Intrinsic value of Andeavor - ANDV

Previous Close

$110.96

  Intrinsic Value

$1,049

stock screener

  Rating & Target

str. buy

+846%

Previous close

$110.96

 
Intrinsic value

$1,049

 
Up/down potential

+846%

 
Rating

str. buy

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

We calculate the intrinsic value of ANDV 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 17.4

 

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, %
  -14.38
  24.90
  22.91
  21.12
  19.51
  18.06
  16.75
  15.58
  14.52
  13.57
  12.71
  11.94
  11.24
  10.62
  10.06
  9.55
  9.10
  8.69
  8.32
  7.99
  7.69
  7.42
  7.18
  6.96
  6.76
  6.59
  6.43
  6.29
  6.16
  6.04
  5.94
Revenue, $m
  24,582
  30,703
  37,737
  45,707
  54,623
  64,486
  75,287
  87,014
  99,647
  113,165
  127,548
  142,775
  158,830
  175,699
  193,371
  211,843
  231,115
  251,193
  272,089
  293,820
  316,410
  339,885
  364,280
  389,633
  415,987
  443,389
  471,893
  501,555
  532,437
  564,604
  598,126
Variable operating expenses, $m
 
  20,689
  25,425
  30,790
  36,792
  43,432
  50,704
  58,599
  67,104
  76,205
  85,888
  96,120
  106,929
  118,285
  130,183
  142,618
  155,593
  169,110
  183,177
  197,808
  213,016
  228,820
  245,243
  262,312
  280,054
  298,502
  317,691
  337,660
  358,451
  380,107
  402,675
Fixed operating expenses, $m
 
  6,862
  7,034
  7,210
  7,390
  7,575
  7,764
  7,958
  8,157
  8,361
  8,570
  8,784
  9,004
  9,229
  9,460
  9,696
  9,939
  10,187
  10,442
  10,703
  10,971
  11,245
  11,526
  11,814
  12,109
  12,412
  12,722
  13,041
  13,367
  13,701
  14,043
Total operating expenses, $m
  23,101
  27,551
  32,459
  38,000
  44,182
  51,007
  58,468
  66,557
  75,261
  84,566
  94,458
  104,904
  115,933
  127,514
  139,643
  152,314
  165,532
  179,297
  193,619
  208,511
  223,987
  240,065
  256,769
  274,126
  292,163
  310,914
  330,413
  350,701
  371,818
  393,808
  416,718
Operating income, $m
  1,481
  3,152
  5,278
  7,707
  10,440
  13,478
  16,819
  20,457
  24,386
  28,599
  33,090
  37,871
  42,897
  48,184
  53,729
  59,528
  65,583
  71,896
  78,469
  85,309
  92,424
  99,820
  107,511
  115,507
  123,824
  132,475
  141,479
  150,854
  160,619
  170,797
  181,408
EBITDA, $m
  2,332
  4,213
  6,578
  9,277
  12,313
  15,686
  19,393
  23,429
  27,787
  32,459
  37,438
  42,716
  48,288
  54,148
  60,291
  66,718
  73,427
  80,421
  87,704
  95,282
  103,162
  111,356
  119,874
  128,731
  137,942
  147,524
  157,495
  167,877
  178,690
  189,959
  201,708
Interest expense (income), $m
  199
  233
  363
  512
  681
  870
  1,079
  1,308
  1,556
  1,824
  2,110
  2,415
  2,738
  3,078
  3,436
  3,810
  4,202
  4,610
  5,036
  5,479
  5,939
  6,418
  6,916
  7,433
  7,970
  8,528
  9,109
  9,713
  10,342
  10,997
  11,678
Earnings before tax, $m
  1,277
  2,919
  4,916
  7,195
  9,759
  12,609
  15,740
  19,149
  22,829
  26,775
  30,980
  35,455
  40,159
  45,106
  50,293
  55,718
  61,381
  67,285
  73,433
  79,831
  86,484
  93,402
  100,595
  108,075
  115,854
  123,947
  132,370
  141,141
  150,277
  159,800
  169,730
Tax expense, $m
  427
  788
  1,327
  1,943
  2,635
  3,404
  4,250
  5,170
  6,164
  7,229
  8,364
  9,573
  10,843
  12,179
  13,579
  15,044
  16,573
  18,167
  19,827
  21,554
  23,351
  25,219
  27,161
  29,180
  31,281
  33,466
  35,740
  38,108
  40,575
  43,146
  45,827
Net income, $m
  734
  2,131
  3,589
  5,252
  7,124
  9,204
  11,490
  13,979
  16,665
  19,546
  22,615
  25,882
  29,316
  32,927
  36,714
  40,674
  44,808
  49,118
  53,606
  58,276
  63,134
  68,184
  73,435
  78,895
  84,573
  90,481
  96,630
  103,033
  109,702
  116,654
  123,903

