Intrinsic value of EnLink Midstream Partners - ENLK

Previous Close

$15.10

  Intrinsic Value

$2.71

stock screener

  Rating & Target

str. sell

-82%

  Value-price divergence*

-48%

Previous close

$15.10

 
Intrinsic value

$2.71

 
Up/down potential

-82%

 
Rating

str. sell

 
Value-price divergence*

-48%

*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 5.3

 

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
  4,264
  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
 
  8,138
  11,712
  16,407
  22,414
  29,918
  39,086
  50,064
  62,973
  77,903
  94,918
  114,010
  135,274
  158,657
  184,133
  211,663
  241,203
  272,706
  306,125
  341,418
  378,552
  417,499
  458,246
  500,788
  545,135
  591,307
  639,338
  689,274
  741,173
  795,105
  851,151
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
  8,138
  11,712
  16,407
  22,414
  29,918
  39,086
  50,064
  62,973
  77,903
  94,918
  114,010
  135,274
  158,657
  184,133
  211,663
  241,203
  272,706
  306,125
  341,418
  378,552
  417,499
  458,246
  500,788
  545,135
  591,307
  639,338
  689,274
  741,173
  795,105
  851,151
Operating income, $m
  -364
  -1,823
  -2,610
  -3,643
  -4,964
  -6,615
  -8,632
  -11,048
  -13,888
  -17,173
  -20,916
  -25,084
  -29,762
  -34,907
  -40,512
  -46,569
  -53,068
  -59,999
  -67,352
  -75,117
  -83,287
  -91,856
  -100,821
  -110,181
  -119,938
  -130,096
  -140,664
  -151,650
  -163,069
  -174,935
  -187,266
EBITDA, $m
  140
  -1,099
  -1,584
  -2,222
  -3,038
  -4,056
  -5,301
  -6,792
  -8,544
  -10,572
  -12,882
  -15,480
  -18,367
  -21,542
  -25,001
  -28,739
  -32,750
  -37,027
  -41,564
  -46,356
  -51,398
  -56,686
  -62,219
  -67,995
  -74,016
  -80,285
  -86,807
  -93,587
  -100,634
  -107,956
  -115,566
Interest expense (income), $m
  133
  137
  238
  375
  554
  783
  1,070
  1,420
  1,839
  2,332
  2,902
  3,552
  4,282
  5,094
  5,987
  6,960
  8,011
  9,139
  10,342
  11,618
  12,966
  14,384
  15,871
  17,427
  19,051
  20,745
  22,508
  24,342
  26,248
  28,230
  30,289
Earnings before tax, $m
  -572
  -1,961
  -2,848
  -4,017
  -5,518
  -7,399
  -9,702
  -12,468
  -15,727
  -19,505
  -23,818
  -28,636
  -34,045
  -40,001
  -46,499
  -53,529
  -61,079
  -69,138
  -77,694
  -86,735
  -96,253
  -106,240
  -116,692
  -127,608
  -138,989
  -150,841
  -163,171
  -175,992
  -189,317
  -203,165
  -217,555
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
  -1,961
  -2,848
  -4,017
  -5,518
  -7,399
  -9,702
  -12,468
  -15,727
  -19,505
  -23,818
  -28,636
  -34,045
  -40,001
  -46,499
  -53,529
  -61,079
  -69,138
  -77,694
  -86,735
  -96,253
  -106,240
  -116,692
  -127,608
  -138,989
  -150,841
  -163,171
  -175,992
  -189,317
  -203,165
  -217,555

