Intrinsic value of Global Partners - GLP

Previous Close

$16.50

  Intrinsic Value

$238.26

stock screener

  Rating & Target

str. buy

+999%

  Value-price divergence*

+13%

Previous close

$16.50

 
Intrinsic value

$238.26

 
Up/down potential

+999%

 
Rating

str. buy

 
Value-price divergence*

+13%

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

We calculate the intrinsic value of GLP 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 0.6

 

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, %
  -20.12
  29.70
  27.23
  25.01
  23.01
  21.21
  19.59
  18.13
  16.81
  15.63
  14.57
  13.61
  12.75
  11.98
  11.28
  10.65
  10.09
  9.58
  9.12
  8.71
  8.34
  8.00
  7.70
  7.43
  7.19
  6.97
  6.77
  6.60
  6.44
  6.29
  6.16
Revenue, $m
  8,240
  10,687
  13,597
  16,998
  20,908
  25,342
  30,305
  35,799
  41,818
  48,355
  55,400
  62,941
  70,967
  79,466
  88,428
  97,846
  107,715
  118,031
  128,794
  140,009
  151,681
  163,819
  176,438
  189,551
  203,179
  217,341
  232,062
  247,368
  263,289
  279,857
  297,106
Variable operating expenses, $m
 
  9,300
  11,824
  14,774
  18,166
  22,012
  26,317
  31,082
  36,303
  41,974
  48,084
  54,596
  61,558
  68,930
  76,704
  84,874
  93,434
  102,382
  111,719
  121,446
  131,571
  142,100
  153,046
  164,421
  176,241
  188,526
  201,295
  214,572
  228,382
  242,754
  257,716
Fixed operating expenses, $m
 
  1,273
  1,305
  1,337
  1,371
  1,405
  1,440
  1,476
  1,513
  1,551
  1,590
  1,630
  1,670
  1,712
  1,755
  1,799
  1,844
  1,890
  1,937
  1,986
  2,035
  2,086
  2,138
  2,192
  2,246
  2,303
  2,360
  2,419
  2,480
  2,542
  2,605
Total operating expenses, $m
  8,392
  10,573
  13,129
  16,111
  19,537
  23,417
  27,757
  32,558
  37,816
  43,525
  49,674
  56,226
  63,228
  70,642
  78,459
  86,673
  95,278
  104,272
  113,656
  123,432
  133,606
  144,186
  155,184
  166,613
  178,487
  190,829
  203,655
  216,991
  230,862
  245,296
  260,321
Operating income, $m
  -152
  114
  468
  887
  1,372
  1,925
  2,548
  3,240
  4,001
  4,830
  5,726
  6,715
  7,738
  8,823
  9,969
  11,174
  12,437
  13,759
  15,138
  16,577
  18,075
  19,633
  21,254
  22,939
  24,691
  26,512
  28,407
  30,377
  32,427
  34,562
  36,785
EBITDA, $m
  -40
  257
  641
  1,096
  1,622
  2,222
  2,898
  3,648
  4,473
  5,370
  6,340
  7,380
  8,488
  9,663
  10,903
  12,207
  13,574
  15,005
  16,498
  18,055
  19,676
  21,363
  23,117
  24,941
  26,836
  28,807
  30,857
  32,989
  35,207
  37,517
  39,922
Interest expense (income), $m
  64
  64
  97
  135
  180
  232
  291
  357
  430
  510
  597
  690
  791
  897
  1,010
  1,129
  1,254
  1,385
  1,522
  1,665
  1,814
  1,969
  2,130
  2,298
  2,472
  2,653
  2,841
  3,036
  3,240
  3,451
  3,671
Earnings before tax, $m
  -239
  50
  372
  751
  1,191
  1,693
  2,257
  2,883
  3,571
  4,320
  5,129
  6,025
  6,948
  7,926
  8,959
  10,045
  11,183
  12,374
  13,616
  14,912
  16,261
  17,664
  19,124
  20,641
  22,219
  23,860
  25,566
  27,341
  29,188
  31,111
  33,114
Tax expense, $m
  0
  14
  100
  203
  322
  457
  609
  778
  964
  1,166
  1,385
  1,627
  1,876
  2,140
  2,419
  2,712
  3,019
  3,341
  3,676
  4,026
  4,390
  4,769
  5,163
  5,573
  5,999
  6,442
  6,903
  7,382
  7,881
  8,400
  8,941
Net income, $m
  -199
  37
  271
  548
  870
  1,236
  1,647
  2,105
  2,607
  3,154
  3,744
  4,398
  5,072
  5,786
  6,540
  7,333
  8,164
  9,033
  9,940
  10,886
  11,870
  12,895
  13,960
  15,068
  16,220
  17,418
  18,663
  19,959
  21,307
  22,711
  24,173