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  3,295
  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
  20,398
  21,366
  26,261
  31,807
  38,012
  44,875
  52,392
  60,552
  69,344
  78,751
  88,760
  99,357
  110,529
  122,268
  134,566
  147,420
  160,831
  174,803
  189,345
  204,468
  220,188
  236,524
  253,501
  271,143
  289,483
  308,552
  328,388
  349,029
  370,520
  392,904
  416,232
Adjusted assets (=assets-cash), $m
  17,103
  21,366
  26,261
  31,807
  38,012
  44,875
  52,392
  60,552
  69,344
  78,751
  88,760
  99,357
  110,529
  122,268
  134,566
  147,420
  160,831
  174,803
  189,345
  204,468
  220,188
  236,524
  253,501
  271,143
  289,483
  308,552
  328,388
  349,029
  370,520
  392,904
  416,232
Revenue / Adjusted assets
  1.437
  1.437
  1.437
  1.437
  1.437
  1.437
  1.437
  1.437
  1.437
  1.437
  1.437
  1.437
  1.437
  1.437
  1.437
  1.437
  1.437
  1.437
  1.437
  1.437
  1.437
  1.437
  1.437
  1.437
  1.437
  1.437
  1.437
  1.437
  1.437
  1.437
  1.437
Average production assets, $m
  11,003
  13,755
  16,906
  20,477
  24,471
  28,890
  33,729
  38,982
  44,642
  50,698
  57,141
  63,963
  71,156
  78,713
  86,630
  94,906
  103,539
  112,534
  121,896
  131,631
  141,751
  152,269
  163,198
  174,556
  186,362
  198,638
  211,408
  224,697
  238,532
  252,942
  267,960
Working capital, $m
  3,860
  1,290
  1,585
  1,920
  2,294
  2,708
  3,162
  3,655
  4,185
  4,753
  5,357
  5,997
  6,671
  7,379
  8,122
  8,897
  9,707
  10,550
  11,428
  12,340
  13,289
  14,275
  15,300
  16,365
  17,471
  18,622
  19,820
  21,065
  22,362
  23,713
  25,121
Total debt, $m
  6,933
  10,076
  14,217
  18,909
  24,158
  29,964
  36,324
  43,227
  50,665
  58,623
  67,091
  76,056
  85,508
  95,438
  105,843
  116,717
  128,063
  139,884
  152,186
  164,980
  178,279
  192,099
  206,461
  221,387
  236,902
  253,035
  269,816
  287,279
  305,460
  324,397
  344,133
Total liabilities, $m
  14,933
  18,076
  22,217
  26,909
  32,158
  37,964
  44,324
  51,227
  58,665
  66,623
  75,091
  84,056
  93,508
  103,438
  113,843
  124,717
  136,063
  147,884
  160,186
  172,980
  186,279
  200,099
  214,461
  229,387
  244,902
  261,035
  277,816
  295,279
  313,460
  332,397
  352,133
Total equity, $m
  5,465
  3,290
  4,044
  4,898
  5,854
  6,911
  8,068
  9,325
  10,679
  12,128
  13,669
  15,301
  17,021
  18,829
  20,723
  22,703
  24,768
  26,920
  29,159
  31,488
  33,909
  36,425
  39,039
  41,756
  44,580
  47,517
  50,572
  53,751
  57,060
  60,507
  64,100
Total liabilities and equity, $m
  20,398
  21,366
  26,261
  31,807
  38,012
  44,875
  52,392
  60,552
  69,344
  78,751
  88,760
  99,357
  110,529
  122,267
  134,566
  147,420
  160,831
  174,804
  189,345
  204,468
  220,188
  236,524
  253,500
  271,143
  289,482
  308,552
  328,388
  349,030
  370,520
  392,904
  416,233
Debt-to-equity ratio
  1.269
  3.060
  3.520
  3.860
  4.130
  4.340
  4.500
  4.640
  4.740
  4.830
  4.910
  4.970
  5.020
  5.070
  5.110
  5.140
  5.170
  5.200
  5.220
  5.240
  5.260
  5.270
  5.290
  5.300
  5.310
  5.330
  5.340
  5.340
  5.350
  5.360
  5.370
Adjusted equity ratio
  0.127
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  734
  2,131
  3,589
  5,252
  7,124
  9,204
  11,490
  13,979
  16,665
  19,546
  22,615
  25,882
  29,316
  32,927
  36,714
  40,674
  44,808
  49,118
  53,606
  58,276
  63,134
  68,184
  73,435
  78,895
  84,573
  90,481
  96,630
  103,033
  109,702
  116,654
  123,903
Depreciation, amort., depletion, $m
  851
  1,061
  1,300
  1,570
  1,873
  2,208
  2,574
