Intrinsic value of Semgroup Cl A - SEMG

Previous Close

$23.35

  Intrinsic Value

$5.42

stock screener

  Rating & Target

str. sell

-77%

  Value-price divergence*

-57%

Previous close

$23.35

 
Intrinsic value

$5.42

 
Up/down potential

-77%

 
Rating

str. sell

 
Value-price divergence*

-57%

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

We calculate the intrinsic value of SEMG 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 1.5

 

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, %
  -8.45
  44.80
  40.82
  37.24
  34.01
  31.11
  28.50
  26.15
  24.04
  22.13
  20.42
  18.88
  17.49
  16.24
  15.12
  14.10
  13.19
  12.38
  11.64
  10.97
  10.38
  9.84
  9.35
  8.92
  8.53
  8.17
  7.86
  7.57
  7.31
  7.08
  6.87
Revenue, $m
  1,332
  1,929
  2,716
  3,727
  4,995
  6,549
  8,416
  10,617
  13,169
  16,084
  19,368
  23,024
  27,051
  31,444
  36,198
  41,303
  46,753
  52,539
  58,653
  65,089
  71,843
  78,912
  86,294
  93,991
  102,006
  110,344
  119,014
  128,025
  137,390
  147,121
  157,235
Variable operating expenses, $m
 
  1,756
  2,471
  3,390
  4,541
  5,953
  7,649
  9,649
  11,967
  14,615
  17,598
  20,916
  24,574
  28,565
  32,884
  37,522
  42,473
  47,729
  53,283
  59,130
  65,266
  71,687
  78,393
  85,385
  92,667
  100,242
  108,118
  116,304
  124,811
  133,652
  142,840
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
  1,211
  1,756
  2,471
  3,390
  4,541
  5,953
  7,649
  9,649
  11,967
  14,615
  17,598
  20,916
  24,574
  28,565
  32,884
  37,522
  42,473
  47,729
  53,283
  59,130
  65,266
  71,687
  78,393
  85,385
  92,667
  100,242
  108,118
  116,304
  124,811
  133,652
  142,840
Operating income, $m
  122
  173
  245
  338
  454
  596
  767
  969
  1,202
  1,469
  1,770
  2,108
  2,477
  2,879
  3,314
  3,781
  4,280
  4,810
  5,370
  5,959
  6,577
  7,225
  7,900
  8,605
  9,339
  10,102
  10,896
  11,721
  12,578
  13,469
  14,395
EBITDA, $m
  221
  317
  446
  612
  821
  1,076
  1,382
  1,744
  2,163
  2,642
  3,181
  3,782
  4,444
  5,165
  5,946
  6,785
  7,680
  8,630
  9,635
  10,692
  11,801
  12,962
  14,175
  15,439
  16,756
  18,126
  19,550
  21,030
  22,568
  24,167
  25,828
Interest expense (income), $m
  71
  70
  119
  184
  267
  371
  498
  651
  831
  1,040
  1,279
  1,548
  1,848
  2,178
  2,538
  2,927
  3,346
  3,792
  4,266
  4,767
  5,295
  5,848
  6,427
  7,032
  7,663
  8,320
  9,003
  9,713
  10,452
  11,219
  12,016
Earnings before tax, $m
  25
  103
  126
  154
  187
  226
  269
  318
  371
  429
  491
  560
  629
  701
  776
  854
  935
  1,018
  1,104
  1,192
  1,283
  1,377
  1,473
  1,573
  1,676
  1,783
  1,893
  2,008
  2,127
  2,250
  2,379
Tax expense, $m
  12
  28
  34
  42
  51
  61
  73
  86
  100
  116
  132
  151
  170
  189
  210
  231
  252
  275
  298
  322
  346
  372
  398
  425
  453
  481
  511
  542
  574
  608
  642
Net income, $m
  2
  75
  92
  112
  137
  165
  197
  232
  271
  313
  358
  409
  459
  512
  567
  624
  682
  743
  806
  870
  936
  1,005
  1,075
  1,148
  1,224
  1,301
  1,382
  1,466
  1,553
  1,643
  1,737

