Intrinsic value of Western Gas Partners - WES

Previous Close

$49.48

  Intrinsic Value

$6.28

stock screener

  Rating & Target

str. sell

-87%

  Value-price divergence*

-44%

Previous close

$49.48

 
Intrinsic value

$6.28

 
Up/down potential

-87%

 
Rating

str. sell

 
Value-price divergence*

-44%

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

We calculate the intrinsic value of WES 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 7.2

 

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, %
  2.97
  34.70
  31.73
  29.06
  26.65
  24.49
  22.54
  20.78
  19.21
  17.78
  16.51
  15.36
  14.32
  13.39
  12.55
  11.79
  11.11
  10.50
  9.95
  9.46
  9.01
  8.61
  8.25
  7.92
  7.63
  7.37
  7.13
  6.92
  6.73
  6.55
  6.40
Revenue, $m
  1,804
  2,430
  3,201
  4,131
  5,232
  6,513
  7,981
  9,640
  11,491
  13,535
  15,769
  18,191
  20,796
  23,580
  26,539
  29,669
  32,967
  36,430
  40,056
  43,844
  47,795
  51,911
  56,193
  60,646
  65,275
  70,085
  75,084
  80,279
  85,679
  91,295
  97,137
Variable operating expenses, $m
 
  2,197
  2,881
  3,705
  4,682
  5,818
  7,120
  8,591
  10,233
  12,045
  14,027
  16,132
  18,442
  20,911
  23,536
  26,312
  29,236
  32,307
  35,522
  38,882
  42,386
  46,036
  49,834
  53,783
  57,888
  62,154
  66,587
  71,194
  75,983
  80,963
  86,144
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
  1,096
  2,197
  2,881
  3,705
  4,682
  5,818
  7,120
  8,591
  10,233
  12,045
  14,027
  16,132
  18,442
  20,911
  23,536
  26,312
  29,236
  32,307
  35,522
  38,882
  42,386
  46,036
  49,834
  53,783
  57,888
  62,154
  66,587
  71,194
  75,983
  80,963
  86,144
Operating income, $m
  708
  233
  320
  426
  550
  695
  861
  1,049
  1,259
  1,490
  1,743
  2,059
  2,353
  2,669
  3,003
  3,358
  3,731
  4,123
  4,533
  4,962
  5,409
  5,875
  6,359
  6,863
  7,387
  7,932
  8,497
  9,085
  9,696
  10,332
  10,993
EBITDA, $m
  981
  618
  814
  1,050
  1,330
  1,655
  2,028
  2,450
  2,920
  3,440
  4,008
  4,623
  5,285
  5,993
  6,745
  7,540
  8,378
  9,258
  10,180
  11,143
  12,147
  13,193
  14,281
  15,413
  16,589
  17,811
  19,082
  20,402
  21,775
  23,202
  24,686
Interest expense (income), $m
  106
  114
  161
  219
  289
  372
  468
  578
  702
  841
  995
  1,162
  1,344
  1,540
  1,749
  1,971
  2,206
  2,453
  2,713
  2,985
  3,270
  3,566
  3,875
  4,197
  4,531
  4,878
  5,239
  5,614
  6,004
  6,410
  6,831
Earnings before tax, $m
  611
  119
  159
  207
  261
  324
  394
  471
  556
  649
  748
  896
  1,009
  1,129
  1,255
  1,387
  1,525
  1,669
  1,820
  1,977
  2,139
  2,309
  2,484
  2,667
  2,856
  3,053
  3,258
  3,471
  3,692
  3,922
  4,162
Tax expense, $m
  9
  32
  43
  56
  71
  87
  106
  127
  150
  175
  202
  242
  272
  305
  339
  374
  412
  451
  491
  534
  578
  623
  671
  720
  771
  824
  880
  937
  997
  1,059
  1,124
Net income, $m
  591
  87
  116
  151
  191
  236
  287
  344
  406
  473
  546
  654
  737
  824
  916
  1,012
  1,113
  1,219
  1,329
  1,443
  1,562
  1,685
  1,814
  1,947
  2,085
  2,229
  2,378
  2,534
  2,695
  2,863
  3,038

