Intrinsic value of Green Plains Partners Un - GPP

Previous Close

$18.25

  Intrinsic Value

$7.61

stock screener

  Rating & Target

str. sell

-58%

  Value-price divergence*

+627%

Previous close

$18.25

 
Intrinsic value

$7.61

 
Up/down potential

-58%

 
Rating

str. sell

 
Value-price divergence*

+627%

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

We calculate the intrinsic value of GPP 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, %
  103.92
  12.50
  11.75
  11.08
  10.47
  9.92
  9.43
  8.99
  8.59
  8.23
  7.91
  7.62
  7.35
  7.12
  6.91
  6.72
  6.54
  6.39
  6.25
  6.13
  6.01
  5.91
  5.82
  5.74
  5.66
  5.60
  5.54
  5.48
  5.44
  5.39
  5.35
Revenue, $m
  104
  117
  131
  145
  160
  176
  193
  210
  228
  247
  267
  287
  308
  330
  353
  377
  401
  427
  453
  481
  510
  540
  572
  605
  639
  675
  712
  751
  792
  835
  879
Variable operating expenses, $m
 
  18
  20
  22
  24
  26
  29
  31
  34
  37
  39
  41
  44
  47
  51
  54
  58
  61
  65
  69
  73
  78
  82
  87
  92
  97
  102
  108
  114
  120
  126
Fixed operating expenses, $m
 
  33
  34
  34
  35
  36
  37
  38
  39
  40
  41
  42
  43
  44
  45
  46
  48
  49
  50
  51
  52
  54
  55
  56
  58
  59
  61
  62
  64
  65
  67
Total operating expenses, $m
  44
  51
  54
  56
  59
  62
  66
  69
  73
  77
  80
  83
  87
  91
  96
  100
  106
  110
  115
  120
  125
  132
  137
  143
  150
  156
  163
  170
  178
  185
  193
Operating income, $m
  59
  66
  77
  89
  101
  114
  127
  141
  156
  171
  186
  204
  221
  239
  257
  276
  296
  317
  339
  361
  385
  409
  435
  461
  489
  519
  549
  581
  614
  649
  686
EBITDA, $m
  64
  70
  82
  93
  106
  119
  133
  147
  162
  178
  194
  211
  228
  247
  266
  285
  306
  327
  350
  373
  397
  422
  449
  476
  505
  535
  567
  599
  634
  670
  708
Interest expense (income), $m
  2
  5
  3
  3
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  9
  9
  10
  11
  11
  12
  13
  14
  15
  16
  16
  17
  18
  20
  21
  22
  23
Earnings before tax, $m
  57
  62
  75
  86
  98
  110
  123
  136
  150
  165
  180
  197
  213
  231
  248
  267
  286
  306
  327
  349
  372
  395
  420
  446
  473
  501
  531
  561
  594
  628
  663
Tax expense, $m
  0
  17
  20
  23
  26
  30
  33
  37
  41
  45
  49
  53
  58
  62
  67
  72
  77
  83
  88
  94
  100
  107
  113
  120
  128
  135
  143
  152
  160
  169
  179
Net income, $m
  57
  45
  55
  63
  71
  80
  90
  99
  110
  120
  131
  144
  156
  168
  181
  195
  209
  224
  239
  255
  271
  289
  307
  326
  345
  366
  387
  410
  433
  458
  484

