Intrinsic value of Enterprise Products Partners - EPD

Previous Close

$25.72

  Intrinsic Value

$1.90

stock screener

  Rating & Target

str. sell

-93%

Previous close

$25.72

 
Intrinsic value

$1.90

 
Up/down potential

-93%

 
Rating

str. sell

We calculate the intrinsic value of EPD 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  -14.82
  16.30
  15.17
  14.15
  13.24
  12.41
  11.67
  11.01
  10.40
  9.86
  9.38
  8.94
  8.55
  8.19
  7.87
  7.59
  7.33
  7.09
  6.88
  6.70
  6.53
  6.37
  6.24
  6.11
  6.00
  5.90
  5.81
  5.73
  5.66
  5.59
  5.53
Revenue, $m
  23,022
  26,775
  30,836
  35,201
  39,860
  44,809
  50,039
  55,546
  61,325
  67,374
  73,693
  80,281
  87,142
  94,280
  101,702
  109,416
  117,432
  125,763
  134,421
  143,422
  152,783
  162,521
  172,656
  183,210
  194,206
  205,666
  217,618
  230,088
  243,104
  256,697
  270,898
Variable operating expenses, $m
 
  23,173
  26,602
  30,285
  34,218
  38,395
  42,810
  47,458
  52,336
  57,442
  62,774
  67,761
  73,552
  79,577
  85,841
  92,352
  99,118
  106,150
  113,458
  121,055
  128,955
  137,175
  145,730
  154,638
  163,918
  173,592
  183,680
  194,205
  205,191
  216,664
  228,650
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
  19,442
  23,173
  26,602
  30,285
  34,218
  38,395
  42,810
  47,458
  52,336
  57,442
  62,774
  67,761
  73,552
  79,577
  85,841
  92,352
  99,118
  106,150
  113,458
  121,055
  128,955
  137,175
  145,730
  154,638
  163,918
  173,592
  183,680
  194,205
  205,191
  216,664
  228,650
Operating income, $m
  3,581
  3,601
  4,235
  4,915
  5,642
  6,414
  7,229
  8,088
  8,989
  9,933
  10,918
  12,520
  13,590
  14,703
  15,861
  17,064
  18,314
  19,613
  20,964
  22,367
  23,827
  25,346
  26,926
  28,572
  30,287
  32,075
  33,939
  35,883
  37,913
  40,033
  42,248
EBITDA, $m
  5,133
  5,735
  6,605
  7,540
  8,538
  9,598
  10,718
  11,898
  13,136
  14,431
  15,785
  17,196
  18,665
  20,194
  21,784
  23,436
  25,154
  26,938
  28,793
  30,720
  32,725
  34,811
  36,982
  39,243
  41,598
  44,053
  46,613
  49,284
  52,072
  54,984
  58,025
Interest expense (income), $m
  948
  969
  1,169
  1,386
  1,620
  1,869
  2,134
  2,414
  2,709
  3,018
  3,342
  3,680
  4,032
  4,400
  4,782
  5,179
  5,592
  6,021
  6,467
  6,930
  7,412
  7,913
  8,434
  8,977
  9,541
  10,130
  10,743
  11,383
  12,050
  12,747
  13,475
Earnings before tax, $m
  2,576
  2,632
  3,066
  3,529
  4,022
  4,545
  5,095
  5,674
  6,281
  6,915
  7,577
  8,840
  9,558
  10,304
  11,079
  11,885
  12,722
  13,592
  14,497
  15,437
  16,415
  17,433
  18,492
  19,596
  20,746
  21,945
  23,195
  24,500
  25,863
  27,286
  28,773
Tax expense, $m
  23
  711
  828
  953
  1,086
  1,227
  1,376
  1,532
  1,696
  1,867
  2,046
  2,387
  2,581
  2,782
  2,991
  3,209
  3,435
  3,670
  3,914
  4,168
  4,432
  4,707
  4,993
  5,291
  5,601
  5,925
  6,263
  6,615
  6,983
  7,367
  7,769
Net income, $m
  2,513
  1,921
  2,238
  2,576
  2,936
  3,318
  3,720
  4,142
  4,585
  5,048
  5,531
  6,453
  6,977
  7,522
  8,088
  8,676
  9,287
  9,922
  10,583
  11,269
  11,983
  12,726
  13,499
  14,305
  15,144
  16,020
  16,932
  17,885
  18,880
  19,919
  21,004

