Intrinsic value of UGI - UGI

Previous Close

$50.60

  Intrinsic Value

$57.29

stock screener

  Rating & Target

hold

+13%

  Value-price divergence*

+12%

Previous close

$50.60

 
Intrinsic value

$57.29

 
Up/down potential

+13%

 
Rating

hold

 
Value-price divergence*

+12%

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

We calculate the intrinsic value of UGI 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 8.8

 

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, %
  -15.02
  10.20
  9.68
  9.21
  8.79
  8.41
  8.07
  7.76
  7.49
  7.24
  7.01
  6.81
  6.63
  6.47
  6.32
  6.19
  6.07
  5.96
  5.87
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
  5.41
  5.37
  5.34
  5.30
  5.27
  5.24
Revenue, $m
  0
  6,266
  6,873
  7,506
  8,165
  8,852
  9,567
  10,309
  11,081
  11,883
  12,717
  13,583
  14,484
  15,421
  16,396
  17,411
  18,468
  19,569
  20,717
  21,915
  23,165
  24,469
  25,832
  27,256
  28,744
  30,301
  31,929
  33,633
  35,416
  37,283
  39,239
Variable operating expenses, $m
 
  5,452
  5,951
  6,472
  7,014
  7,579
  8,167
  8,778
  9,413
  10,072
  10,758
  11,171
  11,912
  12,683
  13,485
  14,319
  15,189
  16,094
  17,039
  18,024
  19,051
  20,124
  21,245
  22,416
  23,640
  24,920
  26,259
  27,660
  29,127
  30,663
  32,271
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
  4,747
  5,452
  5,951
  6,472
  7,014
  7,579
  8,167
  8,778
  9,413
  10,072
  10,758
  11,171
  11,912
  12,683
  13,485
  14,319
  15,189
  16,094
  17,039
  18,024
  19,051
  20,124
  21,245
  22,416
  23,640
  24,920
  26,259
  27,660
  29,127
  30,663
  32,271
Operating income, $m
  939
  814
  921
  1,034
  1,151
  1,273
  1,400
  1,532
  1,669
  1,811
  1,959
  2,412
  2,572
  2,738
  2,911
  3,092
  3,279
  3,475
  3,679
  3,891
  4,113
  4,345
  4,587
  4,840
  5,104
  5,380
  5,670
  5,972
  6,289
  6,620
  6,967
EBITDA, $m
  1,340
  1,337
  1,467
  1,602
  1,742
  1,889
  2,041
  2,200
  2,365
  2,536
  2,714
  2,899
  3,091
  3,291
  3,499
  3,715
  3,941
  4,176
  4,421
  4,677
  4,943
  5,222
  5,512
  5,816
  6,134
  6,466
  6,813
  7,177
  7,558
  7,956
  8,373
Interest expense (income), $m
  229
  218
  264
  311
  361
  412
  466
  522
  580
  640
  703
  768
  836
  907
  980
  1,056
  1,136
  1,218
  1,305
  1,394
  1,488
  1,586
  1,688
  1,795
  1,906
  2,022
  2,144
  2,272
  2,405
  2,544
  2,691
Earnings before tax, $m
  710
  595
  658
  723
  790
  861
  934
  1,010
  1,089
  1,171
  1,256
  1,644
  1,736
  1,832
  1,931
  2,035
  2,144
  2,257
  2,374
  2,497
  2,625
  2,759
  2,899
  3,045
  3,198
  3,358
  3,525
  3,700
  3,884
  4,076
  4,277
Tax expense, $m
  221
  161
  178
  195
  213
  232
  252
  273
  294
  316
  339
  444
  469
  495
  521
  550
  579
  609
  641
  674
  709
  745
  783
  822
  863
  907
  952
  999
  1,049
  1,100
  1,155
Net income, $m
  365
  435
  480
  528
  577
  628
  682
  737
  795
  855
  917
  1,200
  1,267
  1,337
  1,410
  1,486
  1,565
  1,647
  1,733
  1,823
  1,916
  2,014
  2,116
  2,223
  2,335
  2,451
  2,573
  2,701
  2,835
  2,975
  3,122

