Intrinsic value of Plains GP Holdings - PAGP

Previous Close

$23.46

  Intrinsic Value

$357.48

stock screener

  Rating & Target

str. buy

+999%

Previous close

$23.46

 
Intrinsic value

$357.48

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of PAGP 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, %
  -12.83
  29.90
  27.41
  25.17
  23.15
  21.34
  19.70
  18.23
  16.91
  15.72
  14.65
  13.68
  12.81
  12.03
  11.33
  10.70
  10.13
  9.61
  9.15
  8.74
  8.36
  8.03
  7.72
  7.45
  7.21
  6.99
  6.79
  6.61
  6.45
  6.30
  6.17
Revenue, $m
  20,182
  34,064
  43,401
  54,324
  66,901
  81,176
  97,170
  114,887
  134,314
  155,426
  178,191
  202,571
  228,529
  256,026
  285,032
  315,520
  347,472
  380,878
  415,738
  452,063
  489,871
  529,195
  570,072
  612,555
  656,701
  702,579
  750,267
  799,851
  851,424
  905,091
  960,961
Variable operating expenses, $m
 
  32,318
  41,106
  51,387
  63,225
  76,660
  91,714
  108,390
  126,675
  146,546
  167,973
  190,663
  215,094
  240,976
  268,276
  296,972
  327,045
  358,488
  391,299
  425,488
  461,074
  498,086
  536,560
  576,545
  618,096
  661,278
  706,162
  752,831
  801,373
  851,885
  904,470
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
  19,192
  32,318
  41,106
  51,387
  63,225
  76,660
  91,714
  108,390
  126,675
  146,546
  167,973
  190,663
  215,094
  240,976
  268,276
  296,972
  327,045
  358,488
  391,299
  425,488
  461,074
  498,086
  536,560
  576,545
  618,096
  661,278
  706,162
  752,831
  801,373
  851,885
  904,470
Operating income, $m
  990
  1,746
  2,295
  2,937
  3,676
  4,515
  5,456
  6,497
  7,639
  8,880
  10,218
  11,908
  13,434
  15,051
  16,756
  18,548
  20,426
  22,390
  24,439
  26,575
  28,797
  31,109
  33,512
  36,009
  38,604
  41,301
  44,105
  47,019
  50,051
  53,206
  56,490
EBITDA, $m
  1,485
  4,138
  5,273
  6,600
  8,128
  9,862
  11,805
  13,957
  16,317
  18,882
  21,648
  24,609
  27,763
  31,103
  34,627
  38,331
  42,213
  46,271
  50,506
  54,919
  59,512
  64,289
  69,255
  74,416
  79,779
  85,353
  91,146
  97,170
  103,436
  109,955
  116,743
Interest expense (income), $m
  462
  536
  923
  1,385
  1,925
  2,547
  3,252
  4,043
  4,918
  5,879
  6,922
  8,047
  9,252
  10,535
  11,894
  13,328
  14,835
  16,414
  18,065
  19,788
  21,584
  23,452
  25,396
  27,417
  29,516
  31,698
  33,966
  36,323
  38,774
  41,323
  43,975
Earnings before tax, $m
  738
  1,210
  1,371
  1,552
  1,751
  1,969
  2,203
  2,454
  2,721
  3,002
  3,296
  3,861
  4,182
  4,515
  4,861
  5,220
  5,591
  5,976
  6,374
  6,786
  7,214
  7,656
  8,116
  8,593
  9,088
  9,603
  10,139
  10,697
  11,278
  11,883
  12,515
Tax expense, $m
  78
  327
  370
  419
  473
  532
  595
  663
  735
  810
  890
  1,042
  1,129
  1,219
  1,313
  1,409
  1,510
  1,613
  1,721
  1,832
  1,948
  2,067
  2,191
  2,320
  2,454
  2,593
  2,737
  2,888
  3,045
  3,208
  3,379
Net income, $m
  94
  883
  1,001
  1,133
  1,278
  1,437
  1,609
  1,792
  1,986
  2,191
  2,406
  2,819
  3,053
  3,296
  3,549
  3,811
  4,082
  4,362
  4,653
  4,954
  5,266
  5,589
  5,925
  6,273
  6,634
  7,010
  7,401
  7,808
  8,233
  8,675
  9,136