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
Total assets, $m
  94
  106
  118
  131
  145
  159
  174
  190
  206
  223
  241
  260
  279
  298
  319
  340
  363
  386
  410
  435
  461
  489
  517
  547
  578
  610
  644
  679
  716
  755
  795
Adjusted assets (=assets-cash), $m
  93
  106
  118
  131
  145
  159
  174
  190
  206
  223
  241
  260
  279
  298
  319
  340
  363
  386
  410
  435
  461
  489
  517
  547
  578
  610
  644
  679
  716
  755
  795
Revenue / Adjusted assets
  1.118
  1.104
  1.110
  1.107
  1.103
  1.107
  1.109
  1.105
  1.107
  1.108
  1.108
  1.104
  1.104
  1.107
  1.107
  1.109
  1.105
  1.106
  1.105
  1.106
  1.106
  1.104
  1.106
  1.106
  1.106
  1.107
  1.106
  1.106
  1.106
  1.106
  1.106
Average production assets, $m
  26
  29
  32
  36
  39
  43
  47
  52
  56
  61
  65
  70
  75
  81
  86
  92
  98
  105
  111
  118
  125
  132
  140
  148
  157
  165
  174
  184
  194
  204
  215
Working capital, $m
  5
  4
  5
  6
  6
  7
  7
  8
  9
  9
  10
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  21
  22
  23
  24
  26
  27
  29
  30
  32
  33
Total debt, $m
  137
  74
  85
  97
  110
  122
  136
  150
  165
  180
  196
  213
  230
  248
  266
  285
  305
  326
  348
  371
  394
  419
  444
  471
  499
  528
  558
  590
  623
  658
  695
Total liabilities, $m
  158
  95
  106
  118
  131
  143
  157
  171
  186
  201
  217
  234
  251
  269
  287
  306
  326
  347
  369
  392
  415
  440
  465
  492
  520
  549
  579
  611
  644
  679
  716
Total equity, $m
  -64
  11
  12
  13
  15
  16
  17
  19
  21
  22
  24
  26
  28
  30
  32
  34
  36
  39
  41
  44
  46
  49
  52
  55
  58
  61
  64
  68
  72
  75
  80
Total liabilities and equity, $m
  94
  106
  118
  131
  146
  159
  174
  190
  207
  223
  241
  260
  279
  299
  319
  340
  362
  386
  410
  436
  461
  489
  517
  547
  578
  610
  643
  679
  716
  754
  796
Debt-to-equity ratio
  -2.141
  7.010
  7.220
  7.400
  7.550
  7.680
  7.800
  7.900
  7.980
  8.060
  8.130
  8.190
  8.250
  8.300
  8.340
  8.380
  8.420
  8.460
  8.490
  8.520
  8.540
  8.570
  8.590
  8.620
  8.640
  8.660
  8.670
  8.690
  8.710
  8.720
  8.740
Adjusted equity ratio
  -0.699
  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
  57
  45
  55
  63
  71
  80
  90
  99
  110
  120
  131
  144
  156
  168
  181
  195
  209
  224
  239
  255
  271
  289
  307
  326
  345
  366
  387
  410
  433
  458
  484
Depreciation, amort., depletion, $m
  5
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  7
  8
  8
  9
  9
  10
  10
  11
  12
  13
  13
  14
  15
  16
  17
  17
  18
  19
  20
  22
Funds from operations, $m
  61
  49
  59
  67
  76
  86
  95
  106
  116
  128
  139
  151
  163
  176
  190
  204
  219
  234
  250
  266
  284
  302
  321
  340
  361
  382
  405
  428
  453
  479
  506
Change in working capital, $m
  -1
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
Cash from operations, $m
  62
  48
  58
  67
  76
  85
  95
  105
  116
  127
  138
  150
  163
  176
  189
  203
  218
  233
  249
  265
  283
  301
  319
  339
  360
  381
  403
  427
  451
  477
  504
Maintenance CAPEX, $m
  0
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
New CAPEX, $m
  -91
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
Cash from investing activities, $m
  -153
  -6
  -6
  -7
  -8
  -8
  -8
  -9
  -9
  -11
  -11
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -28
  -29
  -31
Free cash flow, $m
  -91
  43
  52
  60
  68
  77
  86
  96
  106
  117
  128
  139
  150
  163
  175
  189
  203
  217
  232
  248
  264
  281
  299
  317
  336
  357
  378
  400
  423
  447
  472
Issuance/(repayment) of debt, $m
  129
  -63
  11
  12
  12
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  35
  36
Issuance/(repurchase) of shares, $m
  0
  30
  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  
  75
  -33
  11
  12
  12
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  35
  36
Total cash flow (excl. dividends), $m
  -16
  10
  63
  72
  81
  90
  100
  110
  121
  132
  143
  155
  168
  180
  194
  208
  223
  238
  254
  270
  287
  305
  324
  344
  364
  386
  408
  432
  456
  482
  509
Retained Cash Flow (-), $m
  136
  -75
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
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
 
  -65
  62
  71
  79
  89
  98
  109
  119
  130
  142
  153
  166
  179
  192
  206
  220
  235
  251
  268
  285
  303
  321
  341
  361
  382
  405
  428
  452
  478
  505
Discount rate, %
 
  10.20
  10.71
  11.25
  11.81
  12.40
  13.02
  13.67
  14.35
  15.07
  15.82
  16.61
  17.45
  18.32
  19.23
  20.20
  21.21
  22.27
  23.38
  24.55
  25.77
  27.06
  28.42
  29.84
  31.33
  32.90
  34.54
  36.27
  38.08
  39.99
  41.98
PV of cash for distribution, $m
 
  -59
  51
  51
  51
  49
  47
  44
  41
  37
  33
  28
  24
  20
  16
  13
  10
  8
  6
  4
  3
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
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Green Plains Partners LP owns, operates, develops, and acquires ethanol and fuel storage tanks, terminals, transportation assets, and other related assets and businesses. The company owns 30 ethanol storage tanks. Green Plains Holdings LLC serves as the general partner of the company. The company was founded in 2015 and is headquartered in Omaha, Nebraska. Green Plains Partners LP operates as a subsidiary of Green Plains Inc.

