Intrinsic value of Hi-Crush Partners - HCLP

Previous Close

$9.50

  Intrinsic Value

$26.74

stock screener

  Rating & Target

str. buy

+181%

Previous close

$9.50

 
Intrinsic value

$26.74

 
Up/down potential

+181%

 
Rating

str. buy

We calculate the intrinsic value of HCLP 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 0.9

 

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, %
  -40.00
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  204
  326
  504
  754
  1,094
  1,544
  2,122
  2,849
  3,741
  4,813
  6,080
  7,550
  9,230
  11,126
  13,237
  15,565
  18,105
  20,856
  23,812
  26,968
  30,320
  33,864
  37,595
  41,511
  45,610
  49,891
  54,356
  59,005
  63,842
  68,872
  74,100
Variable operating expenses, $m
 
  67
  104
  155
  225
  318
  437
  587
  771
  992
  1,252
  1,555
  1,901
  2,292
  2,727
  3,206
  3,730
  4,296
  4,905
  5,555
  6,246
  6,976
  7,745
  8,551
  9,396
  10,278
  11,197
  12,155
  13,152
  14,188
  15,265
Fixed operating expenses, $m
 
  242
  248
  254
  260
  267
  274
  281
  288
  295
  302
  310
  317
  325
  333
  342
  350
  359
  368
  377
  387
  396
  406
  416
  427
  438
  448
  460
  471
  483
  495
Total operating expenses, $m
  272
  309
  352
  409
  485
  585
  711
  868
  1,059
  1,287
  1,554
  1,865
  2,218
  2,617
  3,060
  3,548
  4,080
  4,655
  5,273
  5,932
  6,633
  7,372
  8,151
  8,967
  9,823
  10,716
  11,645
  12,615
  13,623
  14,671
  15,760
Operating income, $m
  -68
  17
  152
  345
  608
  959
  1,412
  1,981
  2,683
  3,527
  4,525
  5,685
  7,011
  8,508
  10,177
  12,017
  14,025
  16,201
  18,538
  21,035
  23,687
  26,491
  29,444
  32,543
  35,787
  39,176
  42,710
  46,390
  50,220
  54,201
  58,340
EBITDA, $m
  -51
  45
  195
  408
  700
  1,088
  1,589
  2,219
  2,995
  3,929
  5,033
  6,315
  7,782
  9,437
  11,282
  13,316
  15,537
  17,941
  20,526
  23,286
  26,218
  29,318
  32,582
  36,008
  39,594
  43,340
  47,247
  51,315
  55,549
  59,950
  64,525
Interest expense (income), $m
  11
  9
  20
  35
  56
  86
  124
  173
  235
  312
  403
  511
  637
  781
  943
  1,123
  1,322
  1,539
  1,774
  2,026
  2,296
  2,582
  2,885
  3,204
  3,539
  3,889
  4,255
  4,636
  5,033
  5,446
  5,876
Earnings before tax, $m
  -81
  8
  133
  310
  552
  873
  1,288
  1,808
  2,447
  3,216
  4,122
  5,173
  6,374
  7,728
  9,234
  10,894
  12,704
  14,662
  16,765
  19,009
  21,391
  23,909
  26,559
  29,339
  32,249
  35,287
  38,455
  41,754
  45,186
  48,755
  52,464
Tax expense, $m
  0
  2
  36
  84
  149
  236
  348
  488
  661
  868
  1,113
  1,397
  1,721
  2,087
  2,493
  2,941
  3,430
  3,959
  4,526
  5,132
  5,776
  6,455
  7,171
  7,922
  8,707
  9,528
  10,383
  11,274
  12,200
  13,164
  14,165
Net income, $m
  -81
  6
  97
  226
  403
  638
  940
  1,320
  1,786
  2,347
  3,009
  3,777
  4,653
  5,641
  6,741
  7,952
  9,274
  10,703
  12,238
  13,877
  15,616
  17,453
  19,388
  21,417
  23,542
  25,760
  28,072
  30,481
  32,986
  35,591
  38,299

