Intrinsic value of Enterprise Products Partners - EPD

Previous Close

$28.71

  Intrinsic Value

$28.39

stock screener

  Rating & Target

hold

-1%

Previous close

$28.71

 
Intrinsic value

$28.39

 
Up/down potential

-1%

 
Rating

hold

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
  27.00
  24.80
  22.82
  21.04
  19.43
  17.99
  16.69
  15.52
  14.47
  13.52
  12.67
  11.90
  11.21
  10.59
  10.03
  9.53
  9.08
  8.67
  8.30
  7.97
  7.67
  7.41
  7.17
  6.95
  6.75
  6.58
  6.42
  6.28
  6.15
  6.04
Revenue, $m
  23,022
  37,137
  46,347
  56,924
  68,900
  82,290
  97,094
  113,301
  130,888
  149,828
  170,089
  191,641
  214,454
  238,502
  263,764
  290,227
  317,885
  346,738
  376,797
  408,078
  440,610
  474,425
  509,567
  546,085
  584,037
  623,488
  664,510
  707,181
  751,587
  797,820
  845,978
Variable operating expenses, $m
 
  31,683
  39,307
  48,061
  57,974
  69,057
  81,311
  94,726
  109,284
  124,961
  141,732
  158,628
  177,510
  197,415
  218,326
  240,230
  263,123
  287,006
  311,886
  337,779
  364,707
  392,697
  421,785
  452,012
  483,426
  516,081
  550,036
  585,356
  622,112
  660,380
  700,243
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
  31,683
  39,307
  48,061
  57,974
  69,057
  81,311
  94,726
  109,284
  124,961
  141,732
  158,628
  177,510
  197,415
  218,326
  240,230
  263,123
  287,006
  311,886
  337,779
  364,707
  392,697
  421,785
  452,012
  483,426
  516,081
  550,036
  585,356
  622,112
  660,380
  700,243
Operating income, $m
  3,581
  5,454
  7,041
  8,863
  10,926
  13,232
  15,783
  18,575
  21,604
  24,867
  28,357
  33,014
  36,944
  41,086
  45,438
  49,997
  54,762
  59,732
  64,910
  70,299
  75,903
  81,729
  87,782
  94,073
  100,611
  107,407
  114,474
  121,825
  129,475
  137,439
  145,736
EBITDA, $m
  5,133
  11,983
  14,955
  18,368
  22,232
  26,552
  31,329
  36,559
  42,233
  48,345
  54,883
  61,837
  69,198
  76,957
  85,108
  93,647
  102,571
  111,881
  121,580
  131,674
  142,171
  153,082
  164,421
  176,205
  188,451
  201,180
  214,417
  228,185
  242,514
  257,431
  272,971
Interest expense (income), $m
  948
  1,327
  1,901
  2,735
  3,692
  4,776
  5,987
  7,327
  8,794
  10,386
  12,100
  13,934
  15,884
  17,949
  20,125
  22,411
  24,806
  27,309
  29,921
  32,641
  35,472
  38,416
  41,477
  44,657
  47,962
  51,397
  54,967
  58,680
  62,542
  66,561
  70,745
Earnings before tax, $m
  2,576
  4,127
  5,140
  6,128
  7,234
  8,457
  9,795
  11,247
  12,810
  14,481
  16,258
  19,080
  21,060
  23,138
  25,313
  27,586
  29,955
  32,423
  34,989
  37,658
  40,431
  43,312
  46,306
  49,416
  52,649
  56,010
  59,507
  63,145
  66,933
  70,879
  74,991
Tax expense, $m
  23
  1,114
  1,388
  1,655
  1,953
  2,283
  2,645
  3,037
  3,459
  3,910
  4,390
  5,152
  5,686
  6,247
  6,835
  7,448
  8,088
  8,754
  9,447
  10,168
  10,916
  11,694
  12,503
  13,342
  14,215
  15,123
  16,067
  17,049
  18,072
  19,137
  20,247
Net income, $m
  2,513
  3,013
  3,752
  4,473
  5,281
  6,173
  7,150
  8,210
  9,351
  10,571
  11,868
  13,929
  15,373
  16,890
  18,479
  20,138
  21,867
  23,668
  25,542
  27,490
  29,515
  31,618
  33,803
  36,074
  38,434
  40,888
  43,440
  46,096
  48,861
  51,741
  54,743

