Intrinsic value of EnLink Midstream Partners - ENLK

Previous Close

$16.37

  Intrinsic Value

$2.71

stock screener

  Rating & Target

str. sell

-83%

  Value-price divergence*

-22%

Previous close

$16.37

 
Intrinsic value

$2.71

 
Up/down potential

-83%

 
Rating

str. sell

 
Value-price divergence*

-22%

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

We calculate the intrinsic value of ENLK 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 5.7

 

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
  4,264
  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
 
  6,715
  8,093
  9,630
  11,326
  13,179
  15,185
  17,342
  19,647
  22,096
  24,685
  27,370
  30,233
  33,231
  36,362
  39,628
  43,029
  46,567
  50,247
  54,072
  58,046
  62,177
  66,469
  70,932
  75,572
  80,400
  85,424
  90,655
  96,105
  101,786
  107,709
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
  4,617
  6,715
  8,093
  9,630
  11,326
  13,179
  15,185
  17,342
  19,647
  22,096
  24,685
  27,370
  30,233
  33,231
  36,362
  39,628
  43,029
  46,567
  50,247
  54,072
  58,046
  62,177
  66,469
  70,932
  75,572
  80,400
  85,424
  90,655
  96,105
  101,786
  107,709
Operating income, $m
  -364
  -1,510
  -1,814
  -2,152
  -2,525
  -2,932
  -3,374
  -3,849
  -4,356
  -4,894
  -5,464
  -6,022
  -6,652
  -7,311
  -8,000
  -8,719
  -9,467
  -10,246
  -11,055
  -11,897
  -12,771
  -13,680
  -14,624
  -15,606
  -16,627
  -17,689
  -18,794
  -19,946
  -21,145
  -22,394
  -23,698
EBITDA, $m
  140
  -906
  -1,093
  -1,302
  -1,532
  -1,784
  -2,056
  -2,349
  -2,662
  -2,994
  -3,346
  -3,716
  -4,105
  -4,512
  -4,937
  -5,380
  -5,842
  -6,323
  -6,822
  -7,342
  -7,881
  -8,442
  -9,025
  -9,631
  -10,261
  -10,916
  -11,599
  -12,309
  -13,049
  -13,820
  -14,624
Interest expense (income), $m
  133
  137
  184
  236
  295
  360
  431
  507
  590
  678
  771
  870
  974
  1,083
  1,198
  1,318
  1,442
  1,572
  1,707
  1,848
  1,994
  2,146
  2,303
  2,467
  2,638
  2,815
  2,999
  3,191
  3,391
  3,599
  3,816
Earnings before tax, $m
  -572
  -1,648
  -1,997
  -2,388
  -2,820
  -3,292
  -3,805
  -4,356
  -4,945
  -5,572
  -6,235
  -6,892
  -7,626
  -8,395
  -9,198
  -10,036
  -10,909
  -11,818
  -12,762
  -13,744
  -14,765
  -15,825
  -16,927
  -18,073
  -19,264
  -20,504
  -21,794
  -23,136
  -24,535
  -25,993
  -27,513
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
  -565
  -1,648
  -1,997
  -2,388
  -2,820
  -3,292
  -3,805
  -4,356
  -4,945
  -5,572
  -6,235
  -6,892
  -7,626
  -8,395
  -9,198
  -10,036
  -10,909
  -11,818
  -12,762
  -13,744
  -14,765
  -15,825
  -16,927
  -18,073
  -19,264
  -20,504
  -21,794
  -23,136
  -24,535
  -25,993
  -27,513

