Intrinsic value of PennTex Midstream Partners - PTXP

Previous Close

$20.00

  Intrinsic Value

$1.34

stock screener

  Rating & Target

str. sell

-93%

  Value-price divergence*

0%

Previous close

$20.00

 
Intrinsic value

$1.34

 
Up/down potential

-93%

 
Rating

str. sell

 
Value-price divergence*

0%

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

We calculate the intrinsic value of PTXP 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 0.8

 

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, %
  133.33
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  77
  79
  80
  82
  85
  87
  90
  93
  97
  100
  104
  108
  112
  117
  122
  127
  133
  139
  145
  152
  159
  166
  174
  182
  191
  200
  209
  219
  230
  241
  253
Variable operating expenses, $m
 
  71
  73
  75
  77
  79
  82
  85
  88
  91
  94
  98
  102
  106
  111
  116
  121
  126
  132
  138
  144
  151
  158
  165
  173
  181
  190
  199
  209
  219
  230
Fixed operating expenses, $m
 
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
Total operating expenses, $m
  71
  72
  74
  76
  78
  80
  83
  86
  89
  92
  95
  99
  103
  107
  112
  117
  122
  128
  134
  140
  146
  153
  160
  167
  175
  183
  192
  201
  211
  221
  232
Operating income, $m
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  16
  16
  17
  18
  19
  20
  21
EBITDA, $m
  20
  20
  21
  21
  22
  23
  23
  24
  25
  26
  27
  28
  29
  31
  32
  33
  35
  36
  38
  40
  42
  44
  46
  48
  50
  53
  55
  58
  61
  64
  67
Interest expense (income), $m
  5
  6
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  16
  16
  17
  18
  19
  20
Earnings before tax, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
Tax expense, $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
  0
Net income, $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
  1
  1
  1
  1
  1
  1

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  8
  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
  410
  409
  418
  429
  441
  455
  469
  485
  503
  521
  541
  563
  586
  610
  636
  663
  692
  723
  755
  790
  826
  864
  905
  947
  992
  1,039
  1,089
  1,142
  1,197
  1,255
  1,316
Adjusted assets (=assets-cash), $m
  402
  409
  418
  429
  441
  455
  469
  485
  503
  521
  541
  563
  586
  610
  636
  663
  692
  723
  755
  790
  826
  864
  905
  947
  992
  1,039
  1,089
  1,142
  1,197
  1,255
  1,316
Revenue / Adjusted assets
  0.192
  0.193
  0.191
  0.191
  0.193
  0.191
  0.192
  0.192
  0.193
  0.192
  0.192
  0.192
  0.191
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.193
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
Average production assets, $m
  384
  392
  401
  411
  423
  435
  449
  465
  481
  499
  518
  539
  561
  584
  609
  635
  663
  692
  723
  756
  791
  828
  866
  907
  950
  995
  1,043
  1,093
  1,146
  1,201
  1,260
Working capital, $m
  23
  15
  16
  16
  17
  17
  18
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  32
  34
  35
  37
  39
  41
  43
  45
  47
  49
Total debt, $m
  164
  168
  172
  177
  183
  189
  196
  204
  212
  221
  231
  241
  252
  264
  276
  289
  303
  318
  333
  350
  367
  385
  404
  425
  446
  469
  493
  518
  544
  572
  601
Total liabilities, $m
  191
  196
  200
  205
  211
  217
  224
  232
  240
  249
  259
  269
  280
  292
  304
  317
  331
  346
  361
  378
  395
  413
  432
  453
  474
  497
  521
  546
  572
  600
  629
Total equity, $m
  218
  214
  218
  224
  230
  237
  245
  253
  262
  272
  283
  294
  306
  318
  332
  346
  361
  377
  394
  412
  431
  451
  472
  495
  518
  543
  569
  596
  625
  655
  687
Total liabilities and equity, $m
  409
  410
  418
  429
  441
  454
  469
  485
  502
  521
  542
  563
  586
  610
  636
  663
  692
  723
  755
  790
  826
  864
  904
  948
  992
  1,040
  1,090
  1,142
  1,197
  1,255
  1,316
Debt-to-equity ratio
  0.752
  0.780
  0.790
  0.790
  0.790
  0.800
  0.800
  0.810
  0.810
  0.810
  0.820
  0.820
  0.820
  0.830
  0.830
  0.830
  0.840
  0.840
  0.840
  0.850
  0.850
  0.850
  0.860
  0.860
  0.860
  0.860
  0.870
  0.870
  0.870
  0.870
  0.870
Adjusted equity ratio
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $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
  1
  1
  1
  1
  1
  1
Depreciation, amort., depletion, $m
  14
  14
  15
  15
  15
  16
  16
  17
  18
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  28
  29
  30
  32
  33
  35
  36
  38
  40
  42
  44
  46
Funds from operations, $m
  73
  15
  15
  15
  16
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  34
  35
  37
  39
  40
  42
  44
  47
Change in working capital, $m
  16
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
Cash from operations, $m
  57
  14
  15
  15
  15
  16
  16
  17
  17
  18
  18
  19
  20
  21
  22
  22
  23
  24
  26
  27
  28
  29
  31
  32
  33
  35
  37
  38
  40
  42
  44
Maintenance CAPEX, $m
  0
  -14
  -14
  -15
  -15
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -40
  -42
  -44
New CAPEX, $m
  -16
  -8
  -9
  -10
  -12
  -13
  -14
  -15
  -17
  -18
  -19
  -20
  -22
  -23
  -25
  -26
  -28
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -48
  -50
  -53
  -55
  -58
Cash from investing activities, $m
  -17
  -22
  -23
  -25
  -27
  -28
  -30
  -31
  -34
  -36
  -37
  -39
  -42
  -43
  -46
  -48
  -51
  -53
  -56
  -59
  -63
  -66
  -69
  -73
  -76
  -80
  -84
  -88
  -93
  -97
  -102
Free cash flow, $m
  40
  -7
  -9
  -10
  -11
  -13
  -14
  -15
  -16
  -18
  -19
  -20
  -22
  -23
  -24
  -26
  -28
  -29
  -31
  -33
  -34
  -36
  -38
  -40
  -43
  -45
  -47
  -50
  -52
  -55
  -58
Issuance/(repayment) of debt, $m
  12
  4
  4
  5
  6
  6
  7
  8
  8
  9
  10
  10
  11
  12
  12
  13
  14
  15
  16
  16
  17
  18
  19
  20
  21
  23
  24
  25
  26
  28
  29
Issuance/(repurchase) of shares, $m
  0
  3
  5
  5
  6
  7
  7
  8
  9
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  30
  31
Cash from financing (excl. dividends), $m  
  6
  7
  9
  10
  12
  13
  14
  16
  17
  18
  20
  21
  23
  24
  25
  27
  29
  31
  33
  34
  36
  38
  40
  42
  44
  47
  49
  52
  54
  58
  60
Total cash flow (excl. dividends), $m
  46
  -1
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
Retained Cash Flow (-), $m
  26
  -4
  -5
  -6
  -6
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -30
  -32
Prev. year cash balance distribution, $m
 