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
  69,157
  86,308
  106,003
  128,305
  153,239
  180,808
  210,988
  243,739
  279,009
  316,740
  356,874
  399,356
  444,137
  491,181
  540,460
  591,964
  645,694
  701,670
  759,923
  820,503
  883,474
  948,915
  1,016,919
  1,087,593
  1,161,058
  1,237,449
  1,316,911
  1,399,603
  1,485,698
  1,575,378
Adjusted assets (=assets-cash), $m
  52,131
  69,157
  86,308
  106,003
  128,305
  153,239
  180,808
  210,988
  243,739
  279,009
  316,740
  356,874
  399,356
  444,137
  491,181
  540,460
  591,964
  645,694
  701,670
  759,923
  820,503
  883,474
  948,915
  1,016,919
  1,087,593
  1,161,058
  1,237,449
  1,316,911
  1,399,603
  1,485,698
  1,575,378
Revenue / Adjusted assets
  0.442
  0.537
  0.537
  0.537
  0.537
  0.537
  0.537
  0.537
  0.537
  0.537
  0.537
  0.537
  0.537
  0.537
  0.537
  0.537
  0.537
  0.537
  0.537
  0.537
  0.537
  0.537
  0.537
  0.537
  0.537
  0.537
  0.537
  0.537
  0.537
  0.537
  0.537
Average production assets, $m
  36,614
  55,855
  69,706
  85,614
  103,625
  123,764
  146,030
  170,404
  196,855
  225,341
  255,814
  288,228
  322,539
  358,706
  396,701
  436,502
  478,098
  521,494
  566,702
  613,750
  662,677
  713,536
  766,389
  821,312
  878,392
  937,726
  999,423
  1,063,600
  1,130,387
  1,199,921
  1,272,351
Working capital, $m
  -1,723
  -4,939
  -6,164
  -7,571
  -9,164
  -10,945
  -12,914
  -15,069
  -17,408
  -19,927
  -22,622
  -25,488
  -28,522
  -31,721
  -35,081
  -38,600
  -42,279
  -46,116
  -50,114
  -54,274
  -58,601
  -63,099
  -67,772
  -72,629
  -77,677
  -82,924
  -88,380
  -94,055
  -99,961
  -106,110
  -112,515
Total debt, $m
  23,698
  35,205
  50,641
  68,367
  88,438
  110,879
  135,691
  162,853
  192,329
  224,072
  258,030
  294,150
  332,384
  372,687
  415,026
  459,378
  505,731
  554,089
  604,466
  656,894
  711,416
  768,090
  826,987
  888,190
  951,797
  1,017,916
  1,086,667
  1,158,183
  1,232,607
  1,310,092
  1,390,804
Total liabilities, $m
  30,147
  62,241
  77,677
  95,403
  115,474
  137,916
  162,728
  189,890
  219,365
  251,108
  285,066
  321,187
  359,420
  399,723
  442,063
  486,414
  532,768
  581,125
  631,503
  683,930
  738,453
  795,126
  854,023
  915,227
  978,834
  1,044,952
  1,113,704
  1,185,220
  1,259,643
  1,337,128
  1,417,840
Total equity, $m
  22,047
  6,916
  8,631
  10,600
  12,830
  15,324
  18,081
  21,099
  24,374
  27,901
  31,674
  35,687
  39,936
  44,414
  49,118
  54,046
  59,196
  64,569
  70,167