  2,972
  3,401
  3,860
  4,348
  4,846
  5,391
  5,963
  6,563
  7,190
  7,844
  8,525
  9,235
  9,972
  10,739
  11,535
  12,363
  13,224
  14,118
  15,048
  16,016
  17,022
  18,071
  19,162
  20,300
Funds from operations, $m
  1,372
  3,192
  4,888
  6,823
  8,997
  11,412
  14,064
  16,951
  20,066
  23,406
  26,963
  30,728
  34,707
  38,891
  43,277
  47,864
  52,652
  57,644
  62,841
  68,249
  73,872
  79,719
  85,798
  92,119
  98,692
  105,530
  112,646
  120,055
  127,773
  135,816
  144,203
Change in working capital, $m
  68
  257
  295
  335
  374
  414
  454
  493
  531
  568
  604
  640
  674
  708
  742
  776
  809
  843
  878
  913
  949
  986
  1,025
  1,065
  1,107
  1,151
  1,197
  1,246
  1,297
  1,351
  1,408
Cash from operations, $m
  1,304
  2,935
  4,593
  6,488
  8,623
  10,998
  13,611
  16,458
  19,536
  22,838
  26,359
  30,089
  34,033
  38,182
  42,534
  47,088
  51,843
  56,800
  61,963
  67,336
  72,924
  78,733
  84,774
  91,054
  97,585
  104,379
  111,449
  118,809
  126,476
  134,465
  142,795
Maintenance CAPEX, $m
  0
  -834
  -1,042
  -1,281
  -1,551
  -1,854
  -2,189
  -2,555
  -2,953
  -3,382
  -3,841
  -4,329
  -4,846
  -5,391
  -5,963
  -6,563
  -7,190
  -7,844
  -8,525
  -9,235
  -9,972
  -10,739
  -11,535
  -12,363
  -13,224
  -14,118
  -15,048
  -16,016
  -17,022
  -18,071
  -19,162
New CAPEX, $m
  -894
  -2,752
  -3,151
  -3,570
  -3,994
  -4,419
  -4,839
  -5,253
  -5,659
  -6,056
  -6,444
  -6,822
  -7,193
  -7,557
  -7,917
  -8,275
  -8,634
  -8,995
  -9,361
  -9,736
  -10,120
  -10,517
  -10,929
  -11,358
  -11,806
  -12,276
  -12,770
  -13,289
  -13,835
  -14,411
  -15,018
Cash from investing activities, $m
  -1,317
  -3,586
  -4,193
  -4,851
  -5,545
  -6,273
  -7,028
  -7,808
  -8,612
  -9,438
  -10,285
  -11,151
  -12,039
  -12,948
  -13,880
  -14,838
  -15,824
  -16,839
  -17,886
  -18,971
  -20,092
  -21,256
  -22,464
  -23,721
  -25,030
  -26,394
  -27,818
  -29,305
  -30,857
  -32,482
  -34,180
Free cash flow, $m
  -13
  -651
  400
  1,637
  3,077
  4,725
  6,583
  8,650
  10,923
  13,400
  16,075
  18,938
  21,994
  25,235
  28,654
  32,250
  36,019
  39,962
  44,077
  48,366
  52,831
  57,477
  62,309
  67,332
  72,554
  77,984
  83,631
  89,505
  95,619
  101,984
  108,615
Issuance/(repayment) of debt, $m
  2,779
  3,608
  4,141
  4,692
  5,249
  5,807
  6,359
  6,904
  7,437
  7,959
  8,468
  8,965
  9,452
  9,931
  10,404
  10,875
  11,346
  11,821
  12,302
  12,794
  13,299
  13,821
  14,362
  14,926
  15,515
  16,133
  16,781
  17,463
  18,181
  18,938
  19,735
Issuance/(repurchase) of shares, $m
  116
  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  
  2,615
  3,608
  4,141
  4,692
  5,249
  5,807
  6,359
  6,904
  7,437
  7,959
  8,468
  8,965
  9,452
  9,931
  10,404
  10,875
  11,346
  11,821
  12,302
  12,794
  13,299
  13,821
  14,362
  14,926
  15,515
  16,133
  16,781
  17,463
  18,181
  18,938
  19,735
Total cash flow (excl. dividends), $m
  2,602
  2,956
  4,541
  6,329
  8,326
  10,532
  12,942
  15,553
  18,360
  21,358
  24,542
  27,903
  31,446
  35,165
  39,058
  43,125
  47,365
  51,782
  56,379
  61,160
  66,130
  71,298
  76,671
  82,258
  88,070
  94,117
  100,412
  106,968
  113,799
  120,921
  128,350
Retained Cash Flow (-), $m
  -252
  -655
  -754
  -854
  -956
  -1,057
  -1,158
  -1,257
  -1,354
  -1,449
  -1,541
  -1,632
  -1,721
  -1,808
  -1,894
  -1,980
  -2,065
  -2,152
  -2,239
  -2,329
  -2,421
  -2,516
  -2,614
  -2,717
  -2,824
  -2,937
  -3,055
  -3,179
  -3,310
  -3,447
  -3,593
Prev. year cash balance distribution, $m
 