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  394
  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
  26,103
  34,759
  44,286
  55,433
  68,266
  82,832
  99,153
  117,232
  137,055
  158,598
  181,828
  206,705
  233,192
  261,251
  290,849
  321,959
  354,563
  388,651
  424,222
  461,288
  499,869
  539,994
  581,706
  625,056
  670,103
  716,917
  765,579
  816,174
  868,800
  923,562
  980,572
Adjusted assets (=assets-cash), $m
  25,709
  34,759
  44,286
  55,433
  68,266
  82,832
  99,153
  117,232
  137,055
  158,598
  181,828
  206,705
  233,192
  261,251
  290,849
  321,959
  354,563
  388,651
  424,222
  461,288
  499,869
  539,994
  581,706
  625,056
  670,103
  716,917
  765,579
  816,174
  868,800
  923,562
  980,572
Revenue / Adjusted assets
  0.785
  0.980
  0.980
  0.980
  0.980
  0.980
  0.980
  0.980
  0.980
  0.980
  0.980
  0.980
  0.980
  0.980
  0.980
  0.980
  0.980
  0.980
  0.980
  0.980
  0.980
  0.980
  0.980
  0.980
  0.980
  0.980
  0.980
  0.980
  0.980
  0.980
  0.980
Average production assets, $m
  14,851
  21,358
  27,212
  34,061
  41,947
  50,897
  60,926
  72,034
  84,215
  97,452
  111,726
  127,012
  143,287
  160,528
  178,715
  197,831
  217,865
  238,810
  260,668
  283,443
  307,149
  331,805
  357,435
  384,072
  411,751
  440,517
  470,417
  501,506
  533,843
  567,492
  602,522
Working capital, $m
  -391
  -3,338
  -4,253
  -5,324
  -6,556
  -7,955
  -9,523
  -11,259
  -13,163
  -15,232
  -17,463
  -19,852
  -22,396
  -25,091
  -27,933
  -30,921
  -34,052
  -37,326
  -40,742
  -44,302
  -48,007
  -51,861
  -55,867
  -60,030
  -64,357
  -68,853
  -73,526
  -78,385
  -83,440
  -88,699
  -94,174
Total debt, $m
  11,839
  17,102
  25,648
  35,646
  47,158
  60,224
  74,863
  91,080
  108,861
  128,185
  149,022
  171,338
  195,097
  220,265
  246,815
  274,720
  303,966
  334,543
  366,451
  399,699
  434,305
  470,298
  507,714
  546,598
  587,005
  628,998
  672,647
  718,031
  765,237
  814,358
  865,496
Total liabilities, $m
  24,366
  31,179
  39,725
  49,723
  61,235
  74,301
  88,940
  105,157
  122,938
  142,262
  163,099
  185,415
  209,174
  234,342
  260,892
  288,797
  318,043
  348,620
  380,528
  413,776
  448,382
  484,375
  521,791
  560,675
  601,082
  643,075
  686,724
  732,108
  779,314
  828,435
  879,573
Total equity, $m
  1,737
  3,580
  4,561
  5,710
  7,031
  8,532
  10,213
  12,075
  14,117
  16,336
  18,728
  21,291
  24,019
  26,909
  29,957
  33,162
  36,520
  40,031
  43,695
  47,513
  51,486
  55,619
  59,916
  64,381
  69,021
  73,842
  78,855
  84,066
  89,486
  95,127
  100,999
Total liabilities and equity, $m
  26,103
  34,759
  44,286
  55,433
  68,266
  82,833
  99,153
  117,232
  137,055
  158,598
  181,827
  206,706
  233,193
  261,251
  290,849
  321,959
  354,563
  388,651
  424,223
  461,289
  499,868
  539,994
  581,707
  625,056
  670,103
  716,917
  765,579
  816,174
  868,800
  923,562
  980,572
Debt-to-equity ratio
  6.816
  4.780
  5.620
  6.240
  6.710
  7.060
  7.330
  7.540
  7.710
  7.850
  7.960
  8.050
  8.120
  8.190
  8.240
  8.280
  8.320
  8.360
  8.390
  8.410
  8.440
  8.460
  8.470
  8.490
  8.500
  8.520
  8.530
  8.540
  8.550
  8.560
  8.570
Adjusted equity ratio
  0.052
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103
  0.103