  8
  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
 
  4
  -5
  -5
  -6
  -6
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -29
Discount rate, %
 
  6.80
  7.14
  7.50
  7.87
  8.27
  8.68
  9.11
  9.57
  10.05
  10.55
  11.08
  11.63
  12.21
  12.82
  13.46
  14.14
  14.84
  15.59
  16.37
  17.18
  18.04
  18.94
  19.89
  20.89
  21.93
  23.03
  24.18
  25.39
  26.66
  27.99
PV of cash for distribution, $m
 
  4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -3
  -3
  -3
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  99.6
  99.0
  98.4
  97.7
  96.9
  96.1
  95.3
  94.4
  93.5
  92.6
  91.7
  90.7
  89.7
  88.8
  87.8
  86.8
  85.8
  84.8
  83.8
  82.8
  81.8
  80.8
  79.8
  78.9
  77.9
  76.9
  76.0
  75.0
  74.1
  73.2

PennTex Midstream Partners, LP focuses on acquiring, owning, developing, and operating midstream energy infrastructure assets in North America. It provides natural gas gathering and processing, as well as residue gas and natural gas liquids transportation services to producers in northern Louisiana. PennTex Midstream Partners, LLC serves as the general partner of the company. PennTex Midstream Partners, LP was founded in 2014 and is headquartered in Houston, Texas.

FINANCIAL RATIOS  of  PennTex Midstream Partners (PTXP)

Valuation Ratios
P/E Ratio 0
Price to Sales 10.6
Price to Book 3.7
Price to Tangible Book
Price to Cash Flow 14.3
Price to Free Cash Flow 19.9
Growth Rates
Sales Growth Rate 133.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -93.3%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 75.2%
Total Debt to Equity 75.2%
Interest Coverage 1
Management Effectiveness
Return On Assets 1.2%
Ret/ On Assets - 3 Yr. Avg. -1.2%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. -2.2%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. -3.5%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 84.4%
Gross Margin - 3 Yr. Avg. 57.4%
EBITDA Margin 24.7%
EBITDA Margin - 3 Yr. Avg. 15.3%
Operating Margin 7.8%
Oper. Margin - 3 Yr. Avg. 4.6%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

PTXP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PTXP stock intrinsic value calculation we used $77 million for the last fiscal year's total revenue generated by PennTex Midstream Partners. The default revenue input number comes from 2016 income statement of PennTex Midstream 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 PTXP stock valuation model: a) initial revenue growth rate of 2% 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 6.8%, whose default value for PTXP is calculated based on our internal credit rating of PennTex Midstream 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 PennTex Midstream 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 PTXP stock the variable cost ratio is equal to 90.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1 million in the base year in the intrinsic value calculation for PTXP 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 PennTex Midstream Partners.

Corporate tax rate of 27% is the nominal tax rate for PennTex Midstream 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 PTXP 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 PTXP are equal to 498.7%.

Life of production assets of 27.4 years is the average useful life of capital assets used in PennTex Midstream 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 PTXP is equal to 19.5%. 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 - $218 million for PennTex Midstream 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 40.816 million for PennTex Midstream 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 PennTex Midstream Partners at the current share price and the inputted number of shares is $0.8 billion.

RELATED COMPANIES Price Int.Val. Rating
ETP Energy Transfe 18.26 6.77  str.sell
WPZ Williams Partn 37.74 5.47  str.sell
ENBL Enable Midstre 14.00 4.41  str.sell
RRC Range Resource 17.94 3.80  str.sell
HON Honeywell Inte 134.95 126.43  hold
EEP Enbridge Energ 14.43 2.84  str.sell
Stock chart of PTXP Financial statements of PTXP
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.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.