Intrinsic value of NGL Energy Partners - NGL

Previous Close

$11.65

  Intrinsic Value

$774.34

stock screener

  Rating & Target

str. buy

+999%

  Value-price divergence*

+5000%

Previous close

$11.65

 
Intrinsic value

$774.34

 
Up/down potential

+999%

 
Rating

str. buy

 
Value-price divergence*

+5000%

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

We calculate the intrinsic value of NGL 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 2017), $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 1.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  10.90
  38.90
  35.51
  32.46
  29.71
  27.24
  25.02
  23.02
  21.21
  19.59
  18.13
  16.82
  15.64
  14.57
  13.62
  12.76
  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
Revenue, $m
  13,022
  18,088
  24,510
  32,466
  42,113
  53,585
  66,991
  82,410
  99,892
  119,464
  141,127
  164,865
  190,647
  218,433
  248,176
  279,832
  313,355
  348,707
  385,857
  424,783
  465,474
  507,932
  552,169
  598,211
  646,095
  695,871
  747,600
  801,355
  857,219
  915,289
  975,668
Variable operating expenses, $m
 
  11,881
  16,049
  21,211
  27,470
  34,914
  43,612
  53,617
  64,960
  77,659
  91,716
  106,973
  123,701
  141,730
  161,029
  181,569
  203,320
  226,258
  250,363
  275,620
  302,023
  329,572
  358,275
  388,149
  419,219
  451,516
  485,080
  519,959
  556,206
  593,885
  633,062
Fixed operating expenses, $m
 
  4,369
  4,478
  4,590
  4,704
  4,822
  4,943
  5,066
  5,193
  5,323
  5,456
  5,592
  5,732
  5,875
  6,022
  6,173
  6,327
  6,485
  6,647
  6,813
  6,984
  7,158
  7,337
  7,521
  7,709
  7,902
  8,099
  8,302
  8,509
  8,722
  8,940
Total operating expenses, $m
  12,755
  16,250
  20,527
  25,801
  32,174
  39,736
  48,555
  58,683
  70,153
  82,982
  97,172
  112,565
  129,433
  147,605
  167,051
  187,742
  209,647
  232,743
  257,010
  282,433
  309,007
  336,730
  365,612
  395,670
  426,928
  459,418
  493,179
  528,261
  564,715
  602,607
  642,002
Operating income, $m
  268
  1,838
  3,984
  6,666
  9,938
  13,849
  18,436
  23,727
  29,739
  36,482
  43,956
  52,300
  61,214
  70,827
  81,125
  92,090
  103,708
  115,963
  128,846
  142,349
  156,468
  171,202
  186,557
  202,541
  219,168
  236,454
  254,421
  273,094
  292,504
  312,682
  333,666
EBITDA, $m
  506
  2,206
  4,432
  7,212
  10,604
  14,656
  19,408
  24,889
  31,118
  38,102
  45,844
  54,336
  63,568
  73,524
  84,189
  95,545
  107,577
  120,269
  133,610
  147,594
  162,215
  177,473
  193,374
  209,927
  227,145
  245,045
  263,651
  282,988
  303,087
  323,983
  345,712
Interest expense (income), $m
  118
  119
  183
  264
  365
  486
  631
  800
  995
  1,215
  1,462
  1,736
  2,035
  2,360
  2,711
  3,086
  3,486
  3,908
  4,354
  4,823
  5,314
  5,828
  6,363
  6,921
  7,502
  8,106
  8,734
  9,387
  10,065
  10,770
  11,503
Earnings before tax, $m
  146
  1,718
  3,801
  6,401
  9,574
  13,363
  17,805
  22,927
  28,744
  35,267
  42,494
  50,565
  59,179
  68,467
  78,414
  89,004
  100,222
  112,055
  124,492
  137,526
  151,153
  165,375
  180,194
  195,620
  211,666
  228,347
  245,687
  263,707
  282,439
  301,912
  322,164
Tax expense, $m
  2
  464
  1,026
  1,728
  2,585
  3,608
  4,807
  6,190
  7,761
  9,522
  11,473
  13,652
  15,978
  18,486
  21,172
  24,031
  27,060
  30,255
  33,613
  37,132
  40,811
  44,651
  48,652
  52,817
  57,150
  61,654
  66,335
  71,201
  76,258
  81,516
  86,984
Net income, $m
  137
  1,254
  2,774
  4,673
  6,989
  9,755
  12,998
  16,736
  20,983
  25,745
  31,020
  36,912
  43,201
  49,981
  57,242
  64,973
  73,162
  81,800
  90,879
  100,394
  110,342
  120,723
  131,542
  142,803
  154,516
  166,694
  179,351
  192,506
  206,180
  220,396
  235,179