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  70
  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
  2,564
  3,238
  4,119
  5,149
  6,334
  7,677
  9,181
  10,845
  12,668
  14,649
  16,783
  19,067
  21,499
  24,073
  26,788
  29,641
  32,631
  35,756
  39,017
  42,414
  45,950
  49,627
  53,450
  57,422
  61,551
  65,841
  70,300
  74,937
  79,760
  84,780
  90,005
Adjusted assets (=assets-cash), $m
  2,494
  3,238
  4,119
  5,149
  6,334
  7,677
  9,181
  10,845
  12,668
  14,649
  16,783
  19,067
  21,499
  24,073
  26,788
  29,641
  32,631
  35,756
  39,017
  42,414
  45,950
  49,627
  53,450
  57,422
  61,551
  65,841
  70,300
  74,937
  79,760
  84,780
  90,005
Revenue / Adjusted assets
  3.304
  3.300
  3.301
  3.301
  3.301
  3.301
  3.301
  3.301
  3.301
  3.301
  3.301
  3.301
  3.301
  3.301
  3.301
  3.301
  3.301
  3.301
  3.301
  3.301
  3.301
  3.301
  3.301
  3.301
  3.301
  3.301
  3.301
  3.301
  3.301
  3.301
  3.301
Average production assets, $m
  1,242
  1,614
  2,053
  2,567
  3,157
  3,827
  4,576
  5,406
  6,314
  7,302
  8,365
  9,504
  10,716
  11,999
  13,353
  14,775
  16,265
  17,823
  19,448
  21,141
  22,904
  24,737
  26,642
  28,622
  30,680
  32,818
  35,041
  37,353
  39,757
  42,258
  44,863
Working capital, $m
  276
  620
  789
  986
  1,213
  1,470
  1,758
  2,076
  2,425
  2,805
  3,213
  3,651
  4,116
  4,609
  5,129
  5,675
  6,247
  6,846
  7,470
  8,120
  8,797
  9,502
  10,233
  10,994
  11,784
  12,606
  13,460
  14,347
  15,271
  16,232
  17,232
Total debt, $m
  1,300
  1,858
  2,601
  3,470
  4,468
  5,601
  6,868
  8,271
  9,808
  11,478
  13,277
  15,203
  17,252
  19,423
  21,712
  24,117
  26,637
  29,271
  32,020
  34,884
  37,865
  40,965
  44,187
  47,536
  51,016
  54,633
  58,392
  62,301
  66,367
  70,598
  75,003
Total liabilities, $m
  2,171
  2,729
  3,472
  4,341
  5,339
  6,472
  7,739
  9,142
  10,679
  12,349
  14,148
  16,074
  18,123
  20,294
  22,583
  24,988
  27,508
  30,142
  32,891
  35,755
  38,736
  41,836
  45,058
  48,407
  51,887
  55,504
  59,263
  63,172
  67,238
  71,469
  75,874
Total equity, $m
  393
  508
  647
  808
  994
  1,205
  1,441
  1,703
  1,989
  2,300
  2,635
  2,994
  3,375
  3,780
  4,206
  4,654
  5,123
  5,614
  6,126
  6,659
  7,214
  7,791
  8,392
  9,015
  9,663
  10,337
  11,037
  11,765
  12,522
  13,310
  14,131
Total liabilities and equity, $m
  2,564
  3,237
  4,119
  5,149
  6,333
  7,677
  9,180
  10,845
  12,668
  14,649
  16,783
  19,068
  21,498
  24,074
  26,789
  29,642
  32,631
  35,756
  39,017
  42,414
  45,950
  49,627
  53,450
  57,422
  61,550
  65,841
  70,300
  74,937
  79,760
  84,779
  90,005
Debt-to-equity ratio
  3.308
  3.660
  4.020
  4.290
  4.490
  4.650
  4.770
  4.860
  4.930
  4.990
  5.040
  5.080
  5.110
  5.140
  5.160
  5.180
  5.200
  5.210
  5.230
  5.240
  5.250
  5.260
  5.270
  5.270
  5.280
  5.290
  5.290
  5.300
  5.300
  5.300
  5.310
Adjusted equity ratio
  0.130
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -199
  37
  271
  548
  870
  1,236
  1,647
  2,105
  2,607
  3,154
  3,744
  4,398
  5,072
  5,786
  6,540
  7,333
  8,164
  9,033
  9,940
  10,886
  11,870
  12,895
  13,960
  15,068
  16,220
  17,418
  18,663
  19,959
  21,307
  22,711
  24,173
Depreciation, amort., depletion, $m
