Intrinsic value of EnLink Midstream - ENLC

Previous Close

$16.80

  Intrinsic Value

$0.47

stock screener

  Rating & Target

str. sell

-97%

  Value-price divergence*

-96%

Previous close

$16.80

 
Intrinsic value

$0.47

 
Up/down potential

-97%

 
Rating

str. sell

 
Value-price divergence*

-96%

*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 3.0

 

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
  22.40
  20.66
  19.09
  17.68
  16.42
  15.27
  14.25
  13.32
  12.49
  11.74
  11.07
  10.46
  9.91
  9.42
  8.98
  8.58
  8.22
  7.90
  7.61
  7.35
  7.12
  6.90
  6.71
  6.54
  6.39
  6.25
  6.12
  6.01
  5.91
  5.82
Revenue, $m
  4,252
  5,204
  6,280
  7,479
  8,801
  10,246
  11,811
  13,494
  15,292
  17,202
  19,221
  21,348
  23,582
  25,920
  28,362
  30,909
  33,562
  36,322
  39,192
  42,175
  45,275
  48,497
  51,845
  55,326
  58,945
  62,710
  66,629
  70,710
  74,961
  79,391
  84,012
Variable operating expenses, $m
 
  6,695
  8,046
  9,553
  11,215
  13,031
  14,998
  17,113
  19,372
  21,772
  24,310
  26,829
  29,636
  32,574
  35,643
  38,844
  42,178
  45,647
  49,254
  53,003
  56,899
  60,948
  65,155
  69,530
  74,078
  78,810
  83,735
  88,864
  94,206
  99,774
  105,580
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
  6,695
  8,046
  9,553
  11,215
  13,031
  14,998
  17,113
  19,372
  21,772
  24,310
  26,829
  29,636
  32,574
  35,643
  38,844
  42,178
  45,647
  49,254
  53,003
  56,899
  60,948
  65,155
  69,530
  74,078
  78,810
  83,735
  88,864
  94,206
  99,774
  105,580
Operating income, $m
  -675
  -1,490
  -1,766
  -2,074
  -2,414
  -2,785
  -3,187
  -3,619
  -4,080
  -4,570
  -5,089
  -5,481
  -6,054
  -6,654
  -7,281
  -7,935
  -8,616
  -9,325
  -10,062
  -10,828
  -11,624
  -12,451
  -13,310
  -14,204
  -15,133
  -16,100
  -17,106
  -18,154
  -19,245
  -20,383
  -21,569
EBITDA, $m
  -171
  -852
  -1,028
  -1,225
  -1,441
  -1,678
  -1,934
  -2,209
  -2,504
  -2,817
  -3,147
  -3,495
  -3,861
  -4,244
  -4,644
  -5,061
  -5,495
  -5,947
  -6,417
  -6,906
  -7,413
  -7,941
  -8,489
  -9,059
  -9,651
  -10,268
  -10,910
  -11,578
  -12,274
  -12,999
  -13,756
Interest expense (income), $m
  134
  138
  218
  307
  407
  516
  636
  766
  906
  1,055
  1,214
  1,381
  1,558
  1,743
  1,937
  2,140
  2,351
  2,572
  2,801
  3,039
  3,287
  3,544
  3,811
  4,089
  4,378
  4,679
  4,991
  5,316
  5,655
  6,008
  6,376
Earnings before tax, $m
  -884
  -1,629
  -1,984
  -2,381
  -2,820
  -3,301
  -3,823
  -4,385
  -4,986
  -5,626
  -6,303
  -6,862
  -7,612
  -8,398
  -9,219
  -10,075
  -10,968
  -11,897
  -12,863
  -13,867
  -14,910
  -15,995
  -17,122
  -18,293
  -19,511
  -20,778
  -22,097
  -23,470
  -24,900
  -26,390
  -27,944
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
  -1,629
  -1,984
  -2,381
  -2,820
  -3,301
  -3,823
  -4,385
  -4,986
  -5,626
  -6,303
  -6,862
  -7,612
  -8,398
  -9,219
  -10,075
  -10,968
  -11,897
  -12,863
  -13,867
  -14,910
  -15,995
  -17,122
  -18,293
  -19,511
  -20,778
  -22,097
  -23,470
  -24,900
  -26,390
  -27,944

