Intrinsic value of SunCoke Energy Partners - SXCP

Previous Close

$16.75

  Intrinsic Value

$5.99

stock screener

  Rating & Target

str. sell

-64%

  Value-price divergence*

-82%

Previous close

$16.75

 
Intrinsic value

$5.99

 
Up/down potential

-64%

 
Rating

str. sell

 
Value-price divergence*

-82%

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

We calculate the intrinsic value of SXCP 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, %
  -7.03
  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
  780
  796
  814
  835
  858
  884
  913
  944
  978
  1,014
  1,053
  1,094
  1,139
  1,186
  1,236
  1,290
  1,346
  1,406
  1,469
  1,536
  1,607
  1,681
  1,760
  1,843
  1,930
  2,022
  2,118
  2,220
  2,327
  2,440
  2,559
Variable operating expenses, $m
 
  665
  680
  697
  717
  738
  762
  788
  815
  845
  878
  905
  941
  980
  1,022
  1,066
  1,113
  1,162
  1,214
  1,270
  1,328
  1,390
  1,454
  1,523
  1,595
  1,671
  1,751
  1,835
  1,924
  2,017
  2,115
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
  609
  665
  680
  697
  717
  738
  762
  788
  815
  845
  878
  905
  941
  980
  1,022
  1,066
  1,113
  1,162
  1,214
  1,270
  1,328
  1,390
  1,454
  1,523
  1,595
  1,671
  1,751
  1,835
  1,924
  2,017
  2,115
Operating income, $m
  171
  131
  134
  137
  142
  146
  151
  156
  162
  168
  175
  190
  198
  206
  214
  224
  234
  244
  255
  267
  279
  292
  305
  320
  335
  351
  368
  385
  404
  423
  444
EBITDA, $m
  249
  214
  219
  224
  231
  238
  245
  254
  263
  272
  283
  294
  306
  319
  332
  347
  362
  378
  395
  413
  432
  452
  473
  495
  519
  543
  569
  597
  625
  656
  688
Interest expense (income), $m
  54
  51
  52
  53
  55
  57
  59
  61
  63
  66
  69
  72
  75
  78
  82
  86
  90
  94
  99
  104
  109
  114
  120
  126
  132
  139
  146
  154
  161
  170
  178
Earnings before tax, $m
  123
  80
  82
  84
  87
  89
  92
  95
  99
  103
  106
  118
  123
  127
  133
  138
  144
  150
  156
  163
  170
  177
  185
  194
  202
  212
  221
  232
  242
  254
  265
Tax expense, $m
  2
  22
  22
  23
  23
  24
  25
  26
  27
  28
  29
  32
  33
  34
  36
  37
  39
  40
  42
  44
  46
  48
  50
  52
  55
  57
  60
  63
  65
  68
  72
Net income, $m
  119
  58
  60
  61
  63
  65
  67
  70
  72
  75
  78
  86
  90
  93
  97
  101
  105
  109
  114
  119
  124
  129
  135
  141
  148
  154
  162
  169
  177
  185
  194