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  12
  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
  6,320
  8,763
  11,875
  15,730
  20,404
  25,962
  32,457
  39,927
  48,397
  57,880
  68,376
  79,877
  92,368
  105,830
  120,241
  135,577
  151,819
  168,947
  186,946
  205,805
  225,520
  246,091
  267,524
  289,831
  313,031
  337,147
  362,209
  388,253
  415,319
  443,454
  472,707
Adjusted assets (=assets-cash), $m
  6,308
  8,763
  11,875
  15,730
  20,404
  25,962
  32,457
  39,927
  48,397
  57,880
  68,376
  79,877
  92,368
  105,830
  120,241
  135,577
  151,819
  168,947
  186,946
  205,805
  225,520
  246,091
  267,524
  289,831
  313,031
  337,147
  362,209
  388,253
  415,319
  443,454
  472,707
Revenue / Adjusted assets
  2.064
  2.064
  2.064
  2.064
  2.064
  2.064
  2.064
  2.064
  2.064
  2.064
  2.064
  2.064
  2.064
  2.064
  2.064
  2.064
  2.064
  2.064
  2.064
  2.064
  2.064
  2.064
  2.064
  2.064
  2.064
  2.064
  2.064
  2.064
  2.064
  2.064
  2.064
Average production assets, $m
  2,877
  3,997
  5,417
  7,175
  9,307
  11,842
  14,805
  18,213
  22,076
  26,402
  31,189
  36,435
  42,133
  48,274
  54,847
  61,843
  69,251
  77,064
  85,274
  93,877
  102,870
  112,253
  122,029
  132,205
  142,787
  153,788
  165,220
  177,099
  189,445
  202,279
  215,623
Working capital, $m
  545
  778
  1,054
  1,396
  1,811
  2,304
  2,881
  3,544
  4,295
  5,137
  6,068
  7,089
  8,198
  9,393
  10,672
  12,033
  13,474
  14,994
  16,592
  18,266
  20,015
  21,841
  23,743
  25,723
  27,782
  29,922
  32,147
  34,458
  36,860
  39,357
  41,954
Total debt, $m
  2,993
  4,582
  6,608
  9,117
  12,160
  15,778
  20,006
  24,870
  30,384
  36,557
  43,390
  50,877
  59,008
  67,772
  77,154
  87,138
  97,711
  108,862
  120,579
  132,856
  145,691
  159,082
  173,035
  187,557
  202,660
  218,360
  234,675
  251,630
  269,250
  287,565
  306,609
Total liabilities, $m
  4,116
  5,705
  7,731
  10,240
  13,283
  16,901
  21,129
  25,993
  31,507
  37,680
  44,513
  52,000
  60,131
  68,895
  78,277
  88,261
  98,834
  109,985
  121,702
  133,979
  146,814
  160,205
  174,158
  188,680
  203,783
  219,483
  235,798
  252,753
  270,373
  288,688
  307,732
Total equity, $m
  2,204
  3,058
  4,144
  5,490
  7,121
  9,061
  11,327
  13,935
  16,891
  20,200
  23,863
  27,877
  32,236
  36,935
  41,964
  47,317
  52,985
  58,963
  65,244
  71,826
  78,707
  85,886
  93,366
  101,151
  109,248
  117,664
  126,411
  135,500
  144,946
  154,765
  164,975
Total liabilities and equity, $m
  6,320
  8,763
  11,875
  15,730
  20,404
  25,962
  32,456
  39,928
  48,398
  57,880
  68,376
  79,877
  92,367
  105,830
  120,241
  135,578
  151,819
  168,948
  186,946
  205,805
  225,521
  246,091
  267,524
  289,831
  313,031
  337,147
  362,209
  388,253
  415,319
  443,453
  472,707
Debt-to-equity ratio
  1.358
  1.500
  1.590
  1.660
  1.710
  1.740
  1.770
  1.780
  1.800
  1.810
  1.820
  1.830
  1.830
  1.830
  1.840
  1.840
  1.840
  1.850
  1.850
  1.850
  1.850
  1.850
  1.850
  1.850
  1.860
  1.860
  1.860
  1.860
  1.860
  1.860
  1.860
Adjusted equity ratio
  0.347
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  137
  1,254
  2,774
  4,673
  6,989
  9,755
  12,998
  16,736
  20,983
  25,745
  31,020
  36,912
  43,201
  49,981
  57,242
  64,973
  73,162
  81,800
  90,879
  100,394
  110,342
  120,723
  131,542
  142,803
  154,516
  166,694
  179,351
  192,506
  206,180
  220,396
  235,179
Depreciation, amort., depletion, $m
  238
  369
  448
  546
  665
  807
  972
  1,163
  1,379
  1,620
  1,888
  2,035
  2,354