  75,992
  82,050
  88,347
  94,891
  101,692
  108,759
  116,106
  123,745
  131,691
  139,960
  148,570
  157,538
Total liabilities and equity, $m
  52,194
  69,157
  86,308
  106,003
  128,304
  153,240
  180,809
  210,989
  243,739
  279,009
  316,740
  356,874
  399,356
  444,137
  491,181
  540,460
  591,964
  645,694
  701,670
  759,922
  820,503
  883,473
  948,914
  1,016,919
  1,087,593
  1,161,058
  1,237,449
  1,316,911
  1,399,603
  1,485,698
  1,575,378
Debt-to-equity ratio
  1.075
  5.090
  5.870
  6.450
  6.890
  7.240
  7.500
  7.720
  7.890
  8.030
  8.150
  8.240
  8.320
  8.390
  8.450
  8.500
  8.540
  8.580
  8.610
  8.640
  8.670
  8.690
  8.720
  8.730
  8.750
  8.770
  8.780
  8.790
  8.810
  8.820
  8.830
Adjusted equity ratio
  0.422
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,513
  3,013
  3,752
  4,473
  5,281
  6,173
  7,150
  8,210
  9,351
  10,571
  11,868
  13,929
  15,373
  16,890
  18,479
  20,138
  21,867
  23,668
  25,542
  27,490
  29,515
  31,618
  33,803
  36,074
  38,434
  40,888
  43,440
  46,096
  48,861
  51,741
  54,743
Depreciation, amort., depletion, $m
  1,552
  6,529
  7,914
  9,505
  11,306
  13,320
  15,547
  17,984
  20,629
  23,478
  26,525
  28,823
  32,254
  35,871
  39,670
  43,650
  47,810
  52,149
  56,670
  61,375
  66,268
  71,354
  76,639
  82,131
  87,839
  93,773
  99,942
  106,360
  113,039
  119,992
  127,235
Funds from operations, $m
  3,883
  9,542
  11,666
  13,978
  16,587
  19,493
  22,697
  26,195
  29,981
  34,049
  38,393
  42,751
  47,627
  52,761
  58,149
  63,788
  69,677
  75,818
  82,212
  88,865
  95,782
  102,971
  110,442
  118,205
  126,273
  134,660
  143,382
  152,456
  161,900
  171,733
  181,978
Change in working capital, $m
  -184
  -1,050
  -1,225
  -1,407
  -1,593
  -1,781
  -1,969
  -2,155
  -2,339
  -2,519
  -2,695
  -2,866
  -3,034
  -3,198
  -3,360
  -3,520
  -3,678
  -3,837
  -3,998
  -4,161
  -4,327
  -4,497
  -4,674
  -4,857
  -5,048
  -5,247
  -5,456
  -5,675
  -5,906
  -6,149
  -6,405
Cash from operations, $m
  4,067
  10,592
  12,891
  15,385
  18,180
  21,274
  24,666
  28,350
  32,320
  36,568
  41,088
  45,618
  50,661
  55,959
  61,509
  67,307
  73,356
  79,655
  86,210
  93,026
  100,109
  107,469
  115,116
  123,062
  131,321
  139,907
  148,838
  158,131
  167,806
  177,882
  188,383
Maintenance CAPEX, $m
  0
  -4,398
  -5,585
  -6,971
  -8,561
  -10,362
  -12,376
  -14,603
  -17,040
  -19,686
  -22,534
  -25,581
  -28,823
  -32,254
  -35,871
  -39,670
  -43,650
  -47,810