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
  13,579
  19,574
  27,450
  37,527
  50,114
  65,492
  83,906
  105,559
  130,603
  159,144
  191,239
  226,907
  266,129
  308,862
  355,041
  404,591
  457,434
  513,490
  572,691
  634,978
  700,308
  768,656
  840,017
  914,403
  991,852
  1,072,418
  1,156,180
  1,243,235
  1,333,700
  1,427,711
Adjusted assets (=assets-cash), $m
  9,141
  13,579
  19,574
  27,450
  37,527
  50,114
  65,492
  83,906
  105,559
  130,603
  159,144
  191,239
  226,907
  266,129
  308,862
  355,041
  404,591
  457,434
  513,490
  572,691
  634,978
  700,308
  768,656
  840,017
  914,403
  991,852
  1,072,418
  1,156,180
  1,243,235
  1,333,700
  1,427,711
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
  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
  -116
  -189
  -273
  -383
  -524
  -699
  -914
  -1,170
  -1,473
  -1,822
  -2,220
  -2,668
  -3,165
  -3,713
  -4,309
  -4,953
  -5,644
  -6,381
  -7,163
  -7,989
  -8,858
  -9,769
  -10,723
  -11,718
  -12,756
  -13,836
  -14,960
  -16,129
  -17,343
  -18,605
  -19,917
Total debt, $m
  3,268
  5,671
  8,920
  13,189
  18,651
  25,473
  33,807
  43,788
  55,524
  69,098
  84,567
  101,963
  121,294
  142,553
  165,714
  190,743
  217,600
  246,240
  276,623
  308,709
  342,469
  377,878
  414,923
  453,600
  493,918
  535,895
  579,562
  624,961
  672,144
  721,176
  772,130
Total liabilities, $m
  4,957
  7,360
  10,609
  14,878
  20,340
  27,162
  35,496
  45,477
  57,213
  70,787
  86,256
  103,652
  122,983
  144,242
  167,403
  192,432
  219,289
  247,929
  278,312
  310,398
  344,158
  379,567
  416,612
  455,289
  495,607
  537,584
  581,251
  626,650
  673,833
  722,865
  773,819
Total equity, $m
  4,196
  6,219
  8,965
  12,572
  17,187
  22,952
  29,995
  38,429
  48,346
  59,816
  72,888
  87,588
  103,923
  121,887
  141,459
  162,609
  185,303
  209,505
  235,178
  262,292
  290,820
  320,741
  352,045
  384,728
  418,797
  454,268
  491,168
  529,531
  569,402
  610,835
  653,892
Total liabilities and equity, $m
  9,153
  13,579
  19,574
  27,450
  37,527
  50,114
  65,491
  83,906
  105,559
  130,603
  159,144
  191,240
  226,906
  266,129
  308,862
  355,041
  404,592
  457,434
  513,490
  572,690
  634,978
  700,308
  768,657
  840,017
  914,404
  991,852
  1,072,419
  1,156,181
  1,243,235
  1,333,700
  1,427,711
Debt-to-equity ratio
  0.779
  0.910
  1.000
  1.050
  1.090
  1.110
  1.130
  1.140
  1.150
  1.160
  1.160
  1.160
  1.170
  1.170
  1.170
  1.170
  1.170
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
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
  -1,961
  -2,848
  -4,017
  -5,518
  -7,399
  -9,702
  -12,468
  -15,727
  -19,505
  -23,818
  -28,636
  -34,045
  -40,001
  -46,499
  -53,529
  -61,079
  -69,138
  -77,694
  -86,735
  -96,253
  -106,240
  -116,692
  -127,608
  -138,989
  -150,841
  -163,171
  -175,992
  -189,317
  -203,165
  -217,555
Depreciation, amort., depletion, $m
  504
  724
  1,025
  1,421
  1,927
  2,559
  3,331
  4,256
  5,343
  6,601
  8,034
  9,604
  11,395
  13,365
  15,511
  17,830
  20,319
  22,972
  25,787
  28,761
  31,889
  35,169
  38,602
  42,186
  45,921
  49,811
  53,857
  58,063
  62,435
  66,978
  71,700
Funds from operations, $m
  688
  -1,236
  -1,823
  -2,597
  -3,592
  -4,840
  -6,371
  -8,212
  -10,384
  -12,904
  -15,784
  -19,032
  -22,649
  -26,636
  -30,988
  -35,699
  -40,761
  -46,166
  -51,907
  -57,975
  -64,364
  -71,070
  -78,090
  -85,422
  -93,068
  -101,030
  -109,314
  -117,929
  -126,882
  -136,186
  -145,855
Change in working capital, $m
  25
  -62
  -84
  -110
  -141
  -176
  -215
  -257
  -302
  -349
  -398
  -448
  -498
  -547
  -596
  -644
  -691
  -737
  -782
  -826
  -869
  -911
  -953
  -995
  -1,038
  -1,080
  -1,124
  -1,168
  -1,214
  -1,262
  -1,311
Cash from operations, $m
  663
  -1,175
  -1,739
  -2,487
  -3,451
  -4,664
  -6,157
  -7,955
  -10,082
  -12,554
  -15,386
  -18,584
  -22,152
  -26,089
  -30,392
  -35,055
  -40,070
  -45,429
  -51,125
  -57,149
  -63,495
  -70,159
  -77,136
  -84,426
  -92,030
  -99,950
  -108,191
  -116,760
  -125,668
  -134,924
  -144,544
Maintenance CAPEX, $m
  0
  -459
  -682
  -983
  -1,379
  -1,885
  -2,517
  -3,289
  -4,214
  -5,301
  -6,559
  -7,992
  -9,604
  -11,395
  -13,365
  -15,511
  -17,830
  -20,319
  -22,972
  -25,787
  -28,761
  -31,889
  -35,169
  -38,602
  -42,186
  -45,921
  -49,811
  -53,857
  -58,063
  -62,435
  -66,978
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
  -1,358
  -3,911
  -5,349
  -7,113
  -9,223
  -11,683
  -14,487
  -17,623
  -21,069
  -24,796
  -28,775
  -32,975
  -37,368
  -41,926
  -46,629
  -51,457
  -56,401
  -61,452
  -66,607
  -71,870
  -77,246
  -82,743
  -88,372
  -94,149
  -100,089
  -106,208
  -112,525
  -119,058
  -125,827
  -132,854
  -140,157
Free cash flow, $m
  -695
  -5,085
  -7,088
  -9,600
  -12,674
  -16,346
  -20,644
  -25,578
  -31,150
  -37,350
  -44,161
  -51,559
  -59,520
  -68,015
  -77,020
  -86,512
  -96,470
  -106,880
  -117,732
  -129,019
  -140,741
  -152,901
  -165,509
  -178,576
  -192,119
  -206,158
  -220,715
  -235,818
  -251,495
  -267,778
  -284,702
Issuance/(repayment) of debt, $m
  199
  2,403
  3,249
  4,269
  5,462
  6,822
  8,335
  9,981
  11,736
  13,574
  15,469
  17,396
  19,332
  21,259
  23,161
  25,029
  26,856
  28,640
  30,383
  32,087
  33,760
  35,409
  37,045
  38,677
  40,318
  41,977
  43,667
  45,399
  47,184
  49,032
  50,954
Issuance/(repurchase) of shares, $m
  892
  3,996
  5,594
  7,624
  10,134
  13,163
  16,745
  20,902
  25,644
  30,975
  36,890
  43,335
  50,380
  57,965
  66,071
  74,679
  83,774
  93,340
  103,368
  113,849
  124,780
  136,161
  147,995
  160,290
  173,058
  186,312
  200,071
  214,355
  229,188
  244,598
  260,612
Cash from financing (excl. dividends), $m  
  1,280
  6,399
  8,843
  11,893
  15,596
  19,985
  25,080
  30,883
  37,380
  44,549
  52,359
  60,731
  69,712
  79,224
  89,232
  99,708
  110,630
  121,980
  133,751
  145,936
  158,540
  171,570
  185,040
  198,967
  213,376
  228,289
  243,738
  259,754
  276,372
  293,630
  311,566
Total cash flow (excl. dividends), $m
  585
  1,313
  1,755
  2,293
  2,922
  3,639
  4,437
  5,304
  6,230
  7,199
  8,198
  9,172
  10,192
  11,208
  12,211
  13,196
  14,160
  15,100
  16,019
  16,917
  17,799
  18,669
  19,531
  20,392
  21,257
  22,132
  23,023
  23,936
  24,877
  25,851
  26,865
Retained Cash Flow (-), $m
  223
  -3,996
  -5,594
  -7,624
  -10,134
  -13,163
  -16,745
  -20,902
  -25,644
  -30,975
  -36,890
  -43,335
  -50,380
  -57,965
  -66,071
  -74,679
  -83,774
  -93,340
  -103,368
  -113,849
  -124,780
  -136,161
  -147,995
  -160,290
  -173,058
  -186,312
  -200,071
  -214,355
  -229,188
  -244,598
  -260,612
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
 