  2,830
  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
 
  5,131
  3,787
  5,475
  7,371
  9,475
  11,785
  14,297
  17,007
  19,910
  23,001
  26,271
  29,726
  33,358
  37,164
  41,145
  45,300
  49,630
  54,139
  58,831
  63,710
  68,782
  74,057
  79,541
  85,245
  91,180
  97,357
  103,789
  110,490
  117,474
  124,758
Discount rate, %
 
  5.60
  5.88
  6.17
  6.48
  6.81
  7.15
  7.50
  7.88
  8.27
  8.69
  9.12
  9.58
  10.06
  10.56
  11.09
  11.64
  12.22
  12.84
  13.48
  14.15
  14.86
  15.60
  16.38
  17.20
  18.06
  18.96
  19.91
  20.91
  21.95
  23.05
PV of cash for distribution, $m
 
  4,859
  3,378
  4,574
  5,733
  6,817
  7,788
  8,615
  9,270
  9,735
  9,999
  10,056
  9,919
  9,598
  9,115
  8,498
  7,778
  6,987
  6,159
  5,325
  4,515
  3,750
  3,051
  2,428
  1,890
  1,436
  1,066
  771
  543
  372
  248
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

Andeavor, formerly Tesoro Corporation, is an independent petroleum refining, logistics and marketing company. he Company operates through three segments. The Refining operating segment refines crude oil and other feedstocks into transportation fuels, such as gasoline and gasoline blendstocks, jet fuel and diesel fuel, as well as other products, including heavy fuel oils, liquefied petroleum gas and petroleum coke for sale in bulk markets to a range of customers within its markets. The TLLP segment comprises Tesoro Logistics LP's (TLLP) assets and operations, and includes certain crude oil and natural gas gathering assets, natural gas and natural gas liquids (NGLs) processing assets, and crude oil and refined products terminaling, and transportation. The marketing segment sells transportation fuels through branded and unbranded channels.