  112
  142
  173
  209
  250
  297
  350
  408
  471
  540
  614
  665
  749
  839
  934
  1,033
  1,137
  1,246
  1,360
  1,478
  1,602
  1,730
  1,863
  2,002
  2,145
  2,295
  2,450
  2,612
  2,780
  2,955
  3,137
Funds from operations, $m
  -320
  179
  444
  757
  1,120
  1,533
  1,997
  2,512
  3,078
  3,694
  4,358
  5,063
  5,821
  6,625
  7,474
  8,366
  9,301
  10,279
  11,300
  12,364
  13,472
  14,625
  15,823
  17,070
  18,365
  19,713
  21,113
  22,571
  24,087
  25,666
  27,311
Change in working capital, $m
  -200
  142
  169
  197
  227
  257
  288
  319
  349
  379
  409
  437
  465
  493
  520
  546
  572
  598
  624
  650
  677
  704
  732
  761
  790
  821
  854
  888
  923
  961
  1,000
Cash from operations, $m
  -120
  37
  276
  560
  893
  1,276
  1,709
  2,194
  2,729
  3,315
  3,950
  4,625
  5,356
  6,132
  6,954
  7,820
  8,729
  9,681
  10,676
  11,714
  12,795
  13,921
  15,092
  16,309
  17,575
  18,891
  20,260
  21,683
  23,164
  24,705
  26,310
Maintenance CAPEX, $m
  0
  -87
  -113
  -144
  -179
  -221
  -268
  -320
  -378
  -442
  -511
  -585
  -665
  -749
  -839
  -934
  -1,033
  -1,137
  -1,246
  -1,360
  -1,478
  -1,602
  -1,730
  -1,863
  -2,002
  -2,145
  -2,295
  -2,450
  -2,612
  -2,780
  -2,955
New CAPEX, $m
  -71
  -372
  -439
  -513
  -590
  -669
  -749
  -829
  -909
  -987
  -1,064
  -1,139
  -1,212
  -1,283
  -1,353
  -1,422
  -1,490
  -1,558
  -1,625
  -1,693
  -1,762
  -1,833
  -1,905
  -1,980
  -2,058
  -2,138
  -2,223
  -2,311
  -2,404
  -2,502
  -2,605
Cash from investing activities, $m
  6
  -459
  -552
  -657
  -769
  -890
  -1,017
  -1,149
  -1,287
  -1,429
  -1,575
  -1,724
  -1,877
  -2,032
  -2,192
  -2,356
  -2,523
  -2,695
  -2,871
  -3,053
  -3,240
  -3,435
  -3,635
  -3,843
  -4,060
  -4,283
  -4,518
  -4,761
  -5,016
  -5,282
  -5,560
Free cash flow, $m
  -114
  -422
  -277
  -97
  123
  385
  692
  1,044
  1,442
  1,886
  2,375
  2,902
  3,479
  4,100
  4,762
  5,464
  6,205
  6,986
  7,804
  8,660
  9,554
  10,486
  11,456
  12,466
  13,516
  14,607
  15,742
  16,921
  18,148
  19,423
  20,750
Issuance/(repayment) of debt, $m
  187
  626
  743
  868
  999
  1,132
  1,268
  1,403
  1,537
  1,669
  1,799
  1,926
  2,050
  2,170
  2,289
  2,405
  2,520
  2,634
  2,749
  2,864
  2,981
  3,100
  3,222
  3,349
  3,480
  3,617
  3,759
  3,909
  4,066
  4,231
  4,405
Issuance/(repurchase) of shares, $m
  0
  79
  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  
  185
  705
  743
  868
  999
  1,132
  1,268
  1,403
  1,537
  1,669
  1,799
  1,926
  2,050
  2,170
  2,289
  2,405
  2,520
  2,634
  2,749
  2,864
  2,981
  3,100
  3,222
  3,349
  3,480
  3,617
  3,759
  3,909
  4,066
  4,231
  4,405
Total cash flow (excl. dividends), $m
  72
  283
  467
  772
  1,122
  1,518
  1,960
  2,447
  2,979
  3,556
  4,175
  4,827
  5,529
  6,270
  7,050
  7,869
  8,725
  9,620
  10,553
  11,524
  12,535
  13,586
  14,679
  15,815
  16,996
  18,224
  19,501
  20,830
  22,213
  23,654
  25,155
Retained Cash Flow (-), $m
  255
  -115
  -138
  -162
  -186
  -211
  -236
  -261
  -286
  -311
  -335
  -359
  -382
  -404
  -426
  -448
  -469
  -491
  -512
  -533
  -555
  -577
  -600
  -624
  -648
  -674
  -700
  -728
  -757
  -788
  -820
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
 