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  12
  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
  9,153
  11,192
  13,505
  16,083
  18,928
  22,035
  25,400
  29,019
  32,885
  36,993
  41,336
  45,911
  50,713
  55,741
  60,993
  66,471
  72,176
  78,112
  84,284
  90,699
  97,366
  104,294
  111,495
  118,980
  126,764
  134,861
  143,289
  152,064
  161,206
  170,734
  180,670
Adjusted assets (=assets-cash), $m
  9,141
  11,192
  13,505
  16,083
  18,928
  22,035
  25,400
  29,019
  32,885
  36,993
  41,336
  45,911
  50,713
  55,741
  60,993
  66,471
  72,176
  78,112
  84,284
  90,699
  97,366
  104,294
  111,495
  118,980
  126,764
  134,861
  143,289
  152,064
  161,206
  170,734
  180,670
Revenue / Adjusted assets
  0.466
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
  0.465
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
  -116
  -156
  -188
  -224
  -264
  -307
  -354
  -405
  -459
  -516
  -577
  -640
  -707
  -778
  -851
  -927
  -1,007
  -1,090
  -1,176
  -1,265
  -1,358
  -1,455
  -1,555
  -1,660
  -1,768
  -1,881
  -1,999
  -2,121
  -2,249
  -2,382
  -2,520
Total debt, $m
  3,268
  4,377
  5,631
  7,028
  8,570
  10,254
  12,078
  14,039
  16,135
  18,361
  20,715
  23,195
  25,798
  28,523
  31,369
  34,338
  37,430
  40,648
  43,993
  47,470
  51,083
  54,838
  58,741
  62,798
  67,017
  71,406
  75,974
  80,730
  85,685
  90,849
  96,234
Total liabilities, $m
  4,957
  6,066
  7,320
  8,717
  10,259
  11,943
  13,767
  15,728
  17,824
  20,050
  22,404
  24,884
  27,487
  30,212
  33,058
  36,027
  39,119
  42,337
  45,682
  49,159
  52,772
  56,527
  60,430
  64,487
  68,706
  73,095
  77,663
  82,419
  87,374
  92,538
  97,923
Total equity, $m
  4,196
  5,126
  6,185
  7,366
  8,669
  10,092
  11,633
  13,291
  15,061
  16,943
  18,932
  21,027
  23,227
  25,529
  27,935
  30,444
  33,057
  35,775
  38,602
  41,540
  44,594
  47,767
  51,065
  54,493
  58,058
  61,766
  65,626
  69,645
  73,832
  78,196
  82,747
Total liabilities and equity, $m
  9,153
  11,192
  13,505
  16,083
  18,928
  22,035
  25,400
  29,019
  32,885
  36,993
  41,336
  45,911
  50,714
  55,741
  60,993
  66,471
  72,176
  78,112
  84,284
  90,699
  97,366
  104,294
  111,495
  118,980
  126,764
  134,861
  143,289
  152,064
  161,206
  170,734
  180,670
Debt-to-equity ratio
  0.779
  0.850
  0.910
  0.950
  0.990
  1.020
  1.040
  1.060
  1.070
  1.080
  1.090
  1.100
  1.110
  1.120
  1.120
  1.130
  1.130
  1.140
  1.140
  1.140
  1.150
  1.150
  1.150
  1.150
  1.150
  1.160
  1.160
  1.160
  1.160
  1.160
  1.160
Adjusted equity ratio
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -565
  -1,648
  -1,997
  -2,388
  -2,820
  -3,292
  -3,805
  -4,356
  -4,945
  -5,572
  -6,235
  -6,892
  -7,626
  -8,395
  -9,198
  -10,036
  -10,909
  -11,818
  -12,762
  -13,744
  -14,765
  -15,825
  -16,927
  -18,073
  -19,264
  -20,504
  -21,794
  -23,136
  -24,535
  -25,993
  -27,513
Depreciation, amort., depletion, $m
  504
  604
  720
  850
  993
  1,149
  1,318
  1,500
  1,694
  1,900
  2,118
  2,306
  2,547
  2,799
  3,063
  3,338
  3,625
  3,923
  4,233
  4,555
  4,890
  5,238
  5,599
  5,975
  6,366
  6,773
  7,196
  7,637
  8,096
  8,574
  9,073
Funds from operations, $m
  688
  -1,043
  -1,277