  2,697
  3,064
  3,455
  3,869
  4,305
  4,764
  5,245
  5,747
  6,271
  6,817
  7,386
  7,977
  8,591
  9,230
  9,894
  10,584
  11,300
  12,046
Funds from operations, $m
  -312
  1,623
  3,222
  5,219
  7,654
  10,562
  13,970
  17,899
  22,362
  27,365
  32,908
  38,948
  45,554
  52,678
  60,306
  68,428
  77,031
  86,105
  95,643
  105,638
  116,089
  126,995
  138,359
  150,188
  162,493
  175,285
  188,581
  202,400
  216,764
  231,696
  247,225
Change in working capital, $m
  -285
  218
  276
  342
  415
  493
  576
  663
  752
  842
  932
  1,021
  1,109
  1,195
  1,279
  1,361
  1,441
  1,520
  1,597
  1,674
  1,750
  1,826
  1,902
  1,980
  2,059
  2,140
  2,224
  2,311
  2,402
  2,497
  2,596
Cash from operations, $m
  -27
  1,405
  2,946
  4,877
  7,239
  10,068
  13,394
  17,236
  21,610
  26,523
  31,976
  37,927
  44,446
  51,483
  59,027
  67,067
  75,590
  84,585
  94,046
  103,965
  114,339
  125,169
  136,457
  148,209
  160,434
  173,145
  186,357
  200,089
  214,362
  229,199
  244,629
Maintenance CAPEX, $m
  0
  -161
  -223
  -303
  -401
  -520
  -662
  -827
  -1,017
  -1,233
  -1,475
  -1,742
  -2,035
  -2,354
  -2,697
  -3,064
  -3,455
  -3,869
  -4,305
  -4,764
  -5,245
  -5,747
  -6,271
  -6,817
  -7,386
  -7,977
  -8,591
  -9,230
  -9,894
  -10,584
  -11,300
New CAPEX, $m
  -364
  -1,121
  -1,419
  -1,758
  -2,132
  -2,535
  -2,963
  -3,408
  -3,864
  -4,325
  -4,788
  -5,246
  -5,698
  -6,141
  -6,573
  -6,996
  -7,409
  -7,813
  -8,210
  -8,603
  -8,993
  -9,383
  -9,776
  -10,175
  -10,582
  -11,000
  -11,432
  -11,880
  -12,346
  -12,833
  -13,344
Cash from investing activities, $m
  -363
  -1,282
  -1,642
  -2,061
  -2,533
  -3,055
  -3,625
  -4,235
  -4,881
  -5,558
  -6,263
  -6,988
  -7,733
  -8,495
  -9,270
  -10,060
  -10,864
  -11,682
  -12,515
  -13,367
  -14,238
  -15,130
  -16,047
  -16,992
  -17,968
  -18,977
  -20,023
  -21,110
  -22,240
  -23,417
  -24,644
Free cash flow, $m
  -390
  124
  1,303
  2,816
  4,706
  7,013
  9,769
  13,001
  16,729
  20,965
  25,714
  30,939
  36,712
  42,989
  49,757
  57,007
  64,726
  72,904
  81,530
  90,598
  100,102
  110,039
  120,409
  131,216
  142,466
  154,167
  166,333
  178,979
  192,122
  205,782
  219,985
Issuance/(repayment) of debt, $m
  96
  1,601
  2,026
  2,509
  3,043
  3,618
  4,228
  4,863
  5,514
  6,173
  6,833
  7,487
  8,132
  8,764
  9,381
  9,984
  10,573
  11,150
  11,717
  12,278
  12,834
  13,392
  13,953
  14,522
  15,103
  15,700
  16,316
  16,955
  17,620
  18,315
  19,044
Issuance/(repurchase) of shares, $m
  287
  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 from financing (excl. dividends), $m  
  556
  1,601
  2,026
  2,509
  3,043
  3,618
  4,228
  4,863
  5,514
  6,173
  6,833
  7,487
  8,132
  8,764
  9,381
  9,984
  10,573
  11,150
  11,717
  12,278
  12,834
  13,392
  13,953
  14,522
  15,103
  15,700
  16,316
  16,955
  17,620
  18,315
  19,044
Total cash flow (excl. dividends), $m
  166
  1,725
  3,329
  5,325
  7,749
  10,631
  13,998
  17,865
  22,243
  27,138
  32,547
  38,426
  44,844
  51,752
  59,139
  66,991
  75,299
  84,054
  93,248
  102,876
  112,936
  123,430
  134,362
  145,738
  157,569
  169,867
  182,649
  195,933
  209,742
  224,098
  239,029
Retained Cash Flow (-), $m
  -548
  -854
  -1,086
  -1,345
  -1,631
  -1,940
  -2,267
  -2,607
  -2,956
  -3,309
  -3,663
  -4,014
  -4,359
  -4,698
  -5,029
  -5,353
  -5,668
  -5,978
  -6,282
  -6,582
  -6,881
  -7,179
  -7,480
  -7,785
  -8,097
  -8,417
  -8,747
  -9,089
  -9,446
  -9,819
  -10,209
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
 