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  5
  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
  659
  1,046
  1,616
  2,417
  3,507
  4,948
  6,803
  9,131
  11,990
  15,428
  19,487
  24,198
  29,584
  35,659
  42,427
  49,887
  58,030
  66,846
  76,320
  86,436
  97,180
  108,537
  120,496
  133,047
  146,185
  159,907
  174,217
  189,118
  204,623
  220,744
  237,499
Adjusted assets (=assets-cash), $m
  654
  1,046
  1,616
  2,417
  3,507
  4,948
  6,803
  9,131
  11,990
  15,428
  19,487
  24,198
  29,584
  35,659
  42,427
  49,887
  58,030
  66,846
  76,320
  86,436
  97,180
  108,537
  120,496
  133,047
  146,185
  159,907
  174,217
  189,118
  204,623
  220,744
  237,499
Revenue / Adjusted assets
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
Average production assets, $m
  496
  793
  1,225
  1,832
  2,658
  3,750
  5,155
  6,920
  9,086
  11,692
  14,768
  18,338
  22,420
  27,024
  32,153
  37,807
  43,978
  50,659
  57,839
  65,505
  73,648
  82,255
  91,317
  100,829
  110,786
  121,185
  132,030
  143,323
  155,073
  167,290
  179,988
Working capital, $m
  -60
  -99
  -153
  -229
  -333
  -469
  -645
  -866
  -1,137
  -1,463
  -1,848
  -2,295
  -2,806
  -3,382
  -4,024
  -4,732
  -5,504
  -6,340
  -7,239
  -8,198
  -9,217
  -10,295
  -11,429
  -12,619
  -13,865
  -15,167
  -16,524
  -17,937
  -19,408
  -20,937
  -22,526
Total debt, $m
  196
  406
  716
  1,152
  1,745
  2,529
  3,538
  4,804
  6,359
  8,230
  10,438
  13,001
  15,931
  19,235
  22,917
  26,975
  31,406
  36,201
  41,355
  46,858
  52,703
  58,881
  65,387
  72,214
  79,361
  86,827
  94,611
  102,717
  111,152
  119,922
  129,037
Total liabilities, $m
  360
  569
  879
  1,315
  1,908
  2,692
  3,701
  4,967
  6,522
  8,393
  10,601
  13,164
  16,094
  19,398
  23,080
  27,138
  31,569
  36,364
  41,518
  47,021
  52,866
  59,044
  65,550
  72,377
  79,524
  86,990
  94,774
  102,880
  111,315
  120,085
  129,200
Total equity, $m
  300
  477
  737
  1,102
  1,599
  2,256
  3,102
  4,164
  5,467
  7,035
  8,886
  11,034
  13,490
  16,261
  19,347
  22,748
  26,462
  30,482
  34,802
  39,415
  44,314
  49,493
  54,946
  60,669
  66,660
  72,918
  79,443
  86,238
  93,308
  100,659
  108,300
Total liabilities and equity, $m
  660
  1,046
  1,616
  2,417
  3,507
  4,948
  6,803
  9,131
  11,989
  15,428
  19,487
  24,198
  29,584
  35,659
  42,427
  49,886
  58,031
  66,846
  76,320
  86,436
  97,180
  108,537
  120,496
  133,046
  146,184
  159,908
  174,217
  189,118
  204,623
  220,744
  237,500
Debt-to-equity ratio
  0.653
  0.850
  0.970
  1.050
  1.090
  1.120
  1.140
  1.150
  1.160
  1.170
  1.170
  1.180
  1.180
  1.180
  1.180
  1.190
  1.190
  1.190
  1.190
  1.190
  1.190
  1.190
  1.190
  1.190
  1.190
  1.190
  1.190
  1.190
  1.190
  1.190
  1.190
Adjusted equity ratio
  0.451
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -81
  6
  97
  226
  403
  638
  940
  1,320
  1,786
  2,347
  3,009
  3,777
  4,653
  5,641
  6,741
  7,952
  9,274
  10,703
  12,238
  13,877
  15,616
  17,453
  19,388
  21,417
  23,542
  25,760
  28,072
  30,481
  32,986
  35,591
  38,299
Depreciation, amort., depletion, $m
  17
  27
  42
  63
  91
  129
  177
  238
  312
  402
  507
  630
  770
  929
  1,105
  1,299
  1,511
  1,741
  1,988