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  358
  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
  7,733
  9,918
  13,065
  16,862
  21,356
  26,585
  32,576
  39,347
  46,904
  55,246
  64,365
  74,248
  84,881
  96,245
  108,323
  121,099
  134,559
  148,693
  163,492
  178,955
  195,082
  211,881
  229,360
  247,537
  266,429
  286,063
  306,465
  327,669
  349,712
  372,633
  396,477
Adjusted assets (=assets-cash), $m
  7,375
  9,918
  13,065
  16,862
  21,356
  26,585
  32,576
  39,347
  46,904
  55,246
  64,365
  74,248
  84,881
  96,245
  108,323
  121,099
  134,559
  148,693
  163,492
  178,955
  195,082
  211,881
  229,360
  247,537
  266,429
  286,063
  306,465
  327,669
  349,712
  372,633
  396,477
Revenue / Adjusted assets
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
  0.245
Average production assets, $m
  5,773
  7,776
  10,243
  13,220
  16,743
  20,843
  25,540
  30,848
  36,773
  43,313
  50,462
  58,211
  66,547
  75,456
  84,925
  94,942
  105,494
  116,575
  128,178
  140,301
  152,945
  166,114
  179,818
  194,069
  208,881
  224,273
  240,269
  256,893
  274,174
  292,144
  310,838
Working capital, $m
  279
  -107
  -141
  -182
  -230
  -287
  -351
  -424
  -506
  -596
  -694
  -800
  -915
  -1,038
  -1,168
  -1,305
  -1,451
  -1,603
  -1,762
  -1,929
  -2,103
  -2,284
  -2,473
  -2,668
  -2,872
  -3,084
  -3,304
  -3,532
  -3,770
  -4,017
  -4,274
Total debt, $m
  3,091
  4,358
  5,923
  7,809
  10,043
  12,642
  15,620
  18,985
  22,740
  26,886
  31,418
  36,330
  41,615
  47,263
  53,266
  59,615
  66,305
  73,329
  80,685
  88,370
  96,385
  104,734
  113,421
  122,455
  131,844
  141,602
  151,742
  162,281
  173,236
  184,628
  196,478
Total liabilities, $m
  3,662
  4,929
  6,494
  8,380
  10,614
  13,213
  16,191
  19,556
  23,311
  27,457
  31,989
  36,901
  42,186
  47,834
  53,837
  60,186
  66,876
  73,900
  81,256
  88,941
  96,956
  105,305
  113,992
  123,026
  132,415
  142,173
  152,313
  162,852
  173,807
  185,199
  197,049
Total equity, $m
  4,071
  4,989
  6,572
  8,481
  10,742
  13,372
  16,386
  19,792
  23,593
  27,789
  32,375
  37,347
  42,695
  48,411
  54,487
  60,913
  67,683
  74,792
  82,237
  90,014
  98,126
  106,576
  115,368
  124,511
  134,014
  143,890
  154,152
  164,818
  175,905
  187,434
  199,428
Total liabilities and equity, $m
  7,733
  9,918
  13,066
  16,861
  21,356
  26,585
  32,577
  39,348
  46,904
  55,246
  64,364
  74,248
  84,881
  96,245
  108,324
  121,099
  134,559
  148,692
  163,493
  178,955
  195,082
  211,881
  229,360
  247,537
  266,429
  286,063
  306,465
  327,670
  349,712
  372,633
  396,477
Debt-to-equity ratio
  0.759
  0.870
  0.900
  0.920
  0.930
  0.950
  0.950
  0.960
  0.960
  0.970
  0.970
  0.970
  0.970
  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
  0.990
  0.990
Adjusted equity ratio
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503
  0.503