  -52,149
  -56,670
  -61,375
  -66,268
  -71,354
  -76,639
  -82,131
  -87,839
  -93,773
  -99,942
  -106,360
  -113,039
  -119,992
New CAPEX, $m
  -3,025
  -11,876
  -13,852
  -15,907
  -18,011
  -20,139
  -22,266
  -24,375
  -26,451
  -28,486
  -30,473
  -32,414
  -34,310
  -36,168
  -37,995
  -39,801
  -41,597
  -43,395
  -45,208
  -47,048
  -48,927
  -50,858
  -52,853
  -54,923
  -57,080
  -59,334
  -61,697
  -64,177
  -66,787
  -69,534
  -72,430
Cash from investing activities, $m
  -4,344
  -16,274
  -19,437
  -22,878
  -26,572
  -30,501
  -34,642
  -38,978
  -43,491
  -48,172
  -53,007
  -57,995
  -63,133
  -68,422
  -73,866
  -79,471
  -85,247
  -91,205
  -97,357
  -103,718
  -110,302
  -117,126
  -124,207
  -131,562
  -139,211
  -147,173
  -155,470
  -164,119
  -173,147
  -182,573
  -192,422
Free cash flow, $m
  -277
  -5,682
  -6,546
  -7,493
  -8,393
  -9,227
  -9,976
  -10,628
  -11,172
  -11,603
  -11,920
  -12,378
  -12,472
  -12,462
  -12,357
  -12,163
  -11,891
  -11,550
  -11,147
  -10,692
  -10,193
  -9,657
  -9,091
  -8,500
  -7,891
  -7,266
  -6,631
  -5,988
  -5,341
  -4,690
  -4,039
Issuance/(repayment) of debt, $m
  1,141
  10,636
  15,436
  17,726
  20,071
  22,441
  24,812
  27,162
  29,476
  31,743
  33,958
  36,121
  38,234
  40,303
  42,339
  44,352
  46,353
  48,357
  50,378
  52,428
  54,522
  56,674
  58,897
  61,204
  63,607
  66,119
  68,751
  71,516
  74,423
  77,485
  80,712
Issuance/(repurchase) of shares, $m
  2,543
  1,090
  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 from financing (excl. dividends), $m  
  3,623
  11,726
  15,436
  17,726
  20,071
  22,441
  24,812
  27,162
  29,476
  31,743
  33,958
  36,121
  38,234
  40,303
  42,339
  44,352
  46,353
  48,357
  50,378
  52,428
  54,522
  56,674
  58,897
  61,204
  63,607
  66,119
  68,751
  71,516
  74,423
  77,485
  80,712
Total cash flow (excl. dividends), $m
  3,345
  6,044
  8,890
  10,233
  11,678
  13,215
  14,836
  16,534
  18,304
  20,140
  22,038
  23,743
  25,762
  27,841
  29,983
  32,188
  34,462
  36,808
  39,230
  41,735
  44,329
  47,017
  49,806
  52,703
  55,716
  58,853
  62,120
  65,527
  69,083
  72,795
  76,673
Retained Cash Flow (-), $m
  -1,752
  -4,103
  -1,715
  -1,970
  -2,230
  -2,493
  -2,757
  -3,018
  -3,275
  -3,527
  -3,773
  -4,013
  -4,248
  -4,478
  -4,704
  -4,928
  -5,150
  -5,373
  -5,598
  -5,825
  -6,058
  -6,297
  -6,544
  -6,800
  -7,067
  -7,347
  -7,639
  -7,946
  -8,269
  -8,609
  -8,968
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
 