  2,251
  2,531
  2,827
  3,138
  3,465
  3,807
  4,164
  4,537
  4,925
  5,329
  5,749
  6,185
Funds from operations, $m
  -36
  33
  139
  289
  494
  766
  1,117
  1,558
  2,099
  2,749
  3,517
  4,407
  5,424
  6,570
  7,846
  9,252
  10,785
  12,444
  14,226
  16,128
  18,147
  20,280
  22,526
  24,882
  27,349
  29,924
  32,609
  35,406
  38,315
  41,340
  44,484
Change in working capital, $m
  -9
  -37
  -54
  -76
  -103
  -137
  -176
  -221
  -271
  -326
  -385
  -447
  -511
  -576
  -642
  -708
  -772
  -836
  -899
  -960
  -1,019
  -1,077
  -1,134
  -1,190
  -1,246
  -1,302
  -1,357
  -1,413
  -1,471
  -1,529
  -1,589
Cash from operations, $m
  -27
  70
  193
  365
  598
  903
  1,293
  1,779
  2,370
  3,075
  3,902
  4,854
  5,935
  7,146
  8,488
  9,959
  11,557
  13,280
  15,124
  17,087
  19,166
  21,357
  23,660
  26,073
  28,595
  31,226
  33,967
  36,819
  39,786
  42,869
  46,073
Maintenance CAPEX, $m
  0
  -17
  -27
  -42
  -63
  -91
  -129
  -177
  -238
  -312
  -402
  -507
  -630
  -770
  -929
  -1,105
  -1,299
  -1,511
  -1,741
  -1,988
  -2,251
  -2,531
  -2,827
  -3,138
  -3,465
  -3,807
  -4,164
  -4,537
  -4,925
  -5,329
  -5,749
New CAPEX, $m
  -43
  -297
  -432
  -607
  -826
  -1,092
  -1,405
  -1,765
  -2,166
  -2,606
  -3,076
  -3,570
  -4,082
  -4,604
  -5,129
  -5,653
  -6,172
  -6,681
  -7,180
  -7,667
  -8,142
  -8,607
  -9,063
  -9,512
  -9,957
  -10,400
  -10,844
  -11,293
  -11,750
  -12,217
  -12,698
Cash from investing activities, $m
  -126
  -314
  -459
  -649
  -889
  -1,183
  -1,534
  -1,942
  -2,404
  -2,918
  -3,478
  -4,077
  -4,712
  -5,374
  -6,058
  -6,758
  -7,471
  -8,192
  -8,921
  -9,655
  -10,393
  -11,138
  -11,890
  -12,650
  -13,422
  -14,207
  -15,008
  -15,830
  -16,675
  -17,546
  -18,447
Free cash flow, $m
  -153
  -244
  -266
  -284
  -291
  -280
  -241
  -163
  -34
  157
  424
  776
  1,222
  1,772
  2,430
  3,201
  4,087
  5,088
  6,204
  7,433
  8,772
  10,219
  11,771
  13,423
  15,173
  17,019
  18,958
  20,989
  23,110
  25,323
  27,626
Issuance/(repayment) of debt, $m
  -58
  213
  310
  436
  593
  784
  1,009
  1,267
  1,555
  1,870
  2,208
  2,563
  2,930
  3,305
  3,682
  4,058
  4,430
  4,796
  5,154
  5,503
  5,845
  6,178
  6,506
  6,828
  7,147
  7,465
  7,784
  8,107
  8,434
  8,770
  9,115
Issuance/(repurchase) of shares, $m
  189
  173
  163
  139
  94
  20
  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  
  146
  386
  473
  575
  687
  804
  1,009
  1,267
  1,555
  1,870
  2,208
  2,563
  2,930
  3,305
  3,682
  4,058
  4,430
  4,796
  5,154
  5,503
  5,845
  6,178
  6,506
  6,828
  7,147
  7,465
  7,784
  8,107
  8,434
  8,770
  9,115
Total cash flow (excl. dividends), $m
  -7
  142
  207
  291
  396
  523
  768
  1,104
  1,521
  2,028
  2,632
  3,339
  4,153
  5,077
  6,112
  7,259
  8,517
  9,884
  11,358
  12,936
  14,617
  16,398
  18,276
  20,251
  22,320
  24,484
  26,742
  29,095
  31,545
  34,093
  36,741
Retained Cash Flow (-), $m
  -166
  -179
  -260
  -365
  -497
  -657
  -846
  -1,062
  -1,304
  -1,568
  -1,851
  -2,148
  -2,456
  -2,770
  -3,086
  -3,402
  -3,713
  -4,020
  -4,320
  -4,613
  -4,899
  -5,179
  -5,453
  -5,723
  -5,991
  -6,257
  -6,525
  -6,795
  -7,070
  -7,351
  -7,641
Prev. year cash balance distribution, $m
 