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  591
  87
  116
  151
  191
  236
  287
  344
  406
  473
  546
  654
  737
  824
  916
  1,012
  1,113
  1,219
  1,329
  1,443
  1,562
  1,685
  1,814
  1,947
  2,085
  2,229
  2,378
  2,534
  2,695
  2,863
  3,038
Depreciation, amort., depletion, $m
  273
  384
  493
  624
  779
  960
  1,167
  1,401
  1,662
  1,950
  2,265
  2,564
  2,932
  3,324
  3,741
  4,182
  4,647
  5,135
  5,647
  6,181
  6,738
  7,318
  7,922
  8,549
  9,202
  9,880
  10,585
  11,317
  12,078
  12,870
  13,693
Funds from operations, $m
  923
  471
  609
  775
  970
  1,196
  1,454
  1,745
  2,068
  2,423
  2,811
  3,219
  3,668
  4,148
  4,657
  5,195
  5,761
  6,354
  6,975
  7,624
  8,299
  9,003
  9,735
  10,496
  11,287
  12,109
  12,963
  13,851
  14,773
  15,733
  16,731
Change in working capital, $m
  5
  -28
  -34
  -41
  -48
  -56
  -65
  -73
  -81
  -90
  -98
  -107
  -115
  -123
  -130
  -138
  -145
  -152
  -160
  -167
  -174
  -181
  -188
  -196
  -204
  -212
  -220
  -229
  -238
  -247
  -257
Cash from operations, $m
  918
  499
  643
  816
  1,019
  1,253
  1,519
  1,818
  2,149
  2,513
  2,909
  3,325
  3,783
  4,271
  4,787
  5,333
  5,906
  6,507
  7,135
  7,790
  8,473
  9,184
  9,923
  10,692
  11,491
  12,320
  13,183
  14,079
  15,011
  15,980
  16,989
Maintenance CAPEX, $m
  0
  -254
  -343
  -451
  -582
  -738
  -918
  -1,125
  -1,359
  -1,620
  -1,908
  -2,223
  -2,564
  -2,932
  -3,324
  -3,741
  -4,182
  -4,647
  -5,135
  -5,647
  -6,181
  -6,738
  -7,318
  -7,922
  -8,549
  -9,202
  -9,880
  -10,585
  -11,317
  -12,078
  -12,870
New CAPEX, $m
  -480
  -2,003
  -2,467
  -2,976
  -3,523
  -4,100
  -4,697
  -5,308
  -5,925
  -6,540
  -7,149
  -7,749
  -8,336
  -8,909
  -9,469
  -10,016
  -10,553
  -11,081
  -11,603
  -12,123
  -12,644
  -13,170
  -13,704
  -14,250
  -14,812
  -15,393
  -15,996
  -16,624
  -17,281
  -17,970
  -18,694
Cash from investing activities, $m
  -1,106
  -2,257
  -2,810
  -3,427
  -4,105
  -4,838
  -5,615
  -6,433
  -7,284
  -8,160
  -9,057
  -9,972
  -10,900
  -11,841
  -12,793
  -13,757
  -14,735
  -15,728
  -16,738
  -17,770
  -18,825
  -19,908
  -21,022
  -22,172
  -23,361
  -24,595
  -25,876
  -27,209
  -28,598
  -30,048
  -31,564
Free cash flow, $m
  -188
  -1,759
  -2,167
  -2,612
  -3,087
  -3,585
  -4,097
  -4,616
  -5,134
  -5,647
  -6,148
  -6,647
  -7,117
  -7,570
  -8,006
  -8,425
  -8,829
  -9,221
  -9,604
  -9,979
  -10,351
  -10,723
  -11,098
  -11,480
  -11,871
  -12,274
  -12,693
  -13,129
  -13,587
  -14,068
  -14,575
Issuance/(repayment) of debt, $m
  397
  1,267
  1,564
  1,887
  2,233
  2,599
  2,978
  3,365
  3,756
  4,146
  4,532
  4,912
  5,284
  5,648
  6,003
  6,350
  6,690
  7,024
  7,355
  7,685
  8,015
  8,349
  8,687
  9,034
  9,390
  9,758
  10,140
  10,538
  10,955
  11,392
  11,851
Issuance/(repurchase) of shares, $m
  712
  1,189
  1,467
  1,759
  2,070
  2,394
  2,726
  3,062
  3,395
  3,722
  4,041
  4,317
  4,611
  4,892
  5,159
  5,414
  5,657
  5,890
  6,116
  6,335
  6,550
  6,764
  6,979
  7,196
  7,418
  7,647
  7,884
  8,132
  8,392
  8,666
  8,956
Cash from financing (excl. dividends), $m  
  1,120
  2,456
  3,031
  3,646
  4,303
  4,993
  5,704
  6,427
  7,151
  7,868
  8,573
  9,229
  9,895
  10,540
  11,162
  11,764
  12,347
  12,914
  13,471
  14,020
  14,565
  15,113
  15,666
  16,230
  16,808
  17,405
  18,024
  18,670
  19,347
  20,058
  20,807
Total cash flow (excl. dividends), $m
  932
  697
  864
  1,034
  1,216
  1,408
  1,608
  1,811
  2,017
  2,222
  2,425
  2,583
  2,778
  2,970
  3,156
  3,339
  3,517
  3,693
  3,867
  4,041
  4,214
  4,390
  4,568
  4,750
  4,937
  5,131
  5,332
  5,541
  5,760
  5,990
  6,231
Retained Cash Flow (-), $m
  -220
  -1,276
  -1,583
  -1,910
  -2,260
  -2,630
  -3,014
  -3,406
  -3,801
  -4,196
  -4,587
  -4,971
  -5,348
  -5,716
  -6,075
  -6,426
  -6,770
  -7,109
  -7,444
  -7,778
  -8,112
  -8,450
  -8,792
  -9,143
  -9,503
  -9,876
  -10,262
  -10,666
  -11,087
  -11,529
  -11,994
Prev. year cash balance distribution, $m
 