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  94
  883
  1,001
  1,133
  1,278
  1,437
  1,609
  1,792
  1,986
  2,191
  2,406
  2,819
  3,053
  3,296
  3,549
  3,811
  4,082
  4,362
  4,653
  4,954
  5,266
  5,589
  5,925
  6,273
  6,634
  7,010
  7,401
  7,808
  8,233
  8,675
  9,136
Depreciation, amort., depletion, $m
  495
  2,392
  2,978
  3,663
  4,451
  5,346
  6,349
  7,460
  8,678
  10,002
  11,429
  12,701
  14,329
  16,053
  17,872
  19,783
  21,786
  23,881
  26,067
  28,344
  30,715
  33,180
  35,744
  38,407
  41,175
  44,052
  47,042
  50,151
  53,384
  56,749
  60,252
Funds from operations, $m
  440
  3,276
  3,979
  4,796
  5,730
  6,784
  7,958
  9,252
  10,664
  12,193
  13,836
  15,520
  17,382
  19,349
  21,420
  23,594
  25,868
  28,243
  30,720
  33,298
  35,981
  38,770
  41,668
  44,680
  47,809
  51,062
  54,443
  57,959
  61,617
  65,424
  69,388
Change in working capital, $m
  -271
  -768
  -915
  -1,071
  -1,233
  -1,399
  -1,567
  -1,736
  -1,904
  -2,069
  -2,231
  -2,389
  -2,544
  -2,695
  -2,843
  -2,988
  -3,131
  -3,274
  -3,416
  -3,560
  -3,705
  -3,854
  -4,006
  -4,163
  -4,326
  -4,496
  -4,673
  -4,859
  -5,054
  -5,259
  -5,475
Cash from operations, $m
  711
  4,044
  4,894
  5,866
  6,962
  8,182
  9,525
  10,988
  12,568
  14,262
  16,067
  17,909
  19,925
  22,044
  24,263
  26,581
  28,999
  31,517
  34,136
  36,858
  39,686
  42,623
  45,674
  48,843
  52,136
  55,558
  59,116
  62,818
  66,671
  70,683
  74,863
Maintenance CAPEX, $m
  0
  -1,645
  -2,136
  -2,721
  -3,406
  -4,195
  -5,090
  -6,093
  -7,203
  -8,421
  -9,745
  -11,173
  -12,701
  -14,329
  -16,053
  -17,872
  -19,783
  -21,786
  -23,881
  -26,067
  -28,344
  -30,715
  -33,180
  -35,744
  -38,407
  -41,175
  -44,052
  -47,042
  -50,151
  -53,384
  -56,749
New CAPEX, $m
  -1,334
  -4,905
  -5,854
  -6,849
  -7,886
  -8,950
  -10,028
  -11,108
  -12,181
  -13,237
  -14,274
  -15,286
  -16,275
  -17,241
  -18,187
  -19,116
  -20,034
  -20,946
  -21,857
  -22,775
  -23,706
  -24,656
  -25,630
  -26,636
  -27,680
  -28,766
  -29,900
  -31,089
  -32,337
  -33,649
  -35,030
Cash from investing activities, $m
  -1,273
  -6,550
  -7,990
  -9,570
  -11,292
  -13,145
  -15,118
  -17,201
  -19,384
  -21,658
  -24,019
  -26,459
  -28,976
  -31,570
  -34,240
  -36,988
  -39,817
  -42,732
  -45,738
  -48,842
  -52,050
  -55,371
  -58,810
  -62,380
  -66,087
  -69,941
  -73,952
  -78,131
  -82,488
  -87,033
  -91,779
Free cash flow, $m
  -562
  -2,506
  -3,096
  -3,704
  -4,330
  -4,962
  -5,593
  -6,213
  -6,816
  -7,397
  -7,952
  -8,550
  -9,051
  -9,526
  -9,977
  -10,406
  -10,817
  -11,215
  -11,602
  -11,984
  -12,364
  -12,747
  -13,137
  -13,537
  -13,951
  -14,383
  -14,836
  -15,312
  -15,816
  -16,350
  -16,916
Issuance/(repayment) of debt, $m
  -103
  7,182
  8,546
  9,998
  11,512
  13,066
  14,640
  16,216
  17,782
  19,324
  20,837
  22,315
  23,759
  25,169
  26,549
  27,906
  29,246
  30,577
  31,908
  33,248
  34,607
  35,993
  37,416
  38,884
  40,407
  41,993
  43,649
  45,384
  47,206
  49,121
  51,138
Issuance/(repurchase) of shares, $m
  2,365
  0
  0
  15
  43
  63
  72
  70
  56
  28
  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  
  812
  7,182
  8,546
  10,013
  11,555
  13,129
  14,712
  16,286
  17,838
  19,352
  20,837
  22,315
  23,759
  25,169
  26,549
  27,906
  29,246
  30,577
  31,908
  33,248
  34,607
  35,993
  37,416
  38,884
  40,407
  41,993
  43,649
  45,384
  47,206
  49,121
  51,138
Total cash flow (excl. dividends), $m
  254
  4,675
  5,450
  6,309
  7,226
  8,166
  9,119
  10,074
  11,021
  11,955
  12,885
  13,765
  14,708
  15,643
  16,573
  17,500
  18,428
  19,362
  20,305
  21,264
  22,242
  23,246
  24,279
  25,347
  26,456
  27,610
  28,814
  30,072
  31,390
  32,771
  34,222
Retained Cash Flow (-), $m
  25
  -824
  -981
  -1,148
  -1,322
  -1,500
  -1,681
  -1,862
  -2,042
  -2,219
  -2,393
  -2,562
  -2,728
  -2,890
  -3,049
  -3,204
  -3,358
  -3,511
  -3,664
  -3,818
  -3,974
  -4,133
  -4,296
  -4,465
  -4,640
  -4,822
  -5,012
  -5,211
  -5,421
  -5,640
  -5,872
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
 