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  63
  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
  52,194
  60,576
  69,765
  79,639
  90,182
  101,377
  113,210
  125,669
  138,745
  152,431
  166,726
  181,631
  197,153
  213,303
  230,095
  247,548
  265,684
  284,532
  304,120
  324,485
  345,662
  367,694
  390,625
  414,503
  439,379
  465,309
  492,349
  520,561
  550,009
  580,763
  612,892
Adjusted assets (=assets-cash), $m
  52,131
  60,576
  69,765
  79,639
  90,182
  101,377
  113,210
  125,669
  138,745
  152,431
  166,726
  181,631
  197,153
  213,303
  230,095
  247,548
  265,684
  284,532
  304,120
  324,485
  345,662
  367,694
  390,625
  414,503
  439,379
  465,309
  492,349
  520,561
  550,009
  580,763
  612,892
Revenue / Adjusted assets
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
  0.442
Average production assets, $m
  36,614
  42,572
  49,030
  55,969
  63,378
  71,246
  79,562
  88,318
  97,507
  107,125
  117,171
  127,647
  138,555
  149,905
  161,706
  173,972
  186,718
  199,963
  213,730
  228,041
  242,924
  258,408
  274,523
  291,304
  308,787
  327,010
  346,013
  365,840
  386,536
  408,148
  430,728
Working capital, $m
  -1,723
  910
  1,048
  1,197
  1,355
  1,523
  1,701
  1,889
  2,085
  2,291
  2,506
  2,730
  2,963
  3,206
  3,458
  3,720
  3,993
  4,276
  4,570
  4,876
  5,195
  5,526
  5,870
  6,229
  6,603
  6,993
  7,399
  7,823
  8,266
  8,728
  9,211
Total debt, $m
  23,698
  28,503
  33,806
  39,503
  45,586
  52,045
  58,873
  66,062
  73,607
  81,504
  89,752
  98,352
  107,308
  116,627
  126,316
  136,386
  146,851
  157,726
  169,028
  180,779
  192,998
  205,710
  218,941
  232,719
  247,073
  262,034
  277,636
  293,915
  310,906
  328,651
  347,190
Total liabilities, $m
  30,147
  34,952
  40,255
  45,952
  52,035
  58,494
  65,322
  72,511
  80,056
  87,953
  96,201
  104,801
  113,757
  123,076
  132,765
  142,835
  153,300
  164,175
  175,477
  187,228
  199,447
  212,159
  225,390
  239,168
  253,522
  268,483
  284,085
  300,364
  317,355
  335,100
  353,639
Total equity, $m
  22,047
  25,624
  29,511
  33,687
  38,147
  42,882
  47,888
  53,158
  58,689
  64,478
  70,525
  76,830
  83,396
  90,227
  97,330
  104,713
  112,384
  120,357
  128,643
  137,257
  146,215
  155,534
  165,234
  175,335
  185,857
  196,826
  208,264
  220,197
  232,654
  245,663
  259,253
Total liabilities and equity, $m
  52,194
  60,576
  69,766
  79,639
  90,182
  101,376
  113,210
  125,669
  138,745
  152,431
  166,726
  181,631
  197,153
  213,303
  230,095
  247,548
  265,684
  284,532
  304,120
  324,485
  345,662
  367,693
  390,624
  414,503
  439,379
  465,309
  492,349
  520,561
  550,009
  580,763
  612,892
Debt-to-equity ratio
  1.075
  1.110
  1.150
  1.170
  1.200
  1.210
  1.230
  1.240
  1.250
  1.260
  1.270
  1.280
  1.290
  1.290
  1.300
  1.300
  1.310
  1.310
  1.310
  1.320
  1.320
  1.320
  1.330
  1.330
  1.330
  1.330
  1.330
  1.330
  1.340
  1.340
  1.340
Adjusted equity ratio
  0.422
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,513
  1,921
  2,238
  2,576
  2,936
  3,318
  3,720
  4,142
  4,585
  5,048
  5,531
  6,453
  6,977
  7,522
  8,088
  8,676
  9,287
  9,922
  10,583
  11,269
  11,983
  12,726
  13,499
  14,305
  15,144
  16,020
  16,932
  17,885
  18,880
  19,919
  21,004
Depreciation, amort., depletion, $m
  1,552
  2,134
  2,370
  2,625
  2,896
  3,184
  3,489
  3,810
  4,146
  4,499
  4,866
  4,676
  5,075
  5,491
  5,923
  6,373
  6,839
  7,325
  7,829
  8,353
  8,898
  9,465
  10,056
  10,670
  11,311
  11,978