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  74
  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
  3,075
  4,344
  6,117
  8,395
  11,251
  14,751
  18,955
  23,912
  29,660
  36,225
  43,622
  51,856
  60,926
  70,820
  81,526
  93,025
  105,299
  118,330
  132,101
  146,597
  161,809
  177,729
  194,355
  211,690
  229,742
  248,523
  268,050
  288,345
  309,436
  331,353
  354,132
Adjusted assets (=assets-cash), $m
  3,001
  4,344
  6,117
  8,395
  11,251
  14,751
  18,955
  23,912
  29,660
  36,225
  43,622
  51,856
  60,926
  70,820
  81,526
  93,025
  105,299
  118,330
  132,101
  146,597
  161,809
  177,729
  194,355
  211,690
  229,742
  248,523
  268,050
  288,345
  309,436
  331,353
  354,132
Revenue / Adjusted assets
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
  0.444
Average production assets, $m
  1,821
  2,637
  3,713
  5,095
  6,829
  8,953
  11,505
  14,514
  18,002
  21,986
  26,476
  31,474
  36,979
  42,984
  49,482
  56,461
  63,911
  71,820
  80,178
  88,977
  98,210
  107,872
  117,963
  128,485
  139,442
  150,840
  162,692
  175,011
  187,812
  201,114
  214,940
Working capital, $m
  148
  108
  152
  209
  280
  367
  471
  595
  737
  901
  1,085
  1,289
  1,515
  1,761
  2,027
  2,313
  2,618
  2,942
  3,285
  3,645
  4,023
  4,419
  4,832
  5,263
  5,712
  6,179
  6,665
  7,169
  7,694
  8,239
  8,805
Total debt, $m
  1,051
  1,781
  2,744
  3,981
  5,531
  7,432
  9,715
  12,406
  15,527
  19,092
  23,108
  27,580
  32,505
  37,877
  43,691
  49,935
  56,600
  63,675
  71,153
  79,024
  87,284
  95,929
  104,957
  114,370
  124,172
  134,370
  144,973
  155,994
  167,446
  179,347
  191,716
Total liabilities, $m
  1,629
  2,359
  3,322
  4,559
  6,109
  8,010
  10,293
  12,984
  16,105
  19,670
  23,686
  28,158
  33,083
  38,455
  44,269
  50,513
  57,178
  64,253
  71,731
  79,602
  87,862
  96,507
  105,535
  114,948
  124,750
  134,948
  145,551
  156,572
  168,024
  179,925
  192,294
Total equity, $m
  1,446
  1,985
  2,796
  3,837
  5,142
  6,741
  8,663
  10,928
  13,555
  16,555
  19,935
  23,698
  27,843
  32,365
  37,257
  42,513
  48,122
  54,077
  60,370
  66,995
  73,947
  81,222
  88,820
  96,743
  104,992
  113,575
  122,499
  131,774
  141,412
  151,428
  161,839
Total liabilities and equity, $m
  3,075
  4,344
  6,118
  8,396
  11,251
  14,751
  18,956
  23,912
  29,660
  36,225
  43,621
  51,856
  60,926
  70,820
  81,526
  93,026
  105,300
  118,330
  132,101
  146,597
  161,809
  177,729
  194,355
  211,691
  229,742
  248,523
  268,050
  288,346
  309,436
  331,353
  354,133
Debt-to-equity ratio
  0.727
  0.900
  0.980
  1.040
  1.080
  1.100
  1.120
  1.140
  1.150
  1.150
  1.160
  1.160
  1.170
  1.170
  1.170
  1.170
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
Adjusted equity ratio
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457
  0.457