  168
  328
  610
  936
  1,307
  1,723
  2,186
  2,693
  3,245
  3,840
  4,469
  5,147
  5,866
  6,624
  7,421
  8,256
  9,129
  10,041
  10,991
  11,980
  13,009
  14,079
  15,191
  16,348
  17,550
  18,801
  20,102
  21,456
  22,866
  24,335
Discount rate, %
 
  11.60
  12.18
  12.79
  13.43
  14.10
  14.80
  15.55
  16.32
  17.14
  18.00
  18.90
  19.84
  20.83
  21.87
  22.97
  24.12
  25.32
  26.59
  27.92
  29.31
  30.78
  32.32
  33.93
  35.63
  37.41
  39.28
  41.25
  43.31
  45.47
  47.75
PV of cash for distribution, $m
 
  150
  261
  425
  565
  676
  753
  795
  803
  781
  734
  666
  587
  501
  415
  334
  260
  197
  144
  102
  70
  46
  30
  18
  11
  6
  3
  2
  1
  0
  0
Current shareholders' claim on cash, %
  100
  87.8
  87.8
  87.8
  87.8
  87.8
  87.8
  87.8
  87.8
  87.8
  87.8
  87.8
  87.8
  87.8
  87.8
  87.8
  87.8
  87.8
  87.8
  87.8
  87.8
  87.8
  87.8
  87.8
  87.8
  87.8
  87.8
  87.8
  87.8
  87.8
  87.8

Global Partners LP, a midstream logistics and marketing company, distributes gasoline, distillates, residual oil, and renewable fuels to wholesalers, retailers, and commercial customers in the New England states and New York. It operates in three segments: Wholesale, Gasoline Distribution and Station Operations, and Commercial. The Wholesale segment sells branded and unbranded gasoline and gasoline blendstocks and diesel to wholesale distributors. It also offers home heating oil, diesel, kerosene, residual oil, and propane to home heating oil and propane retailers and wholesale distributors; and aggregates crude oil in the mid-continent region of the United States and Canada, and offers to refiners on the East and West Coasts. The Gasoline Distribution and Station Operations segment sells branded and unbranded gasoline to gasoline station operators and other sub-jobbers; operates gasoline stations and convenience stores; and provides car wash, lottery, and ATM services, as well as leases gasoline stations. As of December 31, 2015, this segment had a portfolio of 1,509 owned, leased, and/or supplied gasoline stations, including 281 convenience stores, primarily in the Northeast. The Commercial segment sells and delivers unbranded gasoline, home heating oil, diesel, kerosene, residual oil, bunker fuel, and natural gas to end user customers in the public sector, as well as to commercial and industrial end users; and sells custom blended fuels. The company also owns, leases, or maintains storage facilities at 25 bulk terminals with a collective storage capacity of 12.2 million barrels. Global GP LLC serves as the general partner of the company. Global Partners LP was founded in 2005 and is based in Waltham, Massachusetts.

FINANCIAL RATIOS  of  Global Partners (GLP)

Valuation Ratios
P/E Ratio -2.8
Price to Sales 0.1
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow -4.6
Price to Free Cash Flow -2.9
Growth Rates
Sales Growth Rate -20.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -23.7%
Cap. Spend. - 3 Yr. Gr. Rate 1.2%
Financial Strength
Quick Ratio 0
Current Ratio -0
LT Debt to Equity 260.8%
Total Debt to Equity 330.8%
Interest Coverage -3
Management Effectiveness
Return On Assets -5.2%
Ret/ On Assets - 3 Yr. Avg. 2%
Return On Total Capital -11.3%
Ret/ On T. Cap. - 3 Yr. Avg. 0.3%
Return On Equity -38.2%
Return On Equity - 3 Yr. Avg. -2.7%
Asset Turnover 3.2
Profitability Ratios
Gross Margin 6.6%
Gross Margin - 3 Yr. Avg. 5.2%
EBITDA Margin -0.8%
EBITDA Margin - 3 Yr. Avg. 0.9%
Operating Margin -1.8%
Oper. Margin - 3 Yr. Avg. 0.1%
Pre-Tax Margin -2.9%
Pre-Tax Margin - 3 Yr. Avg. -0.6%
Net Profit Margin -2.4%
Net Profit Margin - 3 Yr. Avg. -0.4%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. -1.3%
Payout Ratio -31.7%

GLP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GLP stock intrinsic value calculation we used $8240 million for the last fiscal year's total revenue generated by Global Partners. The default revenue input number comes from 2016 income statement of Global 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 GLP stock valuation model: a) initial revenue growth rate of 29.7% 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 11.6%, whose default value for GLP is calculated based on our internal credit rating of Global 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 Global 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 GLP stock the variable cost ratio is equal to 87.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1242 million in the base year in the intrinsic value calculation for GLP 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 5.2% for Global Partners.

Corporate tax rate of 27% is the nominal tax rate for Global 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 GLP 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 GLP are equal to 15.1%.

Life of production assets of 14.3 years is the average useful life of capital assets used in Global 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 GLP is equal to 5.8%. 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 - $393 million for Global 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 34.431 million for Global 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 Global Partners at the current share price and the inputted number of shares is $0.6 billion.

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Stock chart of GLP Financial statements of GLP
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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