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
  12,333
  14,881
  17,722
  20,856
  24,280
  27,989
  31,976
  36,236
  40,762
  45,548
  50,589
  55,881
  61,421
  67,208
  73,244
  79,530
  86,071
  92,872
  99,941
  107,287
  114,921
  122,855
  131,103
  139,680
  148,603
  157,889
  167,559
  177,632
  188,131
  199,080
Adjusted assets (=assets-cash), $m
  10,071
  12,333
  14,881
  17,722
  20,856
  24,280
  27,989
  31,976
  36,236
  40,762
  45,548
  50,589
  55,881
  61,421
  67,208
  73,244
  79,530
  86,071
  92,872
  99,941
  107,287
  114,921
  122,855
  131,103
  139,680
  148,603
  157,889
  167,559
  177,632
  188,131
  199,080
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
  8,712
  10,512
  12,519
  14,733
  17,152
  19,772
  22,589
  25,598
  28,796
  32,176
  35,737
  39,476
  43,389
  47,478
  51,742
  56,182
  60,803
  65,607
  70,601
  75,791
  81,184
  86,789
  92,615
  98,674
  104,977
  111,537
  118,368
  125,484
  132,901
  140,636
Working capital, $m
  -115
  -390
  -471
  -561
  -660
  -768
  -886
  -1,012
  -1,147
  -1,290
  -1,442
  -1,601
  -1,769
  -1,944
  -2,127
  -2,318
  -2,517
  -2,724
  -2,939
  -3,163
  -3,396
  -3,637
  -3,888
  -4,149
  -4,421
  -4,703
  -4,997
  -5,303
  -5,622
  -5,954
  -6,301
Total debt, $m
  3,295
  5,186
  7,311
  9,680
  12,294
  15,150
  18,243
  21,568
  25,121
  28,896
  32,887
  37,091
  41,504
  46,125
  50,952
  55,986
  61,228
  66,683
  72,355
  78,251
  84,378
  90,744
  97,361
  104,240
  111,393
  118,835
  126,580
  134,644
  143,045
  151,802
  160,933
Total liabilities, $m
  8,395
  10,286
  12,411
  14,780
  17,394
  20,250
  23,343
  26,668
  30,221
  33,996
  37,987
  42,191
  46,604
  51,225
  56,052
  61,086
  66,328
  71,783
  77,455
  83,351
  89,478
  95,844
  102,461
  109,340
  116,493
  123,935
  131,680
  139,744
  148,145
  156,902
  166,033
Total equity, $m
  1,881
  2,047
  2,470
  2,942
  3,462
  4,030
  4,646
  5,308
  6,015
  6,767
  7,561
  8,398
  9,276
  10,196
  11,157
  12,159
  13,202
  14,288
  15,417
  16,590
  17,810
  19,077
  20,394
  21,763
  23,187
  24,668
  26,210
  27,815
  29,487
  31,230
  33,047
Total liabilities and equity, $m
  10,276
  12,333
  14,881
  17,722
  20,856
  24,280
  27,989
  31,976
  36,236
  40,763
  45,548
  50,589
  55,880
  61,421
  67,209
  73,245
  79,530
  86,071
  92,872
  99,941
  107,288
  114,921
  122,855
  131,103
  139,680
  148,603
  157,890
  167,559
  177,632
  188,132
  199,080
Debt-to-equity ratio
  1.752
  2.530
  2.960
  3.290
  3.550
  3.760
  3.930
  4.060
  4.180
  4.270
  4.350
  4.420
  4.470
  4.520
  4.570
  4.600
  4.640
  4.670
  4.690
  4.720
  4.740
  4.760
  4.770
  4.790
  4.800
  4.820
  4.830
  4.840
  4.850
  4.860
  4.870
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
  -1,629
  -1,984
  -2,381
  -2,820
  -3,301
  -3,823
  -4,385
  -4,986
  -5,626
  -6,303
  -6,862
  -7,612
  -8,398
  -9,219
  -10,075
  -10,968
  -11,897
  -12,863
  -13,867
  -14,910
  -15,995
  -17,122
  -18,293
  -19,511
  -20,778
  -22,097
  -23,470
  -24,900
  -26,390
  -27,944
Depreciation, amort., depletion, $m
  504
  638
  738
  850
  973
  1,107
  1,253
  1,409
  1,576
  1,754
  1,942
  1,985
  2,193
  2,411
  2,638
  2,875
  3,121
  3,378
  3,645
  3,922
  4,211
  4,510
  4,822
  5,145
  5,482
  5,832
  6,197
  6,576
  6,971
  7,383
  7,813
Funds from operations, $m
  699
  -991
  -1,246
  -1,532
  -1,848
  -2,194
  -2,570
  -2,976
  -3,410
  -3,872
  -4,361
  -4,877