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2
  75
  92
  112
  137
  165
  197
  232
  271
  313
  358
  409
  459
  512
  567
  624
  682
  743
  806
  870
  936
  1,005
  1,075
  1,148
  1,224
  1,301
  1,382
  1,466
  1,553
  1,643
  1,737
Depreciation, amort., depletion, $m
  99
  144
  201
  274
  367
  480
  615
  775
  961
  1,173
  1,412
  1,674
  1,967
  2,286
  2,632
  3,003
  3,400
  3,820
  4,265
  4,733
  5,224
  5,738
  6,275
  6,834
  7,417
  8,023
  8,654
  9,309
  9,990
  10,698
  11,433
Funds from operations, $m
  147
  219
  293
  387
  503
  644
  812
  1,007
  1,232
  1,486
  1,770
  2,083
  2,426
  2,798
  3,199
  3,627
  4,082
  4,563
  5,070
  5,603
  6,160
  6,743
  7,350
  7,983
  8,641
  9,325
  10,036
  10,775
  11,543
  12,340
  13,170
Change in working capital, $m
  -23
  33
  44
  57
  71
  87
  105
  123
  143
  163
  184
  205
  226
  246
  266
  286
  305
  324
  342
  360
  378
  396
  413
  431
  449
  467
  486
  505
  524
  545
  566
Cash from operations, $m
  170
  185
  249
  330
  432
  557
  707
  884
  1,089
  1,323
  1,586
  1,878
  2,200
  2,552
  2,932
  3,341
  3,777
  4,239
  4,728
  5,242
  5,782
  6,347
  6,937
  7,552
  8,192
  8,858
  9,550
  10,270
  11,018
  11,795
  12,603
Maintenance CAPEX, $m
  0
  -97
  -140
  -197
  -271
  -363
  -476
  -612
  -772
  -958
  -1,169
  -1,408
  -1,674
  -1,967
  -2,286
  -2,632
  -3,003
  -3,400
  -3,820
  -4,265
  -4,733
  -5,224
  -5,738
  -6,275
  -6,834
  -7,417
  -8,023
  -8,654
  -9,309
  -9,990
  -10,698
New CAPEX, $m
  -312
  -816
  -1,076
  -1,383
  -1,733
  -2,125
  -2,552
  -3,009
  -3,489
  -3,984
  -4,489
  -4,998
  -5,505
  -6,006
  -6,498
  -6,979
  -7,450
  -7,909
  -8,358
  -8,799
  -9,233
  -9,663
  -10,091
  -10,522
  -10,956
  -11,399
  -11,852
  -12,318
  -12,801
  -13,303
  -13,826
Cash from investing activities, $m
  -228
  -913
  -1,216
  -1,580
  -2,004
  -2,488
  -3,028
  -3,621
  -4,261
  -4,942
  -5,658
  -6,406
  -7,179
  -7,973
  -8,784
  -9,611
  -10,453
  -11,309
  -12,178
  -13,064
  -13,966
  -14,887
  -15,829
  -16,797
  -17,790
  -18,816
  -19,875
  -20,972
  -22,110
  -23,293
  -24,524
Free cash flow, $m
  -58
  -727
  -968
  -1,250
  -1,572
  -1,930
  -2,321
  -2,737
  -3,172
  -3,619
  -4,073
  -4,528
  -4,978
  -5,420
  -5,852
  -6,271
  -6,676
  -7,069
  -7,450
  -7,821
  -8,183
  -8,540
  -8,893
  -9,245
  -9,599
  -9,958
  -10,325
  -10,702
  -11,092
  -11,497
  -11,920
Issuance/(repayment) of debt, $m
  -14
  730
  963
  1,237
  1,551
  1,901
  2,283
  2,692
  3,121
  3,565
  4,016
  4,471
  4,925
  5,373
  5,813
  6,244
  6,665
  7,076
  7,477
  7,872
  8,260
  8,645
  9,028
  9,413
  9,802
  10,198
  10,603
  11,020
  11,452
  11,901
  12,369
Issuance/(repurchase) of shares, $m
  223
  538
  718
  929
  1,168
  1,435
  1,725
  2,033
  2,356
  2,687
  3,022
  3,355
  3,686
  4,010
  4,326
  4,632
  4,927
  5,212
  5,488
  5,755
  6,015
  6,271
  6,523
  6,774
  7,026
  7,281
  7,542
  7,809
  8,086
  8,373
  8,673
Cash from financing (excl. dividends), $m  
  169
  1,268
  1,681
  2,166
  2,719
  3,336
  4,008
  4,725
  5,477
  6,252
  7,038
  7,826
  8,611
  9,383
  10,139
  10,876
  11,592
  12,288
  12,965
  13,627
  14,275
  14,916
  15,551
  16,187
  16,828
  17,479
  18,145
  18,829
  19,538
  20,274
  21,042
Total cash flow (excl. dividends), $m
  109
  541
  714
  916
  1,147
  1,405
  1,687
  1,989
  2,305
  2,632
  2,966
  3,298
  3,632
  3,963
  4,287
  4,605
  4,915
  5,218
  5,515
  5,805
  6,092
  6,376
  6,658
  6,942
  7,229
  7,521
  7,820
  8,128
  8,446
  8,777
  9,122
Retained Cash Flow (-), $m
  -330
  -613
  -810
  -1,041
  -1,305
  -1,600
  -1,921
  -2,265
  -2,627
  -3,000
  -3,380
  -3,763
  -4,145
  -4,522
  -4,892
  -5,255
  -5,609
  -5,955
  -6,293
  -6,625
  -6,952
  -7,275
  -7,598
  -7,922
  -8,250
  -8,583
  -8,924
  -9,275
  -9,638
  -10,016
  -10,410
Prev. year cash balance distribution, $m
 