  12,674
  13,401
  14,159
  14,950
  15,778
Funds from operations, $m
  3,883
  4,055
  4,609
  5,201
  5,832
  6,502
  7,208
  7,952
  8,731
  9,546
  10,397
  11,129
  12,052
  13,013
  14,011
  15,049
  16,127
  17,247
  18,412
  19,622
  20,881
  22,191
  23,555
  24,975
  26,455
  27,998
  29,607
  31,286
  33,039
  34,869
  36,782
Change in working capital, $m
  -184
  128
  138
  148
  158
  168
  178
  187
  196
  206
  215
  224
  233
  243
  252
  262
  273
  283
  294
  306
  318
  331
  345
  359
  374
  390
  406
  424
  443
  462
  483
Cash from operations, $m
  4,067
  3,928
  4,470
  5,053
  5,674
  6,334
  7,031
  7,765
  8,535
  9,341
  10,183
  10,905
  11,819
  12,770
  13,759
  14,786
  15,854
  16,964
  18,117
  19,316
  20,563
  21,860
  23,211
  24,617
  26,081
  27,608
  29,201
  30,862
  32,596
  34,407
  36,299
Maintenance CAPEX, $m
  0
  -1,341
  -1,559
  -1,796
  -2,050
  -2,322
  -2,610
  -2,914
  -3,235
  -3,572
  -3,924
  -4,292
  -4,676
  -5,075
  -5,491
  -5,923
  -6,373
  -6,839
  -7,325
  -7,829
  -8,353
  -8,898
  -9,465
  -10,056
  -10,670
  -11,311
  -11,978
  -12,674
  -13,401
  -14,159
  -14,950
New CAPEX, $m
  -3,025
  -5,958
  -6,458
  -6,939
  -7,409
  -7,868
  -8,316
  -8,756
  -9,189
  -9,618
  -10,046
  -10,475
  -10,909
  -11,350
  -11,801
  -12,266
  -12,746
  -13,246
  -13,767
  -14,311
  -14,883
  -15,484
  -16,115
  -16,781
  -17,483
  -18,223
  -19,003
  -19,827
  -20,696
  -21,613
  -22,580
Cash from investing activities, $m
  -4,344
  -7,299
  -8,017
  -8,735
  -9,459
  -10,190
  -10,926
  -11,670
  -12,424
  -13,190
  -13,970
  -14,767
  -15,585
  -16,425
  -17,292
  -18,189
  -19,119
  -20,085
  -21,092
  -22,140
  -23,236
  -24,382
  -25,580
  -26,837
  -28,153
  -29,534
  -30,981
  -32,501
  -34,097
  -35,772
  -37,530
Free cash flow, $m
  -277
  -3,371
  -3,547
  -3,683
  -3,785
  -3,856
  -3,895
  -3,906
  -3,890
  -3,849
  -3,788
  -3,862
  -3,765
  -3,655
  -3,533
  -3,402
  -3,265
  -3,121
  -2,974
  -2,824
  -2,673
  -2,521
  -2,370
  -2,220
  -2,072
  -1,925
  -1,781
  -1,640
  -1,501
  -1,364
  -1,231
Issuance/(repayment) of debt, $m
  1,141
  4,868
  5,302
  5,697
  6,083
  6,460
  6,828
  7,189
  7,545
  7,897
  8,248
  8,600
  8,956
  9,318
  9,689
  10,070
  10,465
  10,875
  11,303
  11,750
  12,219
  12,712
  13,231
  13,778
  14,354
  14,961
  15,602
  16,278
  16,992
  17,745
  18,539
Issuance/(repurchase) of shares, $m
  2,543
  1,655
  1,649
  1,600
  1,523
  1,418
  1,286
  1,128
  946
  741
  516
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  3,623
  6,523
  6,951
  7,297
  7,606
  7,878
  8,114
  8,317
  8,491
  8,638
  8,764
  8,600
  8,956
  9,318
  9,689
  10,070
  10,465
  10,875
  11,303
  11,750
  12,219
  12,712
  13,231
  13,778
  14,354
  14,961
  15,602
  16,278
  16,992
  17,745
  18,539
Total cash flow (excl. dividends), $m
  3,345
  3,153
  3,404
  3,615
  3,821
  4,022
  4,218
  4,411
  4,601
  4,789
  4,976
  4,738
  5,191
  5,663
  6,156
  6,668
  7,200
  7,754
  8,329
  8,926
  9,546
  10,191
  10,861
  11,557
  12,282
  13,036
  13,821
  14,639
  15,491
  16,380
  17,307
Retained Cash Flow (-), $m
  -1,752
  -3,577
  -3,887
  -4,177
  -4,459
  -4,736
  -5,005
  -5,270
  -5,531
  -5,789
  -6,047
  -6,305
  -6,566
  -6,831
  -7,103
  -7,383
  -7,672
  -7,972
  -8,286
  -8,614
  -8,958
  -9,319
  -9,700
  -10,100
  -10,523
  -10,968
  -11,438
  -11,934
  -12,457
  -13,009
  -13,591
Prev. year cash balance distribution, $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 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
 