FINANCIAL RATIOS  of  Green Plains Partners Un (GPP)

Valuation Ratios
P/E Ratio 10.2
Price to Sales 5.6
Price to Book -9.1
Price to Tangible Book
Price to Cash Flow 9.4
Price to Free Cash Flow -20
Growth Rates
Sales Growth Rate 103.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 4450%
Cap. Spend. - 3 Yr. Gr. Rate 146.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity -214.1%
Total Debt to Equity -214.1%
Interest Coverage 30
Management Effectiveness
Return On Assets 62.1%
Ret/ On Assets - 3 Yr. Avg. 22.4%
Return On Total Capital 74.5%
Ret/ On T. Cap. - 3 Yr. Avg. 27.3%
Return On Equity 1425%
Return On Equity - 3 Yr. Avg. 477.4%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 61.5%
EBITDA Margin - 3 Yr. Avg. -6.2%
Operating Margin 57.7%
Oper. Margin - 3 Yr. Avg. -24.2%
Pre-Tax Margin 54.8%
Pre-Tax Margin - 3 Yr. Avg. -27.7%
Net Profit Margin 54.8%
Net Profit Margin - 3 Yr. Avg. -0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 1.6%
Payout Ratio 0%

GPP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GPP stock intrinsic value calculation we used $104 million for the last fiscal year's total revenue generated by Green Plains Partners Un. The default revenue input number comes from 2016 income statement of Green Plains Partners Un. 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 GPP stock valuation model: a) initial revenue growth rate of 12.5% 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 10.2%, whose default value for GPP is calculated based on our internal credit rating of Green Plains Partners Un, 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 Green Plains Partners Un.
    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 GPP stock the variable cost ratio is equal to 15.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $32 million in the base year in the intrinsic value calculation for GPP 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 3.5% for Green Plains Partners Un.

Corporate tax rate of 27% is the nominal tax rate for Green Plains Partners Un. 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 GPP 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 GPP are equal to 24.5%.

Life of production assets of 10 years is the average useful life of capital assets used in Green Plains Partners Un 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 GPP is equal to 3.8%. 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 - $-64 million for Green Plains Partners Un - 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 31.72 million for Green Plains Partners Un 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 Green Plains Partners Un at the current share price and the inputted number of shares is $0.6 billion.

RELATED COMPANIES Price Int.Val. Rating
GPRE Green Plains 16.90 9.44  str.sell
DK Delek US Holdi 20.93 2,036.85  str.buy
PEIX Pacific Ethano 4.30 43.17  str.buy
REX Rex American R 92.06 342.54  str.buy

COMPANY NEWS

▶ Now's the Time to Buy These Stocks   [Aug-19-17 11:32AM  Motley Fool]
▶ 5 Strong Sell Stocks the Market Gave Up On   [Aug-10-17 02:38PM  Zacks]
▶ Here's Why Green Plains Partners LP Rose 10.7% in July   [Aug-03-17 08:48AM  Motley Fool]
▶ Green Plains reports 2Q loss   [Jul-31-17 10:27PM  Associated Press]
▶ Green Plains Partners misses Street 2Q forecasts   [10:06PM  Associated Press]
▶ Green Plains Partners Increases Quarterly Distribution   [Jul-20-17 04:30PM  GlobeNewswire]
▶ Sink or Swim: Malls fail despite upgrades   [Jul-05-17 02:12PM  Yahoo Finance Video]
▶ Green Plains: Buy the Dip?   [Jun-28-17 07:52AM  Motley Fool]
▶ Green Plains CEO Sees Havoc in Icahn Ethanol Plan   [May-17-17 09:39AM  Bloomberg]
▶ Can Green Plains Be a Growth Stock?   [May-16-17 11:45AM  Motley Fool]
▶ Green Plains reports 1Q loss   [May-01-17 05:38PM  Associated Press]
▶ Green Plains Partners misses Street 1Q forecasts   [05:34PM  Associated Press]
▶ Green Plains Power Pattern Projects New Highs   [Apr-03-17 07:00AM  TheStreet.com]
▶ Green Plains to Present at the 29th Annual ROTH Conference   [Mar-13-17 09:50AM  GlobeNewswire]
▶ Becker: Trump Will Be Good for Ethanol Industry   [Dec-27-16 10:24AM  at Bloomberg]
▶ Is Renewable Energy Set To Bounce Back In 2017?   [Dec-23-16 11:30AM  at Insider Monkey]
▶ Is Intellia Therapeutics Inc (NTLA) A Good Stock To Buy?   [Dec-12-16 08:33PM  at Insider Monkey]
▶ Is Ardelyx Inc (ARDX) A Good Stock To Buy Right Now?   [Dec-10-16 02:34PM  at Insider Monkey]
▶ With 'Selling Pressure Overdone,' Green Plains Is Now a Buy   [Dec-06-16 01:47PM  at Barrons.com]
▶ Mitel Networks Corp (MITL): 73% Surge in Hedge Fund Ownership   [Nov-28-16 11:26PM  at Insider Monkey]
▶ Green Plains Declares Quarterly Cash Dividend   [Nov-16-16 04:15PM  GlobeNewswire]
Stock chart of GPP Financial statements of GPP
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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