5%
Eff/ Tax Rate - 3 Yr. Avg. 7%
Payout Ratio -40.2%

ENLC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ENLC stock intrinsic value calculation we used $4252 million for the last fiscal year's total revenue generated by EnLink Midstream. The default revenue input number comes from 2016 income statement of EnLink Midstream. 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 ENLC stock valuation model: a) initial revenue growth rate of 48.5% 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 8.8%, whose default value for ENLC is calculated based on our internal credit rating of EnLink Midstream, 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 EnLink Midstream.
    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 ENLC stock the variable cost ratio is equal to 129.3%.

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 ENLC 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 4.2% for EnLink Midstream.

Corporate tax rate of 27% is the nominal tax rate for EnLink Midstream. 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 ENLC 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 ENLC are equal to 167.4%.

Life of production assets of 18 years is the average useful life of capital assets used in EnLink Midstream 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 ENLC is equal to -7.5%. 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 - $1881 million for EnLink Midstream - 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 179.487 million for EnLink Midstream 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 EnLink Midstream at the current share price and the inputted number of shares is $2.9 billion.

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COMPANY NEWS

▶ EnLink Midstream Continues to Expand in the STACK Region   [Aug-10-17 01:34PM  Market Realist]
▶ EnLink Midstream misses 2Q profit forecasts   [12:42AM  Associated Press]
▶ What to Expect from EnLink Midstream Partners 2Q17 Volumes   [Jul-24-17 10:40AM  Market Realist]
▶ EnLink Midstream to Participate in Investor Conferences   [Jul-17-17 08:03AM  PR Newswire]
▶ Analysts Ratings: WES Has the Most Buys, ENBL the Most Sells   [Jul-05-17 09:05AM  Market Realist]
▶ Examining the Growth Prospects of WES, ENLK, ENBL, and DCP   [Jul-04-17 09:06AM  Market Realist]
▶ A Look into the Shale Exposures of WES, ENLK, ENBL, and DCP   [Jun-30-17 03:06PM  Market Realist]
▶ Why EnLink Midstream Is Reaching New YTD Lows   [Jun-23-17 09:09AM  Market Realist]
▶ Why ONEOK Inc Could Be a Gold Mine for Income Investors   [Jun-21-17 10:00AM  Motley Fool]
▶ What Were Key MLP Ratings Updates Last Week?   [Jun-19-17 03:05PM  Market Realist]
▶ Analysts Ratings: ETE Has Most Buys, ENLC Has Most Sells   [Jun-01-17 09:06AM  Market Realist]
▶ ETEs, ENLCs Short Interests Are above the Industry Average   [May-31-17 10:36AM  Market Realist]
▶ EnLink Midstream to Participate in Investor Conferences   [May-16-17 08:04AM  PR Newswire]
▶ ETFs with exposure to EnLink Midstream LLC : May 8, 2017   [May-08-17 04:27PM  Capital Cube]
▶ EnLink Midstream reports 1Q loss   [May-03-17 05:02AM  Associated Press]
▶ How Analysts View EnLink Midstream before Its 1Q17 Earnings   [Apr-28-17 10:37AM  Market Realist]
▶ 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]
▶ EnLink Midstream to Participate in Investor Conferences   [Apr-19-17 05:03PM  PR Newswire]
▶ Why These Midstream Stocks Could Be Bearish   [02:35PM  Market Realist]
▶ Civitas Capital to relocate its Dallas headquarters to city's Arts District   [Apr-07-17 02:05PM  American City Business Journals]
▶ 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]
▶ Do You Own These Bearish Midstream Stocks?   [Feb-28-17 12:35PM  Market Realist]
▶ EnLink Midstream to Participate in Investor Conferences   [Feb-23-17 05:03PM  PR Newswire]
Stock chart of ENLC Financial statements of ENLC
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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