Intrinsic value of Western Refining - WNR

Previous Close

$36.18

  Intrinsic Value

premium content

  Rating & Target

premium content

  Value-price divergence*

premium content

Previous close

$36.18

 
Intrinsic value premium content
 
Up/down potential premium content
 
Rating premium content
 
Value-price divergence* premium content

Premium access subscription - $499/yr

please register and log in before paying

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

We calculate the intrinsic value of WNR 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 3.8

 

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, %
  -20.88
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  7,743
  12,389
  19,141
  28,625
  41,533
  58,597
  80,558
  108,132
  141,985
  182,700
  230,765
  286,558
  350,344
  422,282
  502,433
  590,772
  687,209
  791,607
  903,797
  1,023,598
  1,150,828
  1,285,322
  1,426,939
  1,575,572
  1,731,154
  1,893,660
  2,063,113
  2,239,583
  2,423,190
  2,614,098
  2,812,523
Variable operating expenses, $m
 
  8,731
  13,419
  20,005
  28,968
  40,816
  56,065
  75,211
  98,716
  126,987
  160,361
  198,972
  243,262
  293,213
  348,865
  410,204
  477,166
  549,655
  627,554
  710,738
  799,080
  892,466
  990,799
  1,094,003
  1,202,031
  1,314,868
  1,432,528
  1,555,061
  1,682,548
  1,815,106
  1,952,883
Fixed operating expenses, $m
 
  1,997
  2,047
  2,098
  2,150
  2,204
  2,259
  2,316
  2,373
  2,433
  2,494
  2,556
  2,620
  2,685
  2,752
  2,821
  2,892
  2,964
  3,038
  3,114
  3,192
  3,272
  3,354
  3,437
  3,523
  3,611
  3,702
  3,794
  3,889
  3,986
  4,086
Total operating expenses, $m
  7,404
  10,728
  15,466
  22,103
  31,118
  43,020
  58,324
  77,527
  101,089
  129,420
  162,855
  201,528
  245,882
  295,898
  351,617
  413,025
  480,058
  552,619
  630,592
  713,852
  802,272
  895,738
  994,153
  1,097,440
  1,205,554
  1,318,479
  1,436,230
  1,558,855
  1,686,437
  1,819,092
  1,956,969
Operating income, $m
  340
  1,661
  3,675
  6,522
  10,415
  15,577
  22,234
  30,606
  40,895
  53,280
  67,910
  85,030
  104,462
  126,384
  150,815
  177,746
  207,152
  238,989
  273,205
  309,746
  348,555
  389,583
  432,786
  478,132
  525,599
  575,181
  626,883
  680,728
  736,752
  795,006
  855,554
EBITDA, $m
  557
  2,012
  4,147
  7,165
  11,290
  16,758
  23,809
  32,676
  43,573
  56,689
  72,182
  90,174
  110,751
  133,965
  159,834
  188,352
  219,488
  253,199
  289,430
  328,121
  369,215
  412,657
  458,402
  506,416
  556,676
  609,175
  663,920
  720,933
  780,253
  841,934
  906,044
Interest expense (income), $m
  124
  131
  288
  517
  838
  1,274
  1,852
  2,595
  3,528
  4,673
  6,051
  7,677
  9,565
  11,724
  14,158
  16,870
  19,859
  23,122
  26,655
  30,451
  34,505
  38,810
  43,361
  48,153
  53,182
  58,447
  63,945
  69,679
  75,650
  81,863
  88,323
Earnings before tax, $m
  242
  1,530
  3,387
  6,006
  9,578
  14,303
  20,383
  28,011
  37,367
  48,607
  61,859
  77,352
  94,897
  114,660
  136,657
  160,876
  187,293
  215,866
  246,550
  279,295
  314,051
  350,773
  389,426
  429,979
  472,417
  516,734
  562,938
  611,049
  661,102
  713,143
  767,231
Tax expense, $m
  55
  413
  914
  1,622
  2,586
  3,862
  5,503
  7,563
  10,089
  13,124
  16,702
  20,885
  25,622
  30,958
  36,897
  43,437
  50,569
  58,284
  66,569
  75,410
  84,794
  94,709
  105,145
  116,094
  127,553
  139,518
  151,993
  164,983
  178,497
  192,548
  207,152
Net income, $m
  125
  1,117
  2,472
  4,384
  6,992
  10,441
  14,879
  20,448
  27,278
  35,483
  45,157
  56,467
  69,274
  83,702
  99,759
  117,440
  136,724
  157,582
  179,982
  203,885
  229,257
  256,065
  284,281
  313,885
  344,864
  377,216
  410,945
  446,066
  482,604
  520,594
  560,079