FINANCIAL RATIOS  of  Andeavor (ANDV)

Valuation Ratios
P/E Ratio 17.7
Price to Sales 0.5
Price to Book 2.4
Price to Tangible Book
Price to Cash Flow 9.9
Price to Free Cash Flow 31.6
Growth Rates
Sales Growth Rate -14.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -13.2%
Cap. Spend. - 3 Yr. Gr. Rate 9.4%
Financial Strength
Quick Ratio 7
Current Ratio 0.2
LT Debt to Equity 118.4%
Total Debt to Equity 126.9%
Interest Coverage 7
Management Effectiveness
Return On Assets 4.7%
Ret/ On Assets - 3 Yr. Avg. 7%
Return On Total Capital 6.8%
Ret/ On T. Cap. - 3 Yr. Avg. 11.6%
Return On Equity 13.7%
Return On Equity - 3 Yr. Avg. 21.6%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 19.8%
Gross Margin - 3 Yr. Avg. 18.9%
EBITDA Margin 9.5%
EBITDA Margin - 3 Yr. Avg. 9.1%
Operating Margin 6%
Oper. Margin - 3 Yr. Avg. 6.6%
Pre-Tax Margin 5.2%
Pre-Tax Margin - 3 Yr. Avg. 6%
Net Profit Margin 3%
Net Profit Margin - 3 Yr. Avg. 3.5%
Effective Tax Rate 33.4%
Eff/ Tax Rate - 3 Yr. Avg. 35.5%
Payout Ratio 33.9%

ANDV stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ANDV stock intrinsic value calculation we used $24582 million for the last fiscal year's total revenue generated by Andeavor. The default revenue input number comes from 2016 income statement of Andeavor. 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 ANDV stock valuation model: a) initial revenue growth rate of 24.9% 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 5.6%, whose default value for ANDV is calculated based on our internal credit rating of Andeavor, 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 Andeavor.
    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 ANDV stock the variable cost ratio is equal to 67.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $6695 million in the base year in the intrinsic value calculation for ANDV 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 3.6% for Andeavor.

Corporate tax rate of 27% is the nominal tax rate for Andeavor. 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 ANDV 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 ANDV are equal to 44.8%.

Life of production assets of 13.2 years is the average useful life of capital assets used in Andeavor 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 ANDV is equal to 4.2%. 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 - $5465 million for Andeavor - 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 156.907 million for Andeavor 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 Andeavor at the current share price and the inputted number of shares is $17.4 billion.