  -5,419
  -5,987
  -6,581
  -7,201
  -7,847
  -8,519
  -9,218
  -9,944
  -10,700
  -11,484
  -12,300
  -13,148
  -14,029
  -14,946
  -15,901
  -16,894
  -17,929
  -19,007
  -20,131
Change in working capital, $m
  33
  -71
  -81
  -90
  -99
  -108
  -117
  -126
  -135
  -143
  -151
  -160
  -167
  -175
  -183
  -191
  -199
  -207
  -215
  -224
  -233
  -242
  -251
  -261
  -271
  -282
  -294
  -306
  -319
  -332
  -347
Cash from operations, $m
  666
  -919
  -1,165
  -1,442
  -1,748
  -2,086
  -2,453
  -2,849
  -3,275
  -3,728
  -4,209
  -4,717
  -5,251
  -5,812
  -6,398
  -7,010
  -7,648
  -8,312
  -9,003
  -9,721
  -10,467
  -11,243
  -12,049
  -12,887
  -13,758
  -14,664
  -15,607
  -16,588
  -17,610
  -18,675
  -19,785
Maintenance CAPEX, $m
  0
  -395
  -484
  -584
  -696
  -819
  -953
  -1,098
  -1,255
  -1,422
  -1,600
  -1,788
  -1,985
  -2,193
  -2,411
  -2,638
  -2,875
  -3,121
  -3,378
  -3,645
  -3,922
  -4,211
  -4,510
  -4,822
  -5,145
  -5,482
  -5,832
  -6,197
  -6,576
  -6,971
  -7,383
New CAPEX, $m
  -663
  -1,594
  -1,800
  -2,007
  -2,214
  -2,419
  -2,620
  -2,817
  -3,009
  -3,197
  -3,381
  -3,561
  -3,738
  -3,914
  -4,089
  -4,264
  -4,441
  -4,621
  -4,805
  -4,994
  -5,190
  -5,393
  -5,605
  -5,827
  -6,059
  -6,303
  -6,560
  -6,831
  -7,116
  -7,417
  -7,734
Cash from investing activities, $m
  -1,380
  -1,989
  -2,284
  -2,591
  -2,910
  -3,238
  -3,573
  -3,915
  -4,264
  -4,619
  -4,981
  -5,349
  -5,723
  -6,107
  -6,500
  -6,902
  -7,316
  -7,742
  -8,183
  -8,639
  -9,112
  -9,604
  -10,115
  -10,649
  -11,204
  -11,785
  -12,392
  -13,028
  -13,692
  -14,388
  -15,117
Free cash flow, $m
  -714
  -2,908
  -3,449
  -4,033
  -4,658
  -5,323
  -6,026
  -6,765
  -7,539
  -8,348
  -9,190
  -10,066
  -10,975
  -11,919
  -12,897
  -13,911
  -14,963
  -16,054
  -17,185
  -18,359
  -19,579
  -20,846
  -22,164
  -23,535
  -24,962
  -26,449
  -27,999
  -29,615
  -31,302
  -33,063
  -34,902
Issuance/(repayment) of debt, $m
  226
  1,891
  2,125
  2,370
  2,614
  2,855
  3,093
  3,326
  3,553
  3,775
  3,991
  4,204
  4,413
  4,620
  4,827
  5,034
  5,243
  5,455
  5,672
  5,896
  6,127
  6,367
  6,617
  6,879
  7,153
  7,442
  7,745
  8,064
  8,401
  8,756
  9,131
Issuance/(repurchase) of shares, $m
  168
  2,000
  2,407
  2,853
  3,341
  3,869
  4,438
  5,047
  5,693
  6,377
  7,097
  7,699
  8,490
  9,317
  10,179
  11,077
  12,011
  12,982
  13,992
  15,040
  16,130
  17,262
  18,439
  19,662
  20,935
  22,260
  23,639
  25,075
  26,572
  28,133
  29,762
Cash from financing (excl. dividends), $m  
  893
  3,891
  4,532
  5,223
  5,955
  6,724
  7,531
  8,373
  9,246
  10,152
  11,088
  11,903
  12,903
  13,937
  15,006
  16,111
  17,254
  18,437
  19,664
  20,936
  22,257
  23,629
  25,056
  26,541
  28,088
  29,702
  31,384
  33,139
  34,973
  36,889
  38,893
Total cash flow (excl. dividends), $m
  179
  982
  1,083
  1,190
  1,296
  1,402
  1,506
  1,608
  1,707
  1,804
  1,899
  1,837
  1,929
  2,019
  2,109
  2,200
  2,291
  2,384
  2,479
  2,576
  2,677
  2,782
  2,892
  3,006
  3,126
  3,252
  3,385
  3,524
  3,671
  3,827
  3,990
Retained Cash Flow (-), $m
  405
  -2,000
  -2,407
  -2,853
  -3,341
  -3,869
  -4,438
  -5,047
  -5,693
  -6,377
  -7,097
  -7,699
  -8,490
  -9,317
  -10,179
  -11,077
  -12,011
  -12,982
  -13,992
  -15,040
  -16,130
  -17,262
  -18,439
  -19,662
  -20,935
  -22,260
  -23,639
  -25,075
  -26,572
  -28,133
  -29,762
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
 