  2
  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
 
  -35
  -53
  -74
  -101
  -134
  -78
  42
  217
  460
  781
  1,190
  1,696
  2,307
  3,026
  3,857
  4,803
  5,864
  7,037
  8,323
  9,718
  11,219
  12,823
  14,527
  16,329
  18,227
  20,217
  22,300
  24,475
  26,741
  29,101
Discount rate, %
 
  8.70
  9.14
  9.59
  10.07
  10.57
  11.10
  11.66
  12.24
  12.85
  13.50
  14.17
  14.88
  15.62
  16.41
  17.23
  18.09
  18.99
  19.94
  20.94
  21.98
  23.08
  24.24
  25.45
  26.72
  28.06
  29.46
  30.93
  32.48
  34.11
  35.81
PV of cash for distribution, $m
 
  -32
  -44
  -57
  -69
  -81
  -41
  19
  86
  155
  220
  277
  321
  349
  361
  356
  336
  305
  267
  225
  183
  143
  108
  79
  56
  38
  25
  15
  9
  5
  3
Current shareholders' claim on cash, %
  100
  83.2
  74.4
  69.8
  67.8
  67.5
  67.5
  67.5
  67.5
  67.5
  67.5
  67.5
  67.5
  67.5
  67.5
  67.5
  67.5
  67.5
  67.5
  67.5
  67.5
  67.5
  67.5
  67.5
  67.5
  67.5
  67.5
  67.5
  67.5
  67.5
  67.5

Hi-Crush Partners LP is an integrated producer, transporter, marketer and distributor of monocrystalline sand, a specialized mineral that is used as a proppant to manage the recovery rates of hydrocarbons from oil and natural gas wells. Its reserves consist of northern white sand, a resource in Wisconsin and limited portions of the upper Midwest region of the United States. It owns and operates a portfolio of sand facilities with on-site wet and dry plant assets, including direct access to the United States railroads for distribution to in-basin terminals. It owns and operates a network of strategically located terminals and an integrated distribution system throughout North America, including its PropStream integrated logistics solution, which delivers proppant into the blender at the well site. The Company's Blair facility, as of December 31, 2016, contained 117.7 million tons of proven recoverable reserves of frac sand meeting API specifications.

FINANCIAL RATIOS  of  Hi-Crush Partners (HCLP)

Valuation Ratios
P/E Ratio -7.5
Price to Sales 3
Price to Book 2
Price to Tangible Book
Price to Cash Flow -22.4
Price to Free Cash Flow -8.6
Growth Rates
Sales Growth Rate -40%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -64.5%
Cap. Spend. - 3 Yr. Gr. Rate 31.3%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 64.3%
Total Debt to Equity 65.3%
Interest Coverage -6
Management Effectiveness
Return On Assets -11.7%
Ret/ On Assets - 3 Yr. Avg. 9.8%
Return On Total Capital -18.4%
Ret/ On T. Cap. - 3 Yr. Avg. 8.5%
Return On Equity -37.3%
Return On Equity - 3 Yr. Avg. 18.5%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 21.5%
EBITDA Margin -26%
EBITDA Margin - 3 Yr. Avg. 9.2%
Operating Margin -33.3%
Oper. Margin - 3 Yr. Avg. 4.4%
Pre-Tax Margin -39.7%
Pre-Tax Margin - 3 Yr. Avg. -0%
Net Profit Margin -39.7%
Net Profit Margin - 3 Yr. Avg. -0.1%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

HCLP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HCLP stock intrinsic value calculation we used $204 million for the last fiscal year's total revenue generated by Hi-Crush Partners. The default revenue input number comes from 2016 income statement of Hi-Crush 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 HCLP stock valuation model: a) initial revenue growth rate of 60% 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 8.7%, whose default value for HCLP is calculated based on our internal credit rating of Hi-Crush 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 Hi-Crush 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 HCLP stock the variable cost ratio is equal to 20.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $236 million in the base year in the intrinsic value calculation for HCLP 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 4.9% for Hi-Crush Partners.

Corporate tax rate of 27% is the nominal tax rate for Hi-Crush 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 HCLP 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 HCLP are equal to 242.9%.

Life of production assets of 29.1 years is the average useful life of capital assets used in Hi-Crush 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 HCLP is equal to -30.4%. 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 - $300 million for Hi-Crush 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 91.031 million for Hi-Crush 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 Hi-Crush Partners at the current share price and the inputted number of shares is $0.9 billion.

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Financial statements of HCLP
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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