Intrinsic value of Andeavor - ANDV

Previous Close

$154.73

  Intrinsic Value

$431.27

stock screener

  Rating & Target

str. buy

+179%

Previous close

$154.73

 
Intrinsic value

$431.27

 
Up/down potential

+179%

 
Rating

str. buy

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 0001), $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 23.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  58.90
  53.51
  48.66
  44.29
  40.36
  36.83
  33.64
  30.78
  28.20
  25.88
  23.79
  21.91
  20.22
  18.70
  17.33
  16.10
  14.99
  13.99
  13.09
  12.28
  11.55
  10.90
  10.31
  9.78
  9.30
  8.87
  8.48
  8.13
  7.82
  7.54
Revenue, $m
  55,575
  85,314
  126,826
  183,002
  256,868
  351,466
  469,716
  614,295
  787,539
  991,370
  1,227,254
  1,496,200
  1,798,776
  2,135,158
  2,505,194
  2,908,468
  3,344,383
  3,812,229
  4,311,254
  4,840,723
  5,399,970
  5,988,442
  6,605,726
  7,251,576
  7,925,929
  8,628,917
  9,360,867
  10,122,306
  10,913,955
  11,736,732
Variable operating expenses, $m
  51,953
  79,493
  117,935
  169,957
  238,361
  325,963
  435,468
  569,356
  729,789
  918,546
  1,136,499
  1,385,556
  1,665,756
  1,977,264
  2,319,935
  2,693,387
  3,097,066
  3,530,315
  3,992,437
  4,482,751
  5,000,643
  5,545,597
  6,117,232
  6,715,322
  7,339,807
  7,990,809
  8,668,631
  9,373,761
  10,106,869
  10,868,801
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
  51,953
  79,493
  117,935
  169,957
  238,361
  325,963
  435,468
  569,356
  729,789
  918,546
  1,136,499
  1,385,556
  1,665,756
  1,977,264
  2,319,935
  2,693,387
  3,097,066
  3,530,315
  3,992,437
  4,482,751
  5,000,643
  5,545,597
  6,117,232
  6,715,322
  7,339,807
  7,990,809
  8,668,631
  9,373,761
  10,106,869
  10,868,801
Operating income, $m
  3,622
  5,821
  8,891
  13,045
  18,507
  25,503
  34,248
  44,939
  57,751
  72,824
  90,755
  110,644
  133,019
  157,895
  185,259
  215,081
  247,317
  281,914
  318,817
  357,971
  399,328
  442,845
  488,493
  536,254
  586,122
  638,108
  692,236
  748,544
  807,087
  867,931
EBITDA, $m
  5,569
  8,548
  12,708
  18,337
  25,738
  35,217
  47,065
  61,552
  78,911
  99,335
  122,971
  149,919
  180,237
  213,943
  251,020
  291,428
  335,107
  381,985
  431,987
  485,040
  541,077
  600,042
  661,893
  726,608
  794,178
  864,617
  937,959
  1,014,255
  1,093,578
  1,176,020
Interest expense (income), $m
  199
  461
  1,123
  2,079
  3,414
  5,220
  7,596
  10,638
  14,440
  19,089
  24,660
  31,215
  38,800
  47,449
  57,179
  67,996
  79,895
  92,863
  106,880
  121,925
  137,972
  154,998
  172,982
  191,905
  211,755
  232,524
  254,209
  276,815
  300,352
  324,837
  350,294
Earnings before tax, $m
  3,161
  4,698
  6,812
  9,631
  13,287
  17,907
  23,610
  30,499
  38,661
  48,163
  59,540
  71,844
  85,571
  100,716
  117,263
  135,186
  154,454
  175,034
  196,892
  219,999
  244,330
  269,863
  296,588
  324,499
  353,599
  383,899
  415,421
  448,192
  482,249
  517,637
Tax expense, $m
  853
  1,269
  1,839
  2,600
  3,588
  4,835
  6,375
  8,235
  10,439
  13,004
  16,076
  19,398
  23,104
  27,193
  31,661
  36,500
  41,703
  47,259
  53,161
  59,400
  65,969
  72,863
  80,079
  87,615
  95,472
  103,653
  112,164
  121,012
  130,207
  139,762
Net income, $m
  2,307
  3,430
  4,973
  7,031
  9,700
  13,072
  17,235
  22,264
  28,223
  35,159
  43,465
  52,446
  62,467
  73,523
  85,602
  98,686
  112,752
  127,775
  143,731
  160,599
  178,361
  197,000
  216,509
  236,884
  258,127
  280,247
  303,258
  327,180
  352,042
  377,875