  -813
  -1,324
  -1,663
  -2,044
  -2,467
  -2,933
  -3,439
  -3,986
  -4,573
  -5,199
  -5,862
  -6,562
  -7,298
  -8,070
  -8,877
  -9,720
  -10,599
  -11,513
  -12,464
  -13,452
  -14,480
  -15,547
  -16,656
  -17,809
  -19,008
  -20,254
  -21,551
  -22,901
  -24,307
  -25,771
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
 
  -747
  -1,110
  -1,260
  -1,387
  -1,484
  -1,548
  -1,576
  -1,567
  -1,522
  -1,446
  -1,343
  -1,220
  -1,083
  -941
  -798
  -661
  -535
  -422
  -324
  -243
  -177
  -125
  -86
  -57
  -37
  -23
  -14
  -8
  -4
  -2
Current shareholders' claim on cash, %
  100
  57.5
  33.2
  19.3
  11.3
  6.7
  4.0
  2.4
  1.4
  0.9
  0.5
  0.3
  0.2
  0.1
  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

EnLink Midstream, LLC is an integrated midstream company. The Company's assets consist of equity interests in EnLink Midstream Partners, LP (the Partnership) and EnLink Oklahoma Gas Processing, LP (EnLink Oklahoma T.O.). The Partnership is engaged in the gathering, transmission, processing and marketing of natural gas and natural gas liquids (NGLs), condensate and crude oil, as well as providing crude oil, condensate and brine services to producers. EnLink Oklahoma T.O., a partnership owned by the Partnership and the Company, is engaged in the gathering and processing of natural gas. The Partnership's segments include Texas, Oklahoma, Louisiana, Crude and Condensate, and Corporate. The Partnership connects the wells of producers in its market areas to its gathering systems, processes natural gas to remove NGLs, fractionates NGLs into purity products and markets those products for a fee, transports natural gas and provides natural gas to a range of markets.

FINANCIAL RATIOS  of  EnLink Midstream (ENLC)

Valuation Ratios
P/E Ratio -6.6
Price to Sales 0.7
Price to Book 1.6
Price to Tangible Book
Price to Cash Flow 4.5
Price to Free Cash Flow 1008.3
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 22.4% 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 180.415 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 $3.0 billion.

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COMPANY NEWS

▶ MLPs Rating Updates during the Week Ending October 13   [Oct-17-17 03:06PM  Market Realist]
▶ These MLPs Lost the Most Last Week   [Oct-09-17 02:35PM  Market Realist]
▶ EnLink Midstream Makes Management Change   [08:04AM  PR Newswire]
▶ Analysts Recommendations for EnLink Midstream Partners   [Oct-02-17 10:38AM  Market Realist]
▶ What EnLink Midstream Partners Technical Indicators Show   [Sep-29-17 10:41AM  Market Realist]
▶ EnLink Midstream Partners Distribution Growth Plans   [Sep-28-17 03:06PM  Market Realist]
▶ 3 High-Yield Stocks You Won't Want to Overlook   [Sep-24-17 12:47PM  Motley Fool]
▶ 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]
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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