  358
  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
 
  -220
  -719
  -876
  -1,044
  -1,222
  -1,406
  -1,595
  -1,785
  -1,974
  -2,162
  -2,389
  -2,570
  -2,746
  -2,919
  -3,088
  -3,253
  -3,416
  -3,577
  -3,737
  -3,898
  -4,060
  -4,225
  -4,393
  -4,566
  -4,745
  -4,931
  -5,125
  -5,327
  -5,540
  -5,763
Discount rate, %
 
  6.20
  6.51
  6.84
  7.18
  7.54
  7.91
  8.31
  8.72
  9.16
  9.62
  10.10
  10.60
  11.13
  11.69
  12.28
  12.89
  13.53
  14.21
  14.92
  15.67
  16.45
  17.27
  18.14
  19.04
  20.00
  21.00
  22.05
  23.15
  24.30
  25.52
PV of cash for distribution, $m
 
  -208
  -634
  -718
  -791
  -850
  -890
  -912
  -914
  -897
  -863
  -829
  -767
  -696
  -621
  -544
  -468
  -395
  -327
  -266
  -212
  -166
  -127
  -95
  -70
  -50
  -35
  -24
  -16
  -10
  -6
Current shareholders' claim on cash, %
  100
  84.7
  72.6
  63.0
  55.4
  49.2
  44.1
  39.9
  36.3
  33.4
  30.8
  28.7
  26.8
  25.2
  23.7
  22.5
  21.3
  20.3
  19.4
  18.6
  17.9
  17.2
  16.6
  16.0
  15.5
  15.0
  14.6
  14.2
  13.8
  13.4
  13.0

Western Gas Partners, LP acquires, develops, owns, and operates midstream energy assets in the Rocky Mountains, the Mid-Continent, North-central Pennsylvania, and Texas. It is involved in gathering, processing, compressing, treating, and transporting natural gas, condensate, natural gas liquids, and crude oil. Western Gas Holdings, LLC serves as the general partner of Western Gas Partners, LP. The company was founded in 2007 and is headquartered in The Woodlands, Texas. Western Gas Partners LP operates as a subsidiary of Western Gas Equity Partners, LP.

FINANCIAL RATIOS  of  Western Gas Partners (WES)

Valuation Ratios
P/E Ratio 12
Price to Sales 3.9
Price to Book 1.7
Price to Tangible Book
Price to Cash Flow 7.7
Price to Free Cash Flow 16.2
Growth Rates
Sales Growth Rate 3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -24.8%
Cap. Spend. - 3 Yr. Gr. Rate -6.8%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 75.9%
Total Debt to Equity 75.9%
Interest Coverage 7
Management Effectiveness
Return On Assets 9.3%
Ret/ On Assets - 3 Yr. Avg. 6.1%
Return On Total Capital 8.6%
Ret/ On T. Cap. - 3 Yr. Avg. 5.6%
Return On Equity 14.9%
Return On Equity - 3 Yr. Avg. 9.3%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 72.6%
Gross Margin - 3 Yr. Avg. 70.9%
EBITDA Margin 54.9%
EBITDA Margin - 3 Yr. Avg. 43.3%
Operating Margin 39.2%
Oper. Margin - 3 Yr. Avg. 28.1%
Pre-Tax Margin 33.9%
Pre-Tax Margin - 3 Yr. Avg. 23.2%
Net Profit Margin 32.8%
Net Profit Margin - 3 Yr. Avg. 20.6%
Effective Tax Rate 1.5%
Eff/ Tax Rate - 3 Yr. Avg. 28.7%
Payout Ratio 113.7%