  870
  2,243
  3,980
  6,118
  8,692
  11,731
  15,257
  19,287
  23,828
  28,884
  34,412
  40,485
  47,054
  54,109
  61,639
  69,631
  78,076
  86,966
  96,294
  106,056
  116,251
  126,882
  137,953
  149,472
  161,450
  173,902
  186,844
  200,296
  214,279
  228,819
Discount rate, %
 
  9.70
  10.19
  10.69
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
  21.17
  22.23
  23.34
  24.51
  25.74
  27.02
  28.38
  29.79
  31.28
  32.85
  34.49
  36.21
  38.03
  39.93
PV of cash for distribution, $m
 
  793
  1,848
  2,934
  3,997
  4,978
  5,824
  6,486
  6,930
  7,138
  7,110
  6,853
  6,417
  5,834
  5,152
  4,420
  3,684
  2,982
  2,344
  1,788
  1,322
  948
  658
  441
  286
  179
  108
  63
  35
  19
  10
Current shareholders' claim on cash, %
  100
  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
  100.0

NGL Energy Partners LP owns and operates a vertically integrated energy business. The Company's segments are crude oil logistics, water solutions, liquids, retail propane, refined products and renewables, and corporate and other. Its crude oil logistics segment includes owned and leased crude oil storage terminals, and owned and leased pipeline injection stations. Its water solutions segment provides services for the treatment and disposal of wastewater generated from crude oil and natural gas production, and for the disposal of solids, such as tank bottoms and drilling fluids. Its liquids segment supplies natural gas liquids to retailers, wholesalers, refiners and petrochemical plants throughout the United States and in Canada. Its retail propane segment consists of the retail marketing, and sale and distribution of propane and distillates, among others. The Company's refined products and renewables segment is engaged in gasoline, diesel, ethanol and biodiesel marketing operations.

FINANCIAL RATIOS  of  NGL Energy Partners (NGL)