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  42
  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
  1,696
  1,686
  1,724
  1,769
  1,818
  1,874
  1,934
  2,000
  2,071
  2,148
  2,230
  2,319
  2,413
  2,513
  2,619
  2,732
  2,852
  2,979
  3,113
  3,255
  3,404
  3,562
  3,728
  3,904
  4,089
  4,283
  4,488
  4,704
  4,931
  5,170
  5,421
Adjusted assets (=assets-cash), $m
  1,654
  1,686
  1,724
  1,769
  1,818
  1,874
  1,934
  2,000
  2,071
  2,148
  2,230
  2,319
  2,413
  2,513
  2,619
  2,732
  2,852
  2,979
  3,113
  3,255
  3,404
  3,562
  3,728
  3,904
  4,089
  4,283
  4,488
  4,704
  4,931
  5,170
  5,421
Revenue / Adjusted assets
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
Average production assets, $m
  1,493
  1,523
  1,558
  1,598
  1,643
  1,693
  1,747
  1,807
  1,871
  1,941
  2,015
  2,095
  2,180
  2,270
  2,366
  2,469
  2,577
  2,691
  2,812
  2,940
  3,075
  3,218
  3,368
  3,527
  3,694
  3,869
  4,055
  4,249
  4,455
  4,670
  4,897
Working capital, $m
  64
  28
  28
  29
  30
  31
  32
  33
  34
  35
  37
  38
  40
  42
  43
  45
  47
  49
  51
  54
  56
  59
  62
  64
  68
  71
  74
  78
  81
  85
  90
Total debt, $m
  811
  825
  847
  873
  901
  933
  968
  1,006
  1,047
  1,091
  1,139
  1,190
  1,244
  1,301
  1,363
  1,428
  1,497
  1,570
  1,647
  1,729
  1,815
  1,906
  2,002
  2,103
  2,209
  2,321
  2,439
  2,563
  2,694
  2,832
  2,976
Total liabilities, $m
  957
  971
  993
  1,019
  1,047
  1,079
  1,114
  1,152
  1,193
  1,237
  1,285
  1,336
  1,390
  1,447
  1,509
  1,574
  1,643
  1,716
  1,793
  1,875
  1,961
  2,052
  2,148
  2,249
  2,355
  2,467
  2,585
  2,709
  2,840
  2,978
  3,122
Total equity, $m
  739
  715
  731
  750
  771
  794
  820
  848
  878
  911
  946
  983
  1,023
  1,065
  1,111
  1,159
  1,209
  1,263
  1,320
  1,380
  1,443
  1,510
  1,581
  1,655
  1,734
  1,816
  1,903
  1,994
  2,091
  2,192
  2,298
Total liabilities and equity, $m
  1,696
  1,686
  1,724
  1,769
  1,818
  1,873
  1,934
  2,000
  2,071
  2,148
  2,231
  2,319
  2,413
  2,512
  2,620
  2,733
  2,852
  2,979
  3,113
  3,255
  3,404
  3,562
  3,729
  3,904
  4,089
  4,283
  4,488
  4,703
  4,931
  5,170
  5,420
Debt-to-equity ratio
  1.097
  1.150
  1.160
  1.160
  1.170
  1.170
  1.180
  1.190
  1.190
  1.200
  1.200
  1.210
  1.220
  1.220
  1.230
  1.230
  1.240
  1.240
  1.250
  1.250
  1.260
  1.260
  1.270
  1.270
  1.270
  1.280
  1.280
  1.290
  1.290
  1.290
  1.290
Adjusted equity ratio
  0.421
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  119
  58
  60
  61
  63
  65
  67
  70
  72
  75
  78
  86
  90
  93
  97
  101
  105
  109
  114
  119
  124
  129
  135
  141
  148
  154
  162
  169
  177
  185
  194
Depreciation, amort., depletion, $m
  78
  83
  85
  87
  89
  92
  94
  97
  100
  104
  108
  104
  108
  113
  118
  123
  128
  134
  140
  146
  153
  160
  168
  175
  184
  193
  202
  211
  222
  232
  244
Funds from operations, $m
  194
  141
  145
  148
  152
  157
  162
  167
  173
  179
  185
  190
  198
  206
  214
  223
  233
  243
  254
  265
  277
  290
  303
  317
  331
  347
  363
  380
  398
  417
  437
Change in working capital, $m
  10
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
Cash from operations, $m
  184
  141
  144
  148
  151
  156
  161
  166
  171
  178
  184
  189
  196
  204
  213
  222
  231
  241
  252
  263
  275
  287
  300
  314
  328
  344
  360
  377
  395
  414
  433
Maintenance CAPEX, $m
  0
  -74
  -76
  -78
  -79
  -82
  -84
  -87
  -90
  -93
  -97
  -100
  -104
  -108
  -113
  -118
  -123
  -128
  -134
  -140
  -146
  -153
  -160
  -168
  -175
  -184
  -193
  -202
  -211
  -222
  -232
New CAPEX, $m
  -37
  -30
  -35
  -40
  -45
  -50
  -55
  -60
  -64
  -69
  -74
  -80
  -85
  -91
  -96
  -102
  -108
  -115
  -121
  -128
  -135
  -143
  -150
  -158
  -167
  -176
  -185
  -195
  -205
  -216
  -227
Cash from investing activities, $m
  -18
  -104
  -111
  -118
  -124
  -132
  -139
  -147
  -154
  -162
  -171
  -180
  -189
  -199
  -209
  -220
  -231
  -243
  -255
  -268
  -281
  -296
  -310
  -326
  -342
  -360
  -378
  -397
  -416
  -438
  -459
Free cash flow, $m
  166
  37
  33
  30
  27
  24
  22
  19
  17
  15
  13
  9
  7
  5
  4
  2
  0
  -2
  -3
  -5
  -7
  -9
  -10
  -12
  -14
  -16
  -18
  -20
  -22
  -24
  -26
Issuance/(repayment) of debt, $m
  -61
  19
  22
  26
  29
  32
  35
  38
  41
  44
  47
  51
  54
  58
  61
  65
  69
  73
  77
  82
  86
  91
  96
  101
  106
  112
  118
  124
  131
  138
  145
Issuance/(repurchase) of shares, $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
Cash from financing (excl. dividends), $m  
  -53
  19
  22
  26
  29
  32
  35
  38
  41
  44
  47
  51
  54
  58
  61
  65
  69
  73
  77
  82
  86
  91
  96
  101
  106
  112
  118
  124
  131
  138
  145
Total cash flow (excl. dividends), $m
  113
  56
  56
  56
  56
  56
  57
  57
  58
  59
  60
  60
  61
  63
  65
  67
  69
  71
  74
  76
  79
  82
  85
  89
  92
  96
  100
  105
  109
  114
  119
Retained Cash Flow (-), $m
  -10
  -13
  -16
  -19
  -21
  -23
  -26
  -28
  -30
  -33
  -35
  -37
  -40
  -42
  -45
  -48
  -51
  -54
  -57
  -60
  -63
  -67
  -71
  -74
  -78
  -83
  -87
  -91
  -96
  -101
  -106
Prev. year cash balance distribution, $m
 