  -1,538
  -1,827
  -2,144
  -2,487
  -2,856
  -3,252
  -3,672
  -4,117
  -4,586
  -5,079
  -5,595
  -6,135
  -6,698
  -7,284
  -7,895
  -8,530
  -9,189
  -9,875
  -10,588
  -11,328
  -12,098
  -12,898
  -13,731
  -14,598
  -15,500
  -16,439
  -17,419
  -18,440
Change in working capital, $m
  25
  -29
  -32
  -36
  -40
  -43
  -47
  -50
  -54
  -57
  -61
  -64
  -67
  -70
  -73
  -76
  -80
  -83
  -86
  -89
  -93
  -97
  -100
  -104
  -109
  -113
  -118
  -122
  -128
  -133
  -139
Cash from operations, $m
  663
  -1,015
  -1,245
  -1,502
  -1,788
  -2,100
  -2,440
  -2,806
  -3,198
  -3,615
  -4,057
  -4,522
  -5,012
  -5,525
  -6,062
  -6,622
  -7,205
  -7,812
  -8,443
  -9,100
  -9,782
  -10,491
  -11,228
  -11,994
  -12,790
  -13,618
  -14,480
  -15,377
  -16,312
  -17,286
  -18,301
Maintenance CAPEX, $m
  0
  -459
  -562
  -678
  -808
  -951
  -1,107
  -1,276
  -1,457
  -1,651
  -1,858
  -2,076
  -2,306
  -2,547
  -2,799
  -3,063
  -3,338
  -3,625
  -3,923
  -4,233
  -4,555
  -4,890
  -5,238
  -5,599
  -5,975
  -6,366
  -6,773
  -7,196
  -7,637
  -8,096
  -8,574
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
  -1,358
  -2,053
  -2,362
  -2,685
  -3,022
  -3,370
  -3,727
  -4,093
  -4,466
  -4,848
  -5,239
  -5,637
  -6,044
  -6,461
  -6,888
  -7,327
  -7,779
  -8,246
  -8,728
  -9,227
  -9,745
  -10,283
  -10,843
  -11,426
  -12,034
  -12,669
  -13,333
  -14,027
  -14,753
  -15,513
  -16,308
Free cash flow, $m
  -695
  -3,068
  -3,607
  -4,188
  -4,809
  -5,469
  -6,166
  -6,898
  -7,664
  -8,463
  -9,295
  -10,159
  -11,056
  -11,986
  -12,950
  -13,948
  -14,984
  -16,057
  -17,171
  -18,326
  -19,527
  -20,774
  -22,070
  -23,419
  -24,824
  -26,287
  -27,813
  -29,404
  -31,065
  -32,799
  -34,610
Issuance/(repayment) of debt, $m
  199
  1,109
  1,253
  1,398
  1,542
  1,684
  1,824
  1,961
  2,095
  2,226
  2,354
  2,479
  2,603
  2,725
  2,847
  2,969
  3,092
  3,217
  3,345
  3,477
  3,613
  3,755
  3,903
  4,057
  4,219
  4,389
  4,568
  4,756
  4,955
  5,164
  5,385
Issuance/(repurchase) of shares, $m
  892
  2,590
  3,056
  3,569
  4,123
  4,715
  5,346
  6,013
  6,716
  7,453
  8,224
  8,987
  9,825
  10,698
  11,604
  12,545
  13,522
  14,536
  15,589
  16,683
  17,818
  18,998
  20,225
  21,501
  22,829
  24,212
  25,653
  27,155
  28,722
  30,357
  32,064
Cash from financing (excl. dividends), $m  
  1,280
  3,699
  4,309
  4,967
  5,665
  6,399
  7,170
  7,974
  8,811
  9,679
  10,578
  11,466
  12,428
  13,423
  14,451
  15,514
  16,614
  17,753
  18,934
  20,160
  21,431
  22,753
  24,128
  25,558
  27,048
  28,601
  30,221
  31,911
  33,677
  35,521
  37,449
Total cash flow (excl. dividends), $m
  585
  631
  703
  779
  855
  930
  1,004
  1,076
  1,147
  1,216
  1,283
  1,307
  1,372
  1,437
  1,501
  1,565
  1,630
  1,696
  1,764
  1,833
  1,905
  1,980
  2,058
  2,139
  2,224
  2,314
  2,408
  2,508
  2,612
  2,723
  2,839
Retained Cash Flow (-), $m
  223
  -2,590
  -3,056
  -3,569
  -4,123
  -4,715
  -5,346
  -6,013
  -6,716
  -7,453
  -8,224
  -8,987
  -9,825
  -10,698
  -11,604
  -12,545
  -13,522
  -14,536
  -15,589
  -16,683
  -17,818
  -18,998
  -20,225
  -21,501
  -22,829
  -24,212
  -25,653
  -27,155
  -28,722
  -30,357
  -32,064
Prev. year cash balance distribution, $m
 