WES stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the WES stock intrinsic value calculation we used $1804 million for the last fiscal year's total revenue generated by Western Gas Partners. The default revenue input number comes from 2016 income statement of Western Gas 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 WES stock valuation model: a) initial revenue growth rate of 34.7% 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 6.2%, whose default value for WES is calculated based on our internal credit rating of Western Gas 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 Western Gas 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 WES stock the variable cost ratio is equal to 91%.

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 WES 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 3.7% for Western Gas Partners.

Corporate tax rate of 27% is the nominal tax rate for Western Gas 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 WES 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 WES are equal to 320%.

Life of production assets of 22.7 years is the average useful life of capital assets used in Western Gas 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 WES is equal to -4.4%. 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 - $4071 million for Western Gas 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 145.362 million for Western Gas 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 Western Gas Partners at the current share price and the inputted number of shares is $7.2 billion.

RELATED COMPANIES Price Int.Val. Rating
KMI Kinder Morgan 18.40 5.79  str.sell
OKS ONEOK Partners 51.07 237.81  str.buy
TEP Tallgrass Ener 45.75 15.83  str.sell
EPD Enterprise Pro 24.98 1.91  str.sell
ETP Energy Transfe 18.50 6.77  str.sell
TLLP Tesoro Logisti 52.13 163.48  str.buy
APC Anadarko Petro 41.72 5.48  str.sell
WMB Williams 29.08 1.40  str.sell

COMPANY NEWS

▶ Wesfarmers CEO Says in Talks on Sale of Coal Mines   [Aug-17-17 04:21AM  Bloomberg Video]
▶ First Reserve GP XIII Ltd Buys Western Gas Partners, LP   [Aug-14-17 09:38AM  GuruFocus.com]
▶ MLP Earnings: Wrap-Up for Last Week   [Aug-01-17 05:05PM  Market Realist]
▶ Western Gas Equity posts 2Q profit   [Jul-25-17 11:14PM  Associated Press]
▶ Analysts Ratings: WES Has the Most Buys, ENBL the Most Sells   [Jul-05-17 09:05AM  Market Realist]
▶ A Look into the Shale Exposures of WES, ENLK, ENBL, and DCP   [Jun-30-17 03:06PM  Market Realist]
▶ Analysts Ratings: ETE Has Most Buys, ENLC Has Most Sells   [Jun-01-17 09:06AM  Market Realist]
▶ Why PAGP Has the Highest Distribution Yield among Its Peers   [May-30-17 09:06AM  Market Realist]
▶ Western Gas names new CFO to succeed recently promoted CEO   [May-22-17 09:15AM  American City Business Journals]
▶ 5 MLPs Likely to do Best When Crude Rebounds   [May-08-17 08:38PM  Barrons.com]
▶ Western Gas Equity misses 1Q profit forecasts   [May-02-17 06:43PM  Associated Press]
▶ Are Analysts Bullish on Western Gas?   [Apr-28-17 07:36AM  Market Realist]
▶ Will Western Gass Gross Margins Continue to Expand in 1Q17?   [Apr-26-17 02:35PM  Market Realist]
▶ Fortescue CEO Says Debt to Remain Strategic Focus   [Feb-27-17 07:39PM  Bloomberg Video]
▶ Western Gas Annual Reports Availble   [Feb-23-17 05:30PM  PR Newswire]
▶ Western Gas Equity beats 4Q profit forecasts   [Feb-22-17 07:06PM  Associated Press]
▶ Houston energy co. CEO to step down, replacement named   [Feb-15-17 06:45PM  at bizjournals.com]
Stock chart of WES Financial statements of WES
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.