  52
  68
  87
  109
  134
  162
  194
  230
  269
  311
  356
  405
  457
  512
  570
  631
  695
  762
  831
  904
  980
  1,058
  1,140
  1,225
  1,313
  1,405
  1,501
  1,600
  1,703
  1,810
Cash available for distribution, $m
 
  3,851
  4,469
  5,161
  5,904
  6,666
  7,438
  8,212
  8,979
  9,736
  10,492
  11,203
  11,980
  12,753
  13,524
  14,295
  15,070
  15,851
  16,642
  17,446
  18,268
  19,113
  19,983
  20,882
  21,816
  22,788
  23,801
  24,861
  25,969
  27,131
  28,350
Discount rate, %
 
  8.30
  8.72
  9.15
  9.61
  10.09
  10.59
  11.12
  11.68
  12.26
  12.88
  13.52
  14.20
  14.91
  15.65
  16.43
  17.26
  18.12
  19.02
  19.97
  20.97
  22.02
  23.12
  24.28
  25.49
  26.77
  28.11
  29.51
  30.99
  32.54
  34.16
PV of cash for distribution, $m
 
  3,556
  3,781
  3,969
  4,090
  4,122
  4,065
  3,925
  3,711
  3,438
  3,125
  2,777
  2,436
  2,095
  1,766
  1,459
  1,180
  935
  724
  548
  405
  292
  206
  141
  94
  61
  38
  23
  14
  8
  4
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  99.7
  99.1
  98.4
  97.7
  97.2
  96.8
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7
  96.7

Plains GP Holdings, L.P. owns and operates midstream energy infrastructure and provides logistics services for crude oil, natural gas liquids (NGL), natural gas and refined products. The Company operates through three segments: Transportation, Facilities, and Supply and Logistics. Through its three business segments, the Company is engaged in the transportation, storage, terminaling and marketing of crude oil, NGL and natural gas. The Transportation segment operations consist of fee-based activities associated with transporting crude oil and NGL on pipelines, gathering systems, trucks and barges. The Facilities segment operations consist of fee-based activities associated with providing storage, terminaling and throughput services for crude oil, refined products, NGL and natural gas, as well as NGL fractionation and isomerization services and natural gas and condensate processing services. The Supply and Logistics segment operations consist of the merchant-related activities.