  12
  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
 
  -1,946
  -2,353
  -2,790
  -3,268
  -3,785
  -4,342
  -4,937
  -5,569
  -6,237
  -6,941
  -7,680
  -8,453
  -9,261
  -10,103
  -10,980
  -11,892
  -12,840
  -13,825
  -14,849
  -15,913
  -17,019
  -18,168
  -19,362
  -20,605
  -21,899
  -23,245
  -24,648
  -26,110
  -27,634
  -29,225
Discount rate, %
 
  7.50
  7.88
  8.27
  8.68
  9.12
  9.57
  10.05
  10.55
  11.08
  11.63
  12.22
  12.83
  13.47
  14.14
  14.85
  15.59
  16.37
  17.19
  18.05
  18.95
  19.90
  20.89
  21.94
  23.04
  24.19
  25.40
  26.67
  28.00
  29.40
  30.87
PV of cash for distribution, $m
 
  -1,811
  -2,022
  -2,198
  -2,342
  -2,447
  -2,509
  -2,525
  -2,496
  -2,422
  -2,309
  -2,161
  -1,986
  -1,792
  -1,586
  -1,376
  -1,171
  -975
  -795
  -635
  -495
  -376
  -279
  -202
  -142
  -97
  -65
  -42
  -26
  -16
  -9
Current shareholders' claim on cash, %
  100
  68.7
  47.8
  33.5
  23.8
  17.0
  12.2
  8.9
  6.5
  4.7
  3.5
  2.6
  1.9
  1.4
  1.1
  0.8
  0.6
  0.5
  0.3
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0

EnLink Midstream Partners, LP is a midstream company. The Company's business activities are conducted through its subsidiary, EnLink Midstream Operating, LP (the Operating Partnership) and the subsidiaries of the Operating Partnership. The Company operates through five segments: Texas, Oklahoma, Louisiana, Crude and Condensate, and Corporate. The Company focuses on providing midstream energy services, including gathering, processing, transmission, fractionation, storage, condensate stabilization, brine services and marketing to producers of natural gas, natural gas liquids (NGLs), crude oil and condensate. As of December 31, 2016, its midstream energy asset network included approximately 11,000 miles of pipelines, 20 natural gas processing plants, seven fractionators, barge and rail terminals, product storage facilities, purchasing and marketing capabilities, brine disposal wells, a crude oil trucking fleet, and equity investments in certain private midstream companies.

FINANCIAL RATIOS  of  EnLink Midstream Partners (ENLK)

Valuation Ratios
P/E Ratio -9.9
Price to Sales 1.3
Price to Book 1.3
Price to Tangible Book
Price to Cash Flow 8.5
Price to Free Cash Flow 0
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 0.2
LT Debt to Equity 77.9%
Total Debt to Equity 77.9%
Interest Coverage -3
Management Effectiveness
Return On Assets -5%
Ret/ On Assets - 3 Yr. Avg. -4.5%
Return On Total Capital -7.6%
Ret/ On T. Cap. - 3 Yr. Avg. -6.3%
Return On Equity -13.1%
Return On Equity - 3 Yr. Avg. -10.5%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 1.5%
EBITDA Margin - 3 Yr. Avg. 0.3%
Operating Margin -8.6%
Oper. Margin - 3 Yr. Avg. -9.2%
Pre-Tax Margin -13.5%
Pre-Tax Margin - 3 Yr. Avg. -11.7%
Net Profit Margin -13.3%
Net Profit Margin - 3 Yr. Avg. -11.8%
Effective Tax Rate -0.2%
Eff/ Tax Rate - 3 Yr. Avg. 2.2%
Payout Ratio -102.5%

ENLK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ENLK stock intrinsic value calculation we used $4252 million for the last fiscal year's total revenue generated by EnLink Midstream Partners. The default revenue input number comes from 2016 income statement of EnLink 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 ENLK 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 7.5%, whose default value for ENLK is calculated based on our internal credit rating of EnLink 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 EnLink 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 ENLK stock the variable cost ratio is equal to 129.2%.

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 ENLK 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 Partners.

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

Life of production assets of 15.5 years is the average useful life of capital assets used in EnLink 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 ENLK is equal to -3%. 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 - $4196 million for EnLink 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 348.654 million for EnLink 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 EnLink Midstream Partners at the current share price and the inputted number of shares is $5.7 billion.

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COMPANY NEWS

▶ MLPs Rating Updates during the Week Ending October 13   [Oct-17-17 03:06PM  Market Realist]
▶ How Golar LNG Partners Correlation with Crude Oil Compares   [Oct-12-17 10:38AM  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]
▶ A Look at Enables Leverage Position   [Sep-18-17 10:37AM  Market Realist]
▶ 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]
▶ 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]
▶ 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]
▶ 5 MLPs Likely to do Best When Crude Rebounds   [May-08-17 08:38PM  Barrons.com]
▶ 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]
Financial statements of ENLK
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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