  37
  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
 
  80
  39
  37
  35
  33
  31
  29
  28
  27
  26
  22
  21
  21
  20
  19
  18
  18
  17
  16
  16
  15
  15
  14
  14
  14
  13
  13
  13
  12
  12
Discount rate, %
 
  7.70
  8.09
  8.49
  8.91
  9.36
  9.83
  10.32
  10.83
  11.38
  11.95
  12.54
  13.17
  13.83
  14.52
  15.25
  16.01
  16.81
  17.65
  18.53
  19.46
  20.43
  21.45
  22.52
  23.65
  24.83
  26.07
  27.38
  28.75
  30.18
  31.69
PV of cash for distribution, $m
 
  74
  33
  29
  25
  21
  18
  15
  12
  10
  8
  6
  5
  4
  3
  2
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
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

SunCoke Energy Partners, L.P., a master limited partnership, produces and sells coke used in the blast furnace production of steel in the United States. It operates through two segments, Domestic Coke and Coal Logistics. The company also provides metallurgical and thermal coal mixing and handling terminal services, as well as operates Convent Marine Terminal, an export terminal in the United States Gulf Coast located in Convent, Louisiana. In addition, it offers coal handling and/or mixing services to steel, coke, electric utility, and coal mining customers. SunCoke Energy Partners GP LLC serves as the general partner of the company. The company was founded in 2012 and is headquartered in Lisle, Illinois. SunCoke Energy Partners, L.P. is a subsidiary of Sun Coal & Coke LLC.

FINANCIAL RATIOS  of  SunCoke Energy Partners (SXCP)

Valuation Ratios
P/E Ratio 6.5
Price to Sales 1
Price to Book 1
Price to Tangible Book
Price to Cash Flow 4.2
Price to Free Cash Flow 5.3
Growth Rates
Sales Growth Rate -7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -11.9%
Cap. Spend. - 3 Yr. Gr. Rate -2.5%
Financial Strength
Quick Ratio 8
Current Ratio 0
LT Debt to Equity 109.1%
Total Debt to Equity 109.7%
Interest Coverage 3
Management Effectiveness
Return On Assets 9.9%
Ret/ On Assets - 3 Yr. Avg. 8.5%
Return On Total Capital 7.5%
Ret/ On T. Cap. - 3 Yr. Avg. 6.7%
Return On Equity 16.2%
Return On Equity - 3 Yr. Avg. 12.1%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 33.7%
Gross Margin - 3 Yr. Avg. 29%
EBITDA Margin 32.7%
EBITDA Margin - 3 Yr. Avg. 25.5%
Operating Margin 21.9%
Oper. Margin - 3 Yr. Avg. 17.9%
Pre-Tax Margin 15.8%
Pre-Tax Margin - 3 Yr. Avg. 12.6%
Net Profit Margin 15.3%
Net Profit Margin - 3 Yr. Avg. 11.3%
Effective Tax Rate 1.6%
Eff/ Tax Rate - 3 Yr. Avg. 3.2%
Payout Ratio 100.8%

SXCP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SXCP stock intrinsic value calculation we used $780 million for the last fiscal year's total revenue generated by SunCoke Energy Partners. The default revenue input number comes from 2016 income statement of SunCoke 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 SXCP 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 7.7%, whose default value for SXCP is calculated based on our internal credit rating of SunCoke 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 SunCoke 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 SXCP stock the variable cost ratio is equal to 83.6%.

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 SXCP 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 6.3% for SunCoke Energy Partners.

Corporate tax rate of 27% is the nominal tax rate for SunCoke 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 SXCP 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 SXCP are equal to 191.4%.

Life of production assets of 20.1 years is the average useful life of capital assets used in SunCoke 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 SXCP is equal to 3.5%. 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 - $739 million for SunCoke 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 45.267 million for SunCoke 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 SunCoke Energy Partners at the current share price and the inputted number of shares is $0.8 billion.

RELATED COMPANIES Price Int.Val. Rating
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COMPANY NEWS

▶ SunCoke Energy Doesn't Look Very Sunny   [Aug-07-17 02:24PM  TheStreet.com]
▶ SunCoke reports 2Q loss   [Jul-27-17 03:51PM  Associated Press]
▶ SunCoke Energy Partners Provides Opportunity for Investors   [May-09-17 03:59PM  GuruFocus.com]
▶ SunCoke posts 1Q profit   [08:16AM  Associated Press]
▶ Warrior Met Coal IPO: What Investors Need to Know   [Apr-13-17 08:56PM  Motley Fool]
▶ Coal Industry Stock Outlook - February 2017   [Feb-16-17 03:30PM  Zacks]
▶ Is Renren Inc (RENN) A Good Stock to Buy?   [Dec-16-16 07:38PM  at Insider Monkey]
▶ Is SunCoke Energy, Inc (SXC) A Good Stock To Buy?   [Dec-08-16 11:16AM  at Insider Monkey]
▶ The Best High-Yield Dividend Stocks of 2016   [Nov-18-16 10:18AM  at Motley Fool]
Stock chart of SXCP Financial statements of SXCP
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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