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  269
  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
  5,560
  8,468
  13,083
  19,566
  28,389
  40,053
  55,064
  73,911
  97,050
  124,880
  157,734
  195,870
  239,470
  288,641
  343,426
  403,808
  469,726
  541,085
  617,770
  699,657
  786,622
  878,552
  975,351
  1,076,946
  1,183,290
  1,294,368
  1,410,193
  1,530,816
  1,656,316
  1,786,807
  1,922,436
Adjusted assets (=assets-cash), $m
  5,291
  8,468
  13,083
  19,566
  28,389
  40,053
  55,064
  73,911
  97,050
  124,880
  157,734
  195,870
  239,470
  288,641
  343,426
  403,808
  469,726
  541,085
  617,770
  699,657
  786,622
  878,552
  975,351
  1,076,946
  1,183,290
  1,294,368
  1,410,193
  1,530,816
  1,656,316
  1,786,807
  1,922,436
Revenue / Adjusted assets
  1.463
  1.463
  1.463
  1.463
  1.463
  1.463
  1.463
  1.463
  1.463
  1.463
  1.463
  1.463
  1.463
  1.463
  1.463
  1.463
  1.463
  1.463
  1.463
  1.463
  1.463
  1.463
  1.463
  1.463
  1.463
  1.463
  1.463
  1.463
  1.463
  1.463
  1.463
Average production assets, $m
  2,308
  3,692
  5,704
  8,530
  12,377
  17,462
  24,006
  32,223
  42,311
  54,445
  68,768
  85,394
  104,403
  125,840
  149,725
  176,050
  204,788
  235,899
  269,332
  305,032
  342,947
  383,026
  425,228
  469,521
  515,884
  564,311
  614,808
  667,396
  722,111
  779,001
  838,132
Working capital, $m
  689
  694
  1,072
  1,603
  2,326
  3,281
  4,511
  6,055
  7,951
  10,231
  12,923
  16,047
  19,619
  23,648
  28,136
  33,083
  38,484
  44,330
  50,613
  57,321
  64,446
  71,978
  79,909
  88,232
  96,945
  106,045
  115,534
  125,417
  135,699
  146,390
  157,501
Total debt, $m
  1,936
  4,238
  7,598
  12,317
  18,740
  27,232
  38,159
  51,881
  68,726
  88,986
  112,903
  140,666
  172,407
  208,204
  248,087
  292,045
  340,034
  391,983
  447,810
  507,423
  570,734
  637,659
  708,129
  782,090
  859,508
  940,373
  1,024,694
  1,112,507
  1,203,871
  1,298,868
  1,397,606
Total liabilities, $m
  3,864
  6,165
  9,525
  14,244
  20,667
  29,159
  40,086
  53,808
  70,653
  90,913
  114,830
  142,593
  174,334
  210,131
  250,014
  293,972
  341,961
  393,910
  449,737
  509,350
  572,661
  639,586
  710,056
  784,017
  861,435
  942,300
  1,026,621
  1,114,434
  1,205,798
  1,300,795
  1,399,533
Total equity, $m
  1,697
  2,303
  3,559
  5,322
  7,722
  10,894
  14,977
  20,104
  26,398
  33,967
  42,904
  53,277
  65,136
  78,510
  93,412
  109,836