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  503
  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
  10,847
  11,393
  12,495
  13,647
  14,846
  16,095
  17,394
  18,744
  20,148
  21,606
  23,122
  24,697
  26,335
  28,038
  29,811
  31,656
  33,578
  35,580
  37,668
  39,845
  42,117
  44,490
  46,967
  49,556
  52,262
  55,092
  58,052
  61,150
  64,392
  67,787
  71,343
Adjusted assets (=assets-cash), $m
  10,344
  11,393
  12,495
  13,647
  14,846
  16,095
  17,394
  18,744
  20,148
  21,606
  23,122
  24,697
  26,335
  28,038
  29,811
  31,656
  33,578
  35,580
  37,668
  39,845
  42,117
  44,490
  46,967
  49,556
  52,262
  55,092
  58,052
  61,150
  64,392
  67,787
  71,343
Revenue / Adjusted assets
  0.000
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
Average production assets, $m
  3,074
  3,390
  3,718
  4,061
  4,417
  4,789
  5,176
  5,577
  5,995
  6,429
  6,880
  7,349
  7,836
  8,343
  8,870
  9,419
  9,991
  10,587
  11,208
  11,856
  12,532
  13,238
  13,975
  14,745
  15,551
  16,393
  17,273
  18,195
  19,160
  20,170
  21,228
Working capital, $m
  -18
  -219
  -241
  -263
  -286
  -310
  -335
  -361
  -388
  -416
  -445
  -475
  -507
  -540
  -574
  -609
  -646
  -685
  -725
  -767
  -811
  -856
  -904
  -954
  -1,006
  -1,061
  -1,118
  -1,177
  -1,240
  -1,305
  -1,373
Total debt, $m
  4,087
  4,544
  5,363
  6,217
  7,107
  8,034
  8,997
  9,999
  11,041
  12,123
  13,247
  14,416
  15,632
  16,896
  18,211
  19,580
  21,006
  22,492
  24,041
  25,656
  27,342
  29,102
  30,941
  32,862
  34,870
  36,969
  39,166
  41,464
  43,870
  46,389
  49,027
Total liabilities, $m
  7,996
  8,453
  9,272
  10,126
  11,016
  11,943
  12,906
  13,908
  14,950
  16,032
  17,156
  18,325
  19,541
  20,805
  22,120
  23,489
  24,915
  26,401
  27,950
  29,565
  31,251
  33,011
  34,850
  36,771
  38,779
  40,878
  43,075
  45,373
  47,779
  50,298
  52,936
Total equity, $m
  2,851
  2,939
  3,224
  3,521
  3,830
  4,153
  4,488
  4,836
  5,198
  5,574
  5,965
  6,372
  6,794
  7,234
  7,691
  8,167
  8,663
  9,180
  9,718
  10,280
  10,866
  11,478
  12,118
  12,785
  13,484
  14,214
  14,978
  15,777
  16,613
  17,489
  18,406
Total liabilities and equity, $m
  10,847
  11,392
  12,496
  13,647
  14,846
  16,096
  17,394
  18,744
  20,148
  21,606
  23,121
  24,697
  26,335
  28,039
  29,811
  31,656
  33,578
  35,581
  37,668
  39,845
  42,117
  44,489
  46,968
  49,556
  52,263
  55,092
  58,053
  61,150
  64,392
  67,787
  71,342
Debt-to-equity ratio
  1.434
  1.550
  1.660
  1.770
  1.860
  1.930
  2.000
  2.070
  2.120
  2.170
  2.220
  2.260
  2.300
  2.340
  2.370
  2.400
  2.420
  2.450
  2.470
  2.500
  2.520
  2.540
  2.550
  2.570
  2.590
  2.600
  2.610
  2.630
  2.640
  2.650
  2.660
Adjusted equity ratio
  0.255
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  365
  435
  480
  528
  577
  628
  682
  737
  795
  855
  917
  1,200
  1,267
  1,337
  1,410
  1,486
  1,565
  1,647
  1,733
  1,823
  1,916
  2,014
  2,116
  2,223
  2,335
  2,451
  2,573
  2,701
  2,835
  2,975
  3,122
Depreciation, amort., depletion, $m