  -2,671
  -3,838
  -5,332
  -7,212
  -9,524
  -12,309
  -15,597
  -19,414
  -23,776
  -28,692
  -34,164
  -40,188
  -46,757
  -53,859
  -61,483
  -69,614
  -78,240
  -87,349
  -96,932
  -106,981
  -117,492
  -128,464
  -139,899
  -151,801
  -164,180
  -177,048
  -190,419
  -204,312
  -218,746
  -233,748
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
 
  -2,484
  -3,298
  -4,201
  -5,169
  -6,157
  -7,112
  -7,978
  -8,701
  -9,234
  -9,545
  -9,615
  -9,443
  -9,046
  -8,453
  -7,706
  -6,853
  -5,943
  -5,026
  -4,142
  -3,326
  -2,599
  -1,976
  -1,460
  -1,048
  -730
  -493
  -322
  -203
  -124
  -73
Current shareholders' claim on cash, %
  100
  56.7
  33.0
  19.6
  11.9
  7.4
  4.7
  3.0
  2.0
  1.3
  0.9
  0.6
  0.4
  0.3
  0.2
  0.1
  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

EnLink Midstream Partners, LP, through its subsidiary, EnLink Midstream Operating, LP, provides midstream energy services. The company provides gathering, transmission, processing, fractionation, storage, condensate stabilization, brine, and marketing services to producers of natural gas, natural gas liquids (NGL), crude oil, and condensate. It connects the wells of natural gas producers to its gathering systems; processes natural gas for the removal of NGLs; fractionates NGLs into purity products; markets the purity products; and transports natural gas to various markets. The company also purchases natural gas from natural gas producers and other supply sources, and sells that natural gas to utilities, industrial consumers, other marketers, and pipelines. It operates approximately 11,000 miles of pipelines, 20 natural gas processing plants, 7 fractionators, barge and rail terminals, product storage facilities, purchasing and marketing capabilities, and brine disposal wells, as well as a crude oil trucking fleet of approximately 150 trucks. EnLink Midstream GP, LLC serves as the general partner of the company. The company was formerly known as Crosstex Energy L.P. and changed its name to EnLink Midstream Partners, LP in March 2014. EnLink Midstream Partners, LP was founded in 1992 and is headquartered in Dallas, Texas.

FINANCIAL RATIOS  of  EnLink Midstream Partners (ENLK)

Valuation Ratios
P/E Ratio -9.2
Price to Sales 1.2
Price to Book 1.2
Price to Tangible Book
Price to Cash Flow 7.8
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 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 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 347.691 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 $5.3 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]
▶ 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]
▶ 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]
▶ 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 ENLK 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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