  127,765
  147,175
  168,033
  190,307
  213,961
  238,966
  265,296
  292,929
  321,855
  352,068
  383,573
  416,382
  450,518
  486,011
  522,903
Total liabilities and equity, $m
  5,561
  8,468
  13,084
  19,566
  28,389
  40,053
  55,063
  73,912
  97,051
  124,880
  157,734
  195,870
  239,470
  288,641
  343,426
  403,808
  469,726
  541,085
  617,770
  699,657
  786,622
  878,552
  975,352
  1,076,946
  1,183,290
  1,294,368
  1,410,194
  1,530,816
  1,656,316
  1,786,806
  1,922,436
Debt-to-equity ratio
  1.141
  1.840
  2.130
  2.310
  2.430
  2.500
  2.550
  2.580
  2.600
  2.620
  2.630
  2.640
  2.650
  2.650
  2.660
  2.660
  2.660
  2.660
  2.670
  2.670
  2.670
  2.670
  2.670
  2.670
  2.670
  2.670
  2.670
  2.670
  2.670
  2.670
  2.670
Adjusted equity ratio
  0.270
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  125
  1,117
  2,472
  4,384
  6,992
  10,441
  14,879
  20,448
  27,278
  35,483
  45,157
  56,467
  69,274
  83,702
  99,759
  117,440
  136,724
  157,582
  179,982
  203,885
  229,257
  256,065
  284,281
  313,885
  344,864
  377,216
  410,945
  446,066
  482,604
  520,594
  560,079
Depreciation, amort., depletion, $m
  217
  351
  473
  643
  874
  1,181
  1,575
  2,070
  2,678
  3,409
  4,272
  5,144
  6,289
  7,581
  9,020
  10,605
  12,337
  14,211
  16,225
  18,375
  20,659
  23,074
  25,616
  28,284
  31,077
  33,995
  37,037
  40,205
  43,501
  46,928
  50,490
Funds from operations, $m
  410
  1,468
  2,945
  5,027
  7,866
  11,622
  16,454
  22,518
  29,956
  38,892
  49,429
  61,611
  75,564
  91,283
  108,779
  128,045
  149,060
  171,793
  196,206
  222,261
  249,916
  279,138
  309,897
  342,169
  375,942
  411,210
  447,981
  486,270
  526,105
  567,522
  610,569
Change in working capital, $m
  26
  260
  378
  531
  723
  956
  1,230
  1,544
  1,896
  2,280
  2,692
  3,124
  3,572
  4,029
  4,488
  4,947
  5,401
  5,846
  6,283
  6,709
  7,125
  7,532
  7,931
  8,323
  8,713
  9,100
  9,489
  9,882
  10,282
  10,691
  11,112
Cash from operations, $m
  384
  1,208
  2,567
  4,496
  7,143
  10,666
  15,225
  20,974
  28,060
  36,612
  46,737
  58,487
  71,992
  87,254
  104,291
  123,098
  143,660
  165,947
  189,924
  215,552
  242,791
  271,607
  301,966
  333,846
  367,229
  402,110
  438,492
  476,388
  515,823
  556,831
  599,457
Maintenance CAPEX, $m
  0
  -139
  -222
  -344
  -514
  -746
  -1,052
  -1,446
  -1,941
  -2,549
  -3,280
  -4,143
  -5,144
  -6,289
  -7,581
  -9,020