  401
  523
  545
  568
  591
  616
  642
  668
  696
  725
  755
  487
  519
  553
  587
  624
  662
  701
  742
  785
  830
  877
  926
  977
  1,030
  1,086
  1,144
  1,205
  1,269
  1,336
  1,406
Funds from operations, $m
  1,013
  958
  1,025
  1,095
  1,168
  1,244
  1,323
  1,405
  1,491
  1,579
  1,671
  1,687
  1,786
  1,890
  1,997
  2,110
  2,227
  2,348
  2,475
  2,608
  2,746
  2,891
  3,042
  3,200
  3,364
  3,537
  3,717
  3,906
  4,104
  4,311
  4,528
Change in working capital, $m
  43
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -34
  -36
  -37
  -39
  -40
  -42
  -44
  -46
  -48
  -50
  -52
  -54
  -57
  -60
  -62
  -65
  -68
Cash from operations, $m
  970
  978
  1,047
  1,118
  1,192
  1,268
  1,348
  1,431
  1,518
  1,607
  1,701
  1,717
  1,818
  1,922
  2,032
  2,145
  2,264
  2,387
  2,516
  2,650
  2,790
  2,936
  3,089
  3,249
  3,417
  3,591
  3,774
  3,966
  4,166
  4,376
  4,596
Maintenance CAPEX, $m
  0
  -204
  -224
  -246
  -269
  -293
  -317
  -343
  -369
  -397
  -426
  -456
  -487
  -519
  -553
  -587
  -624
  -662
  -701
  -742
  -785
  -830
  -877
  -926
  -977
  -1,030
  -1,086
  -1,144
  -1,205
  -1,269
  -1,336
New CAPEX, $m
  -564
  -316
  -328
  -343
  -357
  -372
  -387
  -402
  -418
  -434
  -451
  -469
  -487
  -507
  -527
  -549
  -572
  -596
  -621
  -648
  -676
  -706
  -737
  -770
  -805
  -842
  -881
  -922
  -965
  -1,010
  -1,058
Cash from investing activities, $m
  -559
  -520
  -552
  -589
  -626
  -665
  -704
  -745
  -787
  -831
  -877
  -925
  -974
  -1,026
  -1,080
  -1,136
  -1,196
  -1,258
  -1,322
  -1,390
  -1,461
  -1,536
  -1,614
  -1,696
  -1,782
  -1,872
  -1,967
  -2,066
  -2,170
  -2,279
  -2,394
Free cash flow, $m
  411
  458
  494
  529
  566
  604
  645
  687
  731
  776
  824
  792
  844
  897
  952
  1,009
  1,068
  1,129
  1,193
  1,260
  1,329
  1,401
  1,476
  1,554
  1,635
  1,720
  1,808
  1,900
  1,997
  2,097
  2,203
Issuance/(repayment) of debt, $m
  155
  779
  818
  854
  890
  927
  964
  1,002
  1,041
  1,082
  1,125
  1,169
  1,215
  1,264
  1,315
  1,369
  1,426
  1,486
  1,549
  1,616
  1,686
  1,760
  1,838
  1,921
  2,008
  2,100
  2,197
  2,298
  2,406
  2,519
  2,638
Issuance/(repurchase) of shares, $m
  -34
  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  
  -114
  779
  818
  854
  890
  927
  964
  1,002
  1,041
  1,082
  1,125
  1,169
  1,215
  1,264
  1,315
  1,369
  1,426
  1,486
  1,549
  1,616
  1,686
  1,760
  1,838
  1,921
  2,008
  2,100
  2,197
  2,298
  2,406
  2,519
  2,638
Total cash flow (excl. dividends), $m
  294
  1,238
  1,312
  1,383
  1,456
  1,531
  1,609
  1,689
  1,772
  1,859
  1,948
  1,961
  2,059
  2,161
  2,267
  2,378
  2,494
  2,615
  2,742
  2,875
  3,015
  3,161
  3,314
  3,474
  3,643
  3,819
  4,004
  4,199
  4,403
  4,616
  4,841
Retained Cash Flow (-), $m
  -159
  -269
  -285
  -297
  -310
  -322
  -335
  -348
  -362
  -376
  -391
  -406
  -423
  -440
  -457
  -476
  -496
  -517
  -539
  -562
  -586
  -612
  -639
  -668
  -698
  -730
  -764
  -799
  -837
  -876
  -917
Prev. year cash balance distribution, $m
 