COMPANY NEWS

▶ ETFs with exposure to Andeavor : December 7, 2017   [Dec-07-17 12:53PM  Capital Cube]
▶ Washington state panel calls for oil terminal denial   [Nov-28-17 07:04PM  Associated Press]
▶ ETFs with exposure to Andeavor : November 27, 2017   [Nov-27-17 12:00PM  Capital Cube]
▶ Washington state panel outlines risk of oil-by-rail terminal   [Nov-23-17 12:17AM  Associated Press]
▶ How Refining Stocks Moving Averages Are Trending in 4Q17   [Nov-20-17 07:30AM  Market Realist]
▶ Andeavor Value Analysis (NYSE:ANDV) : November 17, 2017   [Nov-17-17 01:34PM  Capital Cube]
▶ This Institution Added a Major Position in ANDX in 3Q17   [Nov-16-17 03:16PM  Market Realist]
▶ How Andeavor Stock Performed ahead of 3Q17 Earnings   [Nov-10-17 10:40AM  Market Realist]
▶ Andeavor Logistics LP Reports Third Quarter 2017 Results   [Nov-08-17 05:02PM  GlobeNewswire]
▶ Andeavor Reports Third Quarter 2017 Results   [05:01PM  GlobeNewswire]
▶ ETFs with exposure to Andeavor : November 2, 2017   [Nov-02-17 11:43AM  Capital Cube]
▶ Will Andeavors 3Q17 Earnings Show a Surge?   [Oct-26-17 01:23PM  Market Realist]
▶ Backers of oil terminal pour money into Washington port race   [Oct-19-17 08:10PM  Associated Press]
▶ Andeavor makes first fuel shipment to Mexico   [Oct-18-17 02:10PM  American City Business Journals]
▶ Andeavor to Release Third Quarter 2017 Earnings   [Oct-05-17 05:01PM  GlobeNewswire]
▶ Tesoro Hits 80-Plus Relative Strength Rating Benchmark   [Sep-20-17 03:00AM  Investor's Business Daily]
▶ How Phillips 66s Capex Is Shaping Its Future Growth Path   [Sep-18-17 09:07AM  Market Realist]
▶ Understanding Phillips 66s Cash Flow   [07:36AM  Market Realist]
▶ How Phillips 66s Leverage Curve Is Trending   [Sep-15-17 10:37AM  Market Realist]
▶ Institutional Ownership in Phillips 66: Whos Buying PSX   [Sep-14-17 10:38AM  Market Realist]
▶ Where Phillips 66s Analysts Are Leaning Now   [08:07AM  Market Realist]
▶ Behind Phillips 66s Moving Averages in 3Q17   [Sep-13-17 01:36PM  Market Realist]
▶ Aftermath of hurricanes sends Andeavor, Valero stocks to near two-year highs   [Sep-12-17 11:49AM  American City Business Journals]
▶ ETFs with exposure to Andeavor : September 12, 2017   [Sep-11-17 08:28PM  Capital Cube]
▶ MPCs Segmental Earnings Trend in 2Q17   [10:36AM  Market Realist]
▶ How Is Marathon Petroleums Leverage Trending?   [10:36AM  Market Realist]
▶ [$$] Maybe The Obama Era Really Is Ending   [Sep-07-17 02:49PM  The Wall Street Journal]
▶ Marathon Petroleums Moving Averages: What Do They Indicate?   [Sep-06-17 02:36PM  Market Realist]
▶ [$$] Underwater: Houston's Refiners, Not the Stocks   [Sep-01-17 11:24PM  Barrons.com]
▶ Andeavor opens first ARCO gas station in Mexico   [Aug-30-17 03:30PM  American City Business Journals]
▶ Andeavor Opens First ARCO┬« Station in Mexico   [Aug-29-17 04:04PM  GlobeNewswire]
▶ [$$] Refiner Stocks Rise as Harvey Disrupts Fuel Production   [12:10AM  The Wall Street Journal]
▶ [$$] Refiner Stocks Rise as Harvey Disrupts Fuel Production   [Aug-28-17 05:43PM  The Wall Street Journal]
▶ Will Valeros Refining Margins Surge in 3Q17?   [09:06AM  Market Realist]
▶ Could Andeavors Refining Margins Expand in 3Q17?   [Aug-25-17 10:36AM  Market Realist]
▶ Refining Margins in 2Q17: A Comparison   [09:06AM  Market Realist]
▶ Tijuana first to sell Andeavor's ARCO brand of gasoline in Mexico   [Aug-24-17 03:36PM  American City Business Journals]
▶ Comparing Refiners Cash Flow in 1H17   [09:06AM  Market Realist]
▶ A Look at Refiners Leverage in 2Q17   [07:35AM  Market Realist]
▶ MPC, ANDV, VLO, PSX: Comparing Refiners Valuation   [Aug-23-17 11:53AM  Market Realist]
▶ Your MLP Ratings Updates from Last Week   [Aug-22-17 12:10PM  Market Realist]
▶ Price Forecasts for MPC, ANDV, VLO, and PSX   [10:37AM  Market Realist]
▶ How Andeavors Valuation Stacks up with Peers   [09:05AM  Market Realist]
▶ Comparing Andeavors Institutional Ownership   [07:35AM  Market Realist]
Financial statements of ANDV
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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