  -10,605
  -12,337
  -14,211
  -16,225
  -18,375
  -20,659
  -23,074
  -25,616
  -28,284
  -31,077
  -33,995
  -37,037
  -40,205
  -43,501
  -46,928
New CAPEX, $m
  -301
  -1,384
  -2,012
  -2,826
  -3,847
  -5,085
  -6,544
  -8,217
  -10,088
  -12,133
  -14,323
  -16,626
  -19,008
  -21,438
  -23,885
  -26,325
  -28,738
  -31,111
  -33,433
  -35,700
  -37,915
  -40,079
  -42,202
  -44,293
  -46,363
  -48,427
  -50,497
  -52,588
  -54,715
  -56,891
  -59,131
Cash from investing activities, $m
  -226
  -1,523
  -2,234
  -3,170
  -4,361
  -5,831
  -7,596
  -9,663
  -12,029
  -14,682
  -17,603
  -20,769
  -24,152
  -27,727
  -31,466
  -35,345
  -39,343
  -43,448
  -47,644
  -51,925
  -56,290
  -60,738
  -65,276
  -69,909
  -74,647
  -79,504
  -84,492
  -89,625
  -94,920
  -100,392
  -106,059
Free cash flow, $m
  158
  -315
  332
  1,326
  2,783
  4,836
  7,628
  11,311
  16,031
  21,930
  29,134
  37,718
  47,839
  59,527
  72,825
  87,754
  104,316
  122,500
  142,280
  163,626
  186,501
  210,868
  236,690
  263,937
  292,581
  322,606
  354,000
  386,763
  420,904
  456,439
  493,398
Issuance/(repayment) of debt, $m
  240
  2,313
  3,360
  4,719
  6,423
  8,491
  10,928
  13,721
  16,845
  20,260
  23,917
  27,763
  31,741
  35,797
  39,883
  43,958
  47,988
  51,949
  55,827
  59,613
  63,311
  66,925
  70,470
  73,961
  77,419
  80,864
  84,321
  87,813
  91,364
  94,998
  98,738
Issuance/(repurchase) of shares, $m
  -75
  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  
  -507
  2,313
  3,360
  4,719
  6,423
  8,491
  10,928
  13,721
  16,845
  20,260
  23,917
  27,763
  31,741
  35,797
  39,883
  43,958
  47,988
  51,949
  55,827
  59,613
  63,311
  66,925
  70,470
  73,961
  77,419
  80,864
  84,321
  87,813
  91,364
  94,998
  98,738
Total cash flow (excl. dividends), $m
  -350
  1,998
  3,692
  6,045
  9,206
  13,327
  18,556
  25,032
  32,876
  42,190
  53,051
  65,481
  79,580
  95,324
  112,709
  131,712
  152,304
  174,449
  198,107
  223,240
  249,812
  277,793
  307,160
  337,898
  370,000
  403,470
  438,321
  474,576
  512,268
  551,437
  592,136
Retained Cash Flow (-), $m
  -398
  -864
  -1,255
  -1,763
  -2,400
  -3,173
  -4,083
  -5,127
  -6,294
  -7,570
  -8,936
  -10,373
  -11,859
  -13,375
  -14,901
  -16,424
  -17,930
  -19,410
  -20,858
  -22,273
  -23,655
  -25,005
  -26,329
  -27,634
  -28,926
  -30,213
  -31,505
  -32,809
  -34,136
  -35,494
  -36,891
Prev. year cash balance distribution, $m
 