  181
  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
 
  1,149
  1,028
  1,086
  1,146
  1,209
  1,273
  1,340
  1,410
  1,482
  1,557
  1,555
  1,636
  1,721
  1,810
  1,902
  1,998
  2,099
  2,204
  2,314
  2,429
  2,549
  2,675
  2,807
  2,945
  3,089
  3,241
  3,400
  3,566
  3,741
  3,924
Discount rate, %
 
  7.60
  7.98
  8.38
  8.80
  9.24
  9.70
  10.18
  10.69
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.20
  20.17
  21.17
  22.23
  23.34
  24.51
  25.74
  27.02
  28.37
  29.79
  31.28
PV of cash for distribution, $m
 
  1,068
  881
  853
  818
  777
  731
  680
  626
  569
  511
  431
  378
  326
  278
  232
  191
  154
  122
  95
  72
  54
  39
  28
  19
  13
  8
  5
  3
  2
  1
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

UGI Corporation distributes, stores, transports, and markets energy products and related services in the United States and internationally. It distributes propane to approximately 1.9 million residential, commercial/industrial, motor fuel, agricultural, and wholesale customers in 50 states through 1,900 propane distribution locations; and sells, installs, and services propane appliances, including heating systems. The company also distributes liquid petroleum gas (LPG) to residential, commercial, industrial, agricultural, resale, and automobile fuel customers for heating, cooking, motor fuel, leisure, construction work, manufacturing, crop and grain drying, power generation, and irrigation activities; and provides logistic, storage, and other services to third-party LPG distributors. In addition, it engages in the retail sale of natural gas, liquid fuels, and electricity to approximately 160,000 residential, commercial, and industrial customers at approximately 44,000 locations. Further, the company distributes natural gas to approximately 626,000 customers in the portions of 44 eastern and central Pennsylvania counties through its distribution system of 12,000 miles of gas mains; and supplies electricity to approximately 62,000 customers in northeastern Pennsylvania through 2,200 miles of lines and 13 substations. Additionally, it operates electric generation facilities, which include coal-fired, landfill gas-fueled, solar-powered, and natural gas-fueled facilities; a natural gas liquefaction, storage, and vaporization facility; propane storage and propane-air mixing stations; and rail transshipment terminals. The company also manages natural gas pipeline and storage contracts; develops, owns, and operates pipelines, gathering infrastructure, and gas storage facilities; and offers heating, ventilation, air conditioning, refrigeration, mechanical, and electrical contracting services. UGI Corporation was founded in 1882 and is based in King of Prussia, Pennsylvania.

FINANCIAL RATIOS  of  UGI (UGI)