FINANCIAL RATIOS  of  Plains GP Holdings (PAGP)

Valuation Ratios
P/E Ratio 25.3
Price to Sales 0.1
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow 3.3
Price to Free Cash Flow -3.8
Growth Rates
Sales Growth Rate -12.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -35.8%
Cap. Spend. - 3 Yr. Gr. Rate -3.7%
Financial Strength
Quick Ratio 0
Current Ratio 0.1
LT Debt to Equity 582.8%
Total Debt to Equity 681.6%
Interest Coverage 3
Management Effectiveness
Return On Assets 2%
Ret/ On Assets - 3 Yr. Avg. 1.8%
Return On Total Capital 0.7%
Ret/ On T. Cap. - 3 Yr. Avg. 0.8%
Return On Equity 5.4%
Return On Equity - 3 Yr. Avg. 5.8%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 14.6%
Gross Margin - 3 Yr. Avg. 12.8%
EBITDA Margin 8.4%
EBITDA Margin - 3 Yr. Avg. 7.2%
Operating Margin 4.9%
Oper. Margin - 3 Yr. Avg. 4.8%
Pre-Tax Margin 3.7%
Pre-Tax Margin - 3 Yr. Avg. 3.8%
Net Profit Margin 0.5%
Net Profit Margin - 3 Yr. Avg. 0.4%
Effective Tax Rate 10.6%
Eff/ Tax Rate - 3 Yr. Avg. 14.2%
Payout Ratio 248.9%

PAGP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PAGP stock intrinsic value calculation we used $26223 million for the last fiscal year's total revenue generated by Plains GP Holdings. The default revenue input number comes from 2016 income statement of Plains GP Holdings. 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 PAGP stock valuation model: a) initial revenue growth rate of 29.9% 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 8.3%, whose default value for PAGP is calculated based on our internal credit rating of Plains GP Holdings, 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 Plains GP Holdings.
    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 PAGP stock the variable cost ratio is equal to 95.1%.

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 PAGP 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 Plains GP Holdings.

Corporate tax rate of 27% is the nominal tax rate for Plains GP Holdings. 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 PAGP stock is equal to 0.2%.

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 PAGP are equal to 62.7%.

Life of production assets of 10 years is the average useful life of capital assets used in Plains GP Holdings 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 PAGP is equal to -9.8%. 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 - $2756 million for Plains GP Holdings - 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 145 million for Plains GP Holdings 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 Plains GP Holdings at the current share price and the inputted number of shares is $3.4 billion.

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COMPANY NEWS

▶ The Mighty Middle of the Market   [Jun-13-18 12:55PM  InvestorPlace]
▶ Plains GP: 1Q Earnings Snapshot   [May-08-18 05:31PM  Associated Press]
▶ Plains All American CEO made less in 2017 than median employee pay   [Apr-05-18 03:32PM  American City Business Journals]
▶ Barclays Downgrades Plains All American Pipeline   [Jan-25-18 02:45PM  Market Realist]
▶ Barclays Downgraded 9 MLPs Last Week   [01:14PM  Market Realist]
▶ Energy Transfer Equity Is Underperforming AMLP in 2018   [Jan-12-18 10:27AM  Market Realist]
▶ Institutional Investors and ETE, PAGP, WGP, and WMB   [Dec-19-17 09:01AM  Market Realist]
▶ No matter how high crude oil goes, it will fall hard back below $50   [Nov-22-17 10:42AM  Yahoo Finance Video]
▶ Crude oil is overextended and won't go much higher: NYSE trader   [Nov-21-17 01:32PM  Yahoo Finance Video]
▶ Rising crude prices are bring US shale rigs back on line   [Nov-20-17 11:05AM  Yahoo Finance Video]
▶ Plains GP misses 3Q profit forecasts   [Nov-06-17 04:58PM  Associated Press]
▶ A Look at Plains GP Holdings Correlation with Crude Oil   [Oct-12-17 07:40AM  Market Realist]
▶ The 10 MLPs Most Correlated with Crude Oil   [Oct-11-17 05:48PM  Market Realist]
▶ Why Williams Companies Is Outperforming Peers in 2017   [Sep-20-17 01:37PM  Market Realist]
▶ Plains GP misses 2Q profit forecasts   [12:01AM  Associated Press]
▶ ETE, PAGP, WGP, and ENLC: How Do Their Valuations Compare?   [May-31-17 07:37AM  Market Realist]
▶ Why PAGP Has the Highest Distribution Yield among Its Peers   [May-30-17 09:06AM  Market Realist]
▶ ETE, PAGP, WGP, and ENLC: Analyzing MLPs General Partners   [May-29-17 02:47PM  Market Realist]
▶ Plains GP misses 1Q profit forecasts   [May-08-17 05:48PM  Associated Press]
Financial statements of PAGP
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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