  258
  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
 
  1,392
  2,437
  4,282
  6,806
  10,154
  14,473
  19,905
  26,582
  34,620
  44,115
  55,108
  67,721
  81,950
  97,807
  115,288
  134,374
  155,039
  177,249
  200,967
  226,158
  252,788
  280,831
  310,264
  341,074
  373,257
  406,817
  441,767
  478,132
  515,944
  555,245
Discount rate, %
 
  7.50
  7.88
  8.27
  8.68
  9.12
  9.57
  10.05
  10.55
  11.08
  11.63
  12.22
  12.83
  13.47
  14.14
  14.85
  15.59
  16.37
  17.19
  18.05
  18.95
  19.90
  20.89
  21.94
  23.04
  24.19
  25.40
  26.67
  28.00
  29.40
  30.87
PV of cash for distribution, $m
 
  1,295
  2,094
  3,374
  4,878
  6,565
  8,363
  10,182
  11,913
  13,445
  14,675
  15,509
  15,913
  15,854
  15,350
  14,449
  13,227
  11,777
  10,199
  8,588
  7,030
  5,592
  4,320
  3,239
  2,355
  1,660
  1,132
  747
  476
  293
  173
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

Western Refining, Inc. operates as an independent crude oil refiner and marketer of refined products. The company operates through four segments: Refining, NTI, WNRL, and Retail. The Refining segment owns and operates two refineries in the Southwest that process crude oil and other feedstocks primarily into gasoline, diesel fuel, jet fuel, and asphalt; and sells refined products in the Mid-Atlantic region and Mexico. It markets refined products to wholesale distributors and retail chains. The NTI segment owns and operates refining and transportation assets; and operates and supports retail convenience stores primarily in the Upper Great Plains region of the Unites States. This segment also owns and operates SuperMom’s Bakery that prepares and distributes baked goods and other prepared items. As of December 31, 2015, it operated 168 retail convenience stores; and supported 109 franchised retail convenience stores. The WNRL segment owns and operates terminal, storage, transportation, and wholesale assets, including a fleet of crude oil and refined product, and lubricant delivery trucks. It also distributes wholesale petroleum products. This segment serves retail fuel distributors; and the mining, construction, utility, manufacturing, transportation, aviation, and agricultural industries. The Retail segment operates retail convenience stores that sell gasoline, diesel fuel, and convenience store merchandise; and unmanned commercial fleet fueling locations located in the Southwest. As of December 31, 2015, this segment operated 258 retail stores under the Giant, Western, Western Express, Howdy's, Mustang, and Sundial brand names in Arizona, Colorado, New Mexico, and Texas; and 52 cardlocks located in Arizona, California, Colorado, New Mexico, and Texas. Western Refining, Inc. was founded in 1993 and is headquartered in El Paso, Texas.

FINANCIAL RATIOS  of  Western Refining (WNR)

Valuation Ratios
P/E Ratio 28.8
Price to Sales 0.5
Price to Book 2.1
Price to Tangible Book
Price to Cash Flow 9.4
Price to Free Cash Flow 43.3
Growth Rates
Sales Growth Rate -20.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 3.4%
Cap. Spend. - 3 Yr. Gr. Rate 7.9%
Financial Strength
Quick Ratio 24
Current Ratio 0.1
LT Debt to Equity 113.4%
Total Debt to Equity 114.1%
Interest Coverage 3
Management Effectiveness
Return On Assets 3.9%
Ret/ On Assets - 3 Yr. Avg. 7.8%
Return On Total Capital 3.8%
Ret/ On T. Cap. - 3 Yr. Avg. 13.6%
Return On Equity 8.3%
Return On Equity - 3 Yr. Avg. 32.5%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 11%
Gross Margin - 3 Yr. Avg. 11%
EBITDA Margin 7.5%
EBITDA Margin - 3 Yr. Avg. 9.2%
Operating Margin 4.4%
Oper. Margin - 3 Yr. Avg. 7%
Pre-Tax Margin 3.1%
Pre-Tax Margin - 3 Yr. Avg. 6.1%
Net Profit Margin 1.6%
Net Profit Margin - 3 Yr. Avg. 3.2%
Effective Tax Rate 22.7%
Eff/ Tax Rate - 3 Yr. Avg. 26.2%
Payout Ratio 123.2%

WNR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the WNR stock intrinsic value calculation we used $7743 million for the last fiscal year's total revenue generated by Western Refining. The default revenue input number comes from 2016 income statement of Western Refining. 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 WNR stock valuation model: a) initial revenue growth rate of 60% 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 7.5%, whose default value for WNR is calculated based on our internal credit rating of Western Refining, 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 Refining.
    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 WNR stock the variable cost ratio is equal to 71.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1948 million in the base year in the intrinsic value calculation for WNR 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 6.8% for Western Refining.

Corporate tax rate of 27% is the nominal tax rate for Western Refining. 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 WNR 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 WNR are equal to 29.8%.

Life of production assets of 16.6 years is the average useful life of capital assets used in Western Refining 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 WNR 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 - $1697 million for Western Refining - 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 104.155 million for Western Refining 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 Refining at the current share price and the inputted number of shares is $3.8 billion.


Premium access subscription - $499/yr

please register and log in before paying
RELATED COMPANIES Price Int.Val. Rating
VLO Valero Energy 67.51 prem.  prem.
ALJ Alon USA Energ 13.32 prem.  prem.
HFC HollyFrontier 27.21 prem.  prem.
TSO Tesoro 97.11 prem.  prem.
MPC Marathon Petro 54.83 prem.  prem.
PSX Phillips 66 81.96 prem.  prem.
ALDW Alon USA Partn 10.90 prem.  prem.
PBF PBF Energy 21.76 prem.  prem.
Stock chart of WNR Financial statements of WNR Annual reports of WNR
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.