Valuation Ratios
P/E Ratio 10.2
Price to Sales 0.1
Price to Book 0.6
Price to Tangible Book
Price to Cash Flow -51.9
Price to Free Cash Flow -3.6
Growth Rates
Sales Growth Rate 10.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -45%
Cap. Spend. - 3 Yr. Gr. Rate 17.1%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 134.4%
Total Debt to Equity 135.8%
Interest Coverage 2
Management Effectiveness
Return On Assets 4.3%
Ret/ On Assets - 3 Yr. Avg. 1.8%
Return On Total Capital 2.8%
Ret/ On T. Cap. - 3 Yr. Avg. -0.2%
Return On Equity 7.1%
Return On Equity - 3 Yr. Avg. -0.5%
Asset Turnover 2.2
Profitability Ratios
Gross Margin 3.6%
Gross Margin - 3 Yr. Avg. 4.4%
EBITDA Margin 3.9%
EBITDA Margin - 3 Yr. Avg. 2.5%
Operating Margin 2.1%
Oper. Margin - 3 Yr. Avg. 0.4%
Pre-Tax Margin 1.1%
Pre-Tax Margin - 3 Yr. Avg. -0.1%
Net Profit Margin 1.1%
Net Profit Margin - 3 Yr. Avg. -0.1%
Effective Tax Rate 1.4%
Eff/ Tax Rate - 3 Yr. Avg. -1.7%
Payout Ratio 132.8%

NGL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NGL stock intrinsic value calculation we used $13022 million for the last fiscal year's total revenue generated by NGL Energy Partners. The default revenue input number comes from 2017 income statement of NGL Energy 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 NGL stock valuation model: a) initial revenue growth rate of 38.9% 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 9.7%, whose default value for NGL is calculated based on our internal credit rating of NGL Energy 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 NGL Energy 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 NGL stock the variable cost ratio is equal to 66%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $4262 million in the base year in the intrinsic value calculation for NGL 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% for NGL Energy Partners.

Corporate tax rate of 27% is the nominal tax rate for NGL Energy 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 NGL 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 NGL are equal to 22.1%.

Life of production assets of 17.9 years is the average useful life of capital assets used in NGL Energy 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 NGL is equal to 4.3%. 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 - $2204 million for NGL Energy 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 118.28 million for NGL Energy 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 NGL Energy Partners at the current share price and the inputted number of shares is $1.4 billion.

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COMPANY NEWS

▶ These Five Midstream MLPs Offer Highest Yield   [Sep-21-17 04:06PM  Market Realist]
▶ Can NGL Energy Partners Gain Upward Momentum?   [Sep-18-17 02:36PM  Market Realist]
▶ These MLPs Rose More than 6% Last Week   [01:00PM  Market Realist]
▶ Alerian Index Series September 2017 Index Review   [Sep-08-17 08:30AM  PR Newswire]
▶ Top MLPs Losers Last Week, Ended September 1   [Sep-05-17 12:01PM  Market Realist]
▶ NGL Energy Partners Hit With Quant Downgrade, Weak Charts   [Aug-16-17 04:00PM  TheStreet.com]
▶ These MLPs Fell More than 5% Last Week   [Aug-08-17 12:28PM  Market Realist]
▶ These Energy Stocks Fell the Most Last Week   [11:36AM  Market Realist]
▶ Which Segment Could Drive Williams Partners Q2 Performance   [Jul-28-17 07:40AM  Market Realist]
▶ Who Were the Top Energy Losers Last Week?   [Jul-25-17 08:12AM  Market Realist]
▶ NGL Energy Partners Announces Quarterly Cash Distribution   [Jul-20-17 07:40PM  Business Wire]
▶ Stay Away! 5 Dividend Stocks That Are Yield Traps   [Jul-13-17 11:30AM  Motley Fool]
▶ NGL Energy Hits New Year-to-Date Lows: Key for Investors   [Jun-23-17 09:09AM  Market Realist]
▶ Which MLP Stocks Were the Biggest Losers in April 2017?   [May-05-17 04:34PM  Market Realist]
▶ Which Segment Will Drive Williams Partners 1Q17 Performance?   [Apr-28-17 04:05PM  Market Realist]
▶ Midstream Stocks Returns and Implied Volatilities   [Apr-27-17 03:06PM  Market Realist]
▶ Implied Volatility in Midstream: Inside the Latest Returns   [Mar-14-17 01:05PM  Market Realist]
▶ MLPs Issue Equity; Tailwind or Headwind for Sector?   [Mar-03-17 04:13PM  at Barrons.com]
▶ Midstream Stocks: How Returns Impact Implied Volatility   [Feb-28-17 11:05AM  Market Realist]
▶ Inside Sunoco Logistics 4Q16 Earnings Drivers   [Feb-24-17 10:38AM  Market Realist]
Financial statements of NGL
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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