  -424
  -483
  -562
  -639
  -714
  -787
  -859
  -930
  -1,000
  -1,070
  -1,567
  -1,375
  -1,168
  -947
  -715
  -471
  -219
  43
  312
  588
  871
  1,161
  1,457
  1,759
  2,068
  2,383
  2,705
  3,034
  3,371
  3,717
Discount rate, %
 
  8.30
  8.72
  9.15
  9.61
  10.09
  10.59
  11.12
  11.68
  12.26
  12.88
  13.52
  14.20
  14.91
  15.65
  16.43
  17.26
  18.12
  19.02
  19.97
  20.97
  22.02
  23.12
  24.28
  25.49
  26.77
  28.11
  29.51
  30.99
  32.54
  34.16
PV of cash for distribution, $m
 
  -392
  -409
  -432
  -442
  -441
  -430
  -411
  -384
  -353
  -319
  -388
  -280
  -192
  -124
  -73
  -37
  -13
  2
  10
  13
  13
  12
  10
  8
  5
  4
  3
  2
  1
  1
Current shareholders' claim on cash, %
  100
  97.1
  94.7
  92.7
  91.0
  89.7
  88.6
  87.8
  87.2
  86.7
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5

Enterprise Products Partners L.P. (Enterprise) is a provider of midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, petrochemicals and refined products in North America. The Company's segments include NGL Pipelines & Services; Crude Oil Pipelines & Services; Natural Gas Pipelines & Services, and Petrochemical & Refined Products Services. The Company's midstream energy operations include natural gas gathering, treating, processing, transportation and storage; NGL transportation, fractionation, storage, and import and export terminals, including liquefied petroleum gas (LPG); crude oil gathering, transportation, storage and terminals; petrochemical and refined products transportation, storage, export and import terminals, and related services, and a marine transportation business that operates primarily on the United States inland and Intracoastal Waterway systems.

FINANCIAL RATIOS  of  Enterprise Products Partners (EPD)

Valuation Ratios
P/E Ratio 21.7
Price to Sales 2.4
Price to Book 2.5
Price to Tangible Book
Price to Cash Flow 13.4
Price to Free Cash Flow 52.3
Growth Rates
Sales Growth Rate -14.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -21%
Cap. Spend. - 3 Yr. Gr. Rate -2.4%
Financial Strength
Quick Ratio 0
Current Ratio 0.2
LT Debt to Equity 95.8%
Total Debt to Equity 107.5%
Interest Coverage 4
Management Effectiveness
Return On Assets 6.8%
Ret/ On Assets - 3 Yr. Avg. 7.4%
Return On Total Capital 5.7%
Ret/ On T. Cap. - 3 Yr. Avg. 6.5%
Return On Equity 11.9%
Return On Equity - 3 Yr. Avg. 13.9%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 14.7%
Gross Margin - 3 Yr. Avg. 11.6%
EBITDA Margin 22%
EBITDA Margin - 3 Yr. Avg. 17%
Operating Margin 15.6%
Oper. Margin - 3 Yr. Avg. 12.2%
Pre-Tax Margin 11.2%
Pre-Tax Margin - 3 Yr. Avg. 8.9%
Net Profit Margin 10.9%
Net Profit Margin - 3 Yr. Avg. 8.7%
Effective Tax Rate 0.9%
Eff/ Tax Rate - 3 Yr. Avg. 0.5%
Payout Ratio 131.4%

EPD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EPD stock intrinsic value calculation we used $23022 million for the last fiscal year's total revenue generated by Enterprise Products Partners. The default revenue input number comes from 2016 income statement of Enterprise Products 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 EPD stock valuation model: a) initial revenue growth rate of 16.3% 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 8.3%, whose default value for EPD is calculated based on our internal credit rating of Enterprise Products 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 Enterprise Products 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 EPD stock the variable cost ratio is equal to 86.9%.

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 EPD 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 4.1% for Enterprise Products Partners.

Corporate tax rate of 27% is the nominal tax rate for Enterprise Products 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 EPD 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 EPD are equal to 159%.

Life of production assets of 27.3 years is the average useful life of capital assets used in Enterprise Products 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 EPD is equal to 3.4%. 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 - $22047 million for Enterprise Products 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 2146.74 million for Enterprise Products 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 Enterprise Products Partners at the current share price and the inputted number of shares is $55.2 billion.

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Financial statements of EPD
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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