  74
  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
 
  2
  -97
  -125
  -158
  -194
  -234
  -277
  -322
  -368
  -415
  -465
  -513
  -559
  -605
  -650
  -694
  -737
  -778
  -819
  -860
  -900
  -940
  -980
  -1,020
  -1,062
  -1,104
  -1,147
  -1,192
  -1,239
  -1,288
Discount rate, %
 
  7.20
  7.56
  7.94
  8.33
  8.75
  9.19
  9.65
  10.13
  10.64
  11.17
  11.73
  12.31
  12.93
  13.58
  14.26
  14.97
  15.72
  16.50
  17.33
  18.19
  19.10
  20.06
  21.06
  22.11
  23.22
  24.38
  25.60
  26.88
  28.22
  29.64
PV of cash for distribution, $m
 
  1
  -84
  -100
  -115
  -128
  -138
  -145
  -149
  -148
  -144
  -137
  -127
  -115
  -102
  -88
  -74
  -62
  -50
  -39
  -30
  -23
  -17
  -12
  -8
  -6
  -4
  -2
  -2
  -1
  -1
Current shareholders' claim on cash, %
  100
  72.8
  54.2
  41.2
  31.9
  25.2
  20.3
  16.6
  13.8
  11.6
  9.9
  8.5
  7.4
  6.5
  5.8
  5.2
  4.7
  4.2
  3.8
  3.5
  3.3
  3.0
  2.8
  2.6
  2.4
  2.3
  2.2
  2.0
  1.9
  1.8
  1.7

SemGroup Corporation provides gathering, transportation, storage, distribution, marketing, and other midstream services for producers, refiners of petroleum products, and other market participants. The company operates through seven segments: Crude Transportation, Crude Facilities, Crude Supply and Logistics, SemGas, SemCAMS, SemLogistics, and SemMexico. The company engages in the crude oil pipelines and truck transportation; crude oil storage and terminal; and crude oil marketing businesses in the United States. It also provides natural gas gathering, processing, and marketing services in Oklahoma and Texas; operates natural gas processing and gathering facilities in Alberta, Canada; owns independent petroleum products storage facilities in the United Kingdom; and purchases, produces, stores, and distributes liquid asphalt cement products in Mexico. The company was founded in 2000 and is headquartered in Tulsa, Oklahoma.