Valuation Ratios
P/E Ratio 24
Price to Sales 1.5
Price to Book 3.1
Price to Tangible Book
Price to Cash Flow 9
Price to Free Cash Flow 21.6
Growth Rates
Sales Growth Rate -15%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 14.9%
Cap. Spend. - 3 Yr. Gr. Rate 3%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 132.1%
Total Debt to Equity 143.4%
Interest Coverage 4
Management Effectiveness
Return On Assets 4.9%
Ret/ On Assets - 3 Yr. Avg. 4.7%
Return On Total Capital 5.4%
Ret/ On T. Cap. - 3 Yr. Avg. 5%
Return On Equity 13.2%
Return On Equity - 3 Yr. Avg. 12.3%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 23.6%
EBITDA Margin - 3 Yr. Avg. 19.3%
Operating Margin 16.5%
Oper. Margin - 3 Yr. Avg. 13.7%
Pre-Tax Margin 12.5%
Pre-Tax Margin - 3 Yr. Avg. 10.2%
Net Profit Margin 6.4%
Net Profit Margin - 3 Yr. Avg. 4.9%
Effective Tax Rate 31.1%
Eff/ Tax Rate - 3 Yr. Avg. 30.6%
Payout Ratio 44.1%

UGI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the UGI stock intrinsic value calculation we used $5686 million for the last fiscal year's total revenue generated by UGI. The default revenue input number comes from 2016 income statement of UGI. 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 UGI stock valuation model: a) initial revenue growth rate of 10.2% 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 7.6%, whose default value for UGI is calculated based on our internal credit rating of UGI, 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 UGI.
    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 UGI stock the variable cost ratio is equal to 87.5%.

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 UGI 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 5.8% for UGI.

Corporate tax rate of 27% is the nominal tax rate for UGI. 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 UGI 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 UGI are equal to 54.1%.

Life of production assets of 15.1 years is the average useful life of capital assets used in UGI 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 UGI 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 - $2851 million for UGI - 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 173.985 million for UGI 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 UGI at the current share price and the inputted number of shares is $8.8 billion.

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COMPANY NEWS

▶ UGI Declares Common Dividend   [Jul-25-17 04:15PM  Business Wire]
▶ ETFs with exposure to UGI Corp. : July 10, 2017   [Jul-10-17 03:25PM  Capital Cube]
▶ ETFs with exposure to UGI Corp. : June 26, 2017   [Jun-26-17 05:06PM  Capital Cube]
▶ ETFs with exposure to UGI Corp. : June 15, 2017   [Jun-15-17 03:38PM  Capital Cube]
▶ UGI Corp. Value Analysis (NYSE:UGI) : May 4, 2017   [May-04-17 05:08PM  Capital Cube]
▶ UGI beats 2Q profit forecasts   [May-01-17 06:14PM  Associated Press]
▶ UGI Reports Second Quarter Earnings   [06:00PM  Business Wire]
▶ Best Performing Stocks of All Time   [Mar-14-17 02:08PM  at Motley Fool]
▶ UGI beats 1Q profit forecasts   [Feb-01-17 06:08PM  Associated Press]
▶ UGI Reports Record First Quarter Earnings   [05:30PM  Business Wire]
▶ UGI Declares Common Dividend   [04:15PM  Business Wire]
▶ UGI Corporation Investor Day Recap   [Dec-13-16 04:50PM  Business Wire]
▶ Is UGI Corp (UGI) A Good Stock To Buy?   [Dec-09-16 04:06PM  at Insider Monkey]
▶ UGI Declares Common Dividend   [Nov-18-16 04:15PM  Business Wire]
▶ These 3 Dividend Aristocrats Are Ridiculously Cheap   [Nov-15-16 11:45AM  at Motley Fool]
▶ UGI Reports Record Fiscal 2016 Earnings   [06:00PM  Business Wire]
▶ UGI Issues Earnings Guidance for Fiscal Years 2016 and 2017   [Oct-12-16 06:05PM  Business Wire]
▶ Trend Channel Buying Opportunity in These Stocks (ABBV, RTN)   [Sep-21-16 01:00PM  at Investopedia]
▶ UGI Utilities Increases Base Rates   [Sep-01-16 06:30PM  Business Wire]
▶ UGI Corporation elects G. Gary Garcia Treasurer   [Aug-29-16 04:15PM  Business Wire]
▶ UGI Declares Common Dividend   [Jul-26-16 04:15PM  Business Wire]
Stock chart of UGI Financial statements of UGI Annual reports of UGI
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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