  1,942
  7,174
  8,264
  9,448
  10,721
  12,079
  13,516
  15,029
  16,613
  18,265
  19,729
  21,514
  23,363
  25,278
  27,260
  29,312
  31,435
  33,633
  35,910
  38,271
  40,720
  43,262
  45,903
  48,649
  51,506
  54,481
  57,581
  60,813
  64,185
  67,705
Discount rate, %
 
  11.00
  11.55
  12.13
  12.73
  13.37
  14.04
  14.74
  15.48
  16.25
  17.06
  17.92
  18.81
  19.75
  20.74
  21.78
  22.87
  24.01
  25.21
  26.47
  27.80
  29.19
  30.65
  32.18
  33.79
  35.48
  37.25
  39.11
  41.07
  43.12
  45.28
PV of cash for distribution, $m
 
  1,749
  5,766
  5,862
  5,849
  5,724
  5,492
  5,162
  4,753
  4,284
  3,779
  3,219
  2,718
  2,243
  1,806
  1,419
  1,086
  810
  588
  414
  283
  188
  121
  75
  45
  26
  14
  8
  4
  2
  1
Current shareholders' claim on cash, %
  100
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3

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 24.2
Price to Sales 2.6
Price to Book 2.8
Price to Tangible Book
Price to Cash Flow 15
Price to Free Cash Flow 58.4
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 $29242 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 27% 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 11%, 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%.

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 5.4% 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 150.4%.

Life of production assets of 10 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 -13.3%. 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 - $2813 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 2153 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 $61.8 billion.

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COMPANY NEWS

▶ Houston energy cos. jump ranks in latest Fortune Global 500 list   [Jul-19-18 01:12PM  American City Business Journals]
▶ Enterprise to develop crude oil export terminal off Texas Gulf Coast   [08:58AM  American City Business Journals]
▶ Best-in-Class Enterprise Products Is Undervalued   [Jul-16-18 06:00AM  Morningstar]
▶ Houston midstream co. eyes Midwestern pipeline expansion   [Jul-09-18 03:49PM  American City Business Journals]
▶ 2 Stocks That Turned $5,000 Into More Than $85,000   [Jun-30-18 10:19AM  Motley Fool]
▶ Seaway Loads First VLCC Ship   [09:55AM  Business Wire]
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▶ This High-Yield Pipeline Stock Is a Bargain Buy   [Jun-14-18 08:18AM  Motley Fool]
▶ 3 Top Quality Stocks for 2018   [06:00AM  Investopedia]
▶ Permian Boom Jeopardized By Pipeline Troubles   [Jun-10-18 05:00PM  Oilprice.com]
▶ Three Attractive MLPs for Income Investors   [12:00PM  TheStreet.com]
▶ 3 Top Energy Stocks to Buy in June   [Jun-06-18 06:06AM  Motley Fool]
▶ Down 30%, Are These High-Yield Stocks Good Buys?   [Jun-05-18 08:08AM  Motley Fool]
▶ How to Find the Best Dividend Growth Stocks   [Jun-03-18 11:53AM  Motley Fool]
▶ Is Enterprise Products Partners LP a Buy?   [May-31-18 05:00PM  Motley Fool]
▶ This Oil Stock Is Quietly Creating Hidden Value   [May-29-18 07:16PM  Motley Fool]
▶ Apache Dedicates Alpine High NGLs to Enterprise   [May-24-18 08:00AM  Business Wire]
▶ Top 4 Oil Stocks for May 2018   [May-11-18 05:29AM  Investopedia]
▶ Enterprise Products: 1Q Earnings Snapshot   [06:31AM  Associated Press]
▶ 10 Ways To Play The Wide World Of Commodities   [Apr-27-18 12:52PM  Forbes]
▶ 3 Top Dividend Stocks With Yields Over 3%   [Apr-26-18 06:34AM  Motley Fool]
▶ 3 Dividend Stocks Perfect for Retirement   [Apr-24-18 12:13PM  Motley Fool]
▶ Why You're Smart to Buy This Beaten-Up Dividend Stock   [Apr-23-18 07:48AM  Motley Fool]
▶ [$$] MLPs Look Attractive Again, and Yield as Much as 8%   [Apr-21-18 12:01AM  Barrons.com]
▶ Enterprise Receives Top Honors for Safety   [Apr-18-18 04:15PM  Business Wire]
▶ Oil Markets: The Calm Before The Storm   [Apr-17-18 03:00PM  Oilprice.com]
▶ Enterprise Products Could Retest January Peak   [Apr-12-18 02:22PM  TheStreet.com]
▶ Enterprise Products Partners buys 65-acre Houston Ship Channel site   [08:47AM  American City Business Journals]
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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