FINANCIAL RATIOS  of  Semgroup Cl A (SEMG)

Valuation Ratios
P/E Ratio 771.7
Price to Sales 1.2
Price to Book 1.1
Price to Tangible Book
Price to Cash Flow 9.1
Price to Free Cash Flow -10.9
Growth Rates
Sales Growth Rate -8.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -35%
Cap. Spend. - 3 Yr. Gr. Rate 7.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 72.7%
Total Debt to Equity 72.7%
Interest Coverage 1
Management Effectiveness
Return On Assets 1.3%
Ret/ On Assets - 3 Yr. Avg. 1.9%
Return On Total Capital 0.1%
Ret/ On T. Cap. - 3 Yr. Avg. 1.1%
Return On Equity 0.2%
Return On Equity - 3 Yr. Avg. 1.8%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 34.5%
Gross Margin - 3 Yr. Avg. 30.2%
EBITDA Margin 14.6%
EBITDA Margin - 3 Yr. Avg. 14.1%
Operating Margin 9.1%
Oper. Margin - 3 Yr. Avg. 8%
Pre-Tax Margin 1.9%
Pre-Tax Margin - 3 Yr. Avg. 3.9%
Net Profit Margin 0.2%
Net Profit Margin - 3 Yr. Avg. 1.2%
Effective Tax Rate 48%
Eff/ Tax Rate - 3 Yr. Avg. 46.3%
Payout Ratio 4650%

SEMG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SEMG stock intrinsic value calculation we used $1332 million for the last fiscal year's total revenue generated by Semgroup Cl A. The default revenue input number comes from 2016 income statement of Semgroup Cl A. 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 SEMG stock valuation model: a) initial revenue growth rate of 44.8% 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 7.2%, whose default value for SEMG is calculated based on our internal credit rating of Semgroup Cl A, 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 Semgroup Cl A.
    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 SEMG stock the variable cost ratio is equal to 91.1%.

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 SEMG 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 6.7% for Semgroup Cl A.

Corporate tax rate of 27% is the nominal tax rate for Semgroup Cl A. 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 SEMG 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 SEMG are equal to 136.7%.

Life of production assets of 18.8 years is the average useful life of capital assets used in Semgroup Cl A 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 SEMG is equal to 5.6%. 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 - $1446 million for Semgroup Cl A - 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 65.097 million for Semgroup Cl A 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 Semgroup Cl A at the current share price and the inputted number of shares is $1.5 billion.

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COMPANY NEWS

▶ SemGroup posts 2Q profit   [Aug-07-17 10:39PM  Associated Press]
▶ SemGroup Names New General Counsel   [Jun-21-17 04:15PM  GlobeNewswire]
▶ New Strong Sell Stocks for June 12th   [Jun-12-17 10:25AM  Zacks]
▶ Texas Oil And Gas Exports Are Booming   [Jun-07-17 07:00PM  Oilprice.com]
▶ [$$] Alinda Capital Selling Houston Fuel Oil Terminal to SemGroup   [Jun-06-17 06:20PM  The Wall Street Journal]
▶ Tulsa-based midstream co. to buy Houston terminal co. for $2B   [01:00PM  American City Business Journals]
▶ ETFs with exposure to SemGroup Corp. : June 2, 2017   [Jun-02-17 02:30PM  Capital Cube]
▶ 5 MLPs Likely to do Best When Crude Rebounds   [May-08-17 08:38PM  Barrons.com]
▶ SemGroup reports 1Q loss   [May-05-17 05:03AM  Associated Press]
▶ SemGroup Corporation Announces First Quarter 2017 Results   [May-04-17 04:15PM  GlobeNewswire]
▶ SemGroup Corporation Announces New Board Member   [Mar-20-17 07:29AM  GlobeNewswire]
▶ Top Ranked Income Stocks to Buy for March 17th   [Mar-17-17 12:19PM  Zacks]
▶ SemGroup Corporation to Participate in Upcoming Conferences   [Feb-21-17 04:15PM  GlobeNewswire]
▶ SemGroup Corporation to Participate in UBS MLP Conference   [Jan-06-17 04:15PM  GlobeNewswire]
▶ Is SemGroup Corp (SEMG) Going to Burn These Hedge Funds?   [Dec-07-16 01:11PM  at Insider Monkey]
Stock chart of SEMG Financial statements of SEMG
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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