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  45,405
  69,701
  103,616
  149,511
  209,860
  287,145
  383,755
  501,875
  643,415
  809,943
  1,002,659
  1,222,385
  1,469,588
  1,744,410
  2,046,727
  2,376,200
  2,732,339
  3,114,566
  3,522,266
  3,954,839
  4,411,741
  4,892,518
  5,396,835
  5,924,490
  6,475,433
  7,049,769
  7,647,767
  8,269,857
  8,916,630
  9,588,833
Adjusted assets (=assets-cash), $m
  45,405
  69,701
  103,616
  149,511
  209,860
  287,145
  383,755
  501,875
  643,415
  809,943
  1,002,659
  1,222,385
  1,469,588
  1,744,410
  2,046,727
  2,376,200
  2,732,339
  3,114,566
  3,522,266
  3,954,839
  4,411,741
  4,892,518
  5,396,835
  5,924,490
  6,475,433
  7,049,769
  7,647,767
  8,269,857
  8,916,630
  9,588,833
Revenue / Adjusted assets
  1.224
  1.224
  1.224
  1.224
  1.224
  1.224
  1.224
  1.224
  1.224
  1.224
  1.224
  1.224
  1.224
  1.224
  1.224
  1.224
  1.224
  1.224
  1.224
  1.224
  1.224
  1.224
  1.224
  1.224
  1.224
  1.224
  1.224
  1.224
  1.224
  1.224
Average production assets, $m
  22,175
  34,040
  50,604
  73,018
  102,490
  140,235
  187,416
  245,104
  314,228
  395,557
  489,675
  596,984
  717,711
  851,928
  999,572
  1,160,479
  1,334,409
  1,521,079
  1,720,190
  1,931,448
  2,154,588
  2,389,388
  2,635,685
  2,893,379
  3,162,446
  3,442,938
  3,734,986
  4,038,800
  4,354,668
  4,682,956
Working capital, $m
  2,167
  3,327
  4,946
  7,137
  10,018
  13,707
  18,319
  23,958
  30,714
  38,663
  47,863
  58,352
  70,152
  83,271
  97,703
  113,430
  130,431
  148,677
  168,139
  188,788
  210,599
  233,549
  257,623
  282,811
  309,111
  336,528
  365,074
  394,770
  425,644
  457,733
Total debt, $m
  18,712
  34,651
  56,899
  87,006
  126,595
  177,294
  240,670
  318,157
  411,007
  520,250
  646,671
  790,812
  952,977
  1,133,260
  1,331,580
  1,547,714
  1,781,342
  2,032,082
  2,299,534
  2,583,301
  2,883,029
  3,198,419
  3,529,251
  3,875,392
  4,236,811
  4,613,576
  5,005,862
  5,413,954
  5,838,236
  6,279,202
Total liabilities, $m
  29,785
  45,724
  67,972
  98,079
  137,668
  188,367
  251,743
  329,230
  422,080
  531,323
  657,744
  801,885
  964,050
  1,144,333
  1,342,653
  1,558,787
  1,792,415
  2,043,155
  2,310,607
  2,594,374
  2,894,102
  3,209,492
  3,540,324
  3,886,465
  4,247,884
  4,624,649
  5,016,935
  5,425,027
  5,849,309
  6,290,275
Total equity, $m
  15,619
  23,977
  35,644
  51,432
  72,192
  98,778
  132,012
  172,645
  221,335
  278,620
  344,915
  420,501
  505,538
  600,077
  704,074
  817,413
  939,925
  1,071,411
  1,211,660
  1,360,465
  1,517,639
  1,683,026
  1,856,511
  2,038,025
  2,227,549
  2,425,121
  2,630,832
  2,844,831
  3,067,321
  3,298,559
Total liabilities and equity, $m
  45,404
  69,701
  103,616
  149,511
  209,860
  287,145
  383,755
  501,875
  643,415
  809,943
  1,002,659
  1,222,386
  1,469,588
  1,744,410
  2,046,727
  2,376,200
  2,732,340
  3,114,566
  3,522,267
  3,954,839
  4,411,741
  4,892,518
  5,396,835
  5,924,490
  6,475,433
  7,049,770
  7,647,767
  8,269,858
  8,916,630
  9,588,834
Debt-to-equity ratio
  1.200
  1.450
  1.600
  1.690
  1.750
  1.790
  1.820
  1.840
  1.860
  1.870
  1.870
  1.880
  1.890
  1.890
  1.890
  1.890
  1.900
  1.900
  1.900
  1.900
  1.900
  1.900
  1.900
  1.900
  1.900
  1.900
  1.900
  1.900
  1.900
  1.900
Adjusted equity ratio
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,307
  3,430
  4,973
  7,031
  9,700
  13,072
  17,235
  22,264
  28,223
  35,159
  43,465
  52,446
  62,467
  73,523
  85,602
  98,686
  112,752
  127,775
  143,731
  160,599
  178,361
  197,000
  216,509
  236,884
  258,127
  280,247
  303,258
  327,180
  352,042
  377,875
Depreciation, amort., depletion, $m
  1,947
  2,727
  3,817
  5,292
  7,231
  9,714
  12,818
  16,613
  21,161
  26,511
  32,215
  39,275
  47,218
  56,048
  65,761
  76,347
  87,790
  100,071
  113,170
  127,069
  141,749
  157,197
  173,400
  190,354
  208,056
  226,509
  245,723
  265,711
  286,491
  308,089
Funds from operations, $m
  4,254
  6,157
  8,790
  12,322
  16,930
  22,786
  30,053
  38,877
  49,383
  61,671
  75,680
  91,721
  109,684
  129,571
  151,364
  175,033
  200,542
  227,846
  256,902
  287,668
  320,110
  354,197
  389,910
  427,238
  466,183
  506,756
  548,980
  592,891
  638,533
  685,964
Change in working capital, $m
  803
  1,160
  1,619
  2,191
  2,881
  3,689
  4,612
  5,639
  6,757
  7,949
  9,199
  10,489
  11,800
  13,119
  14,431
  15,728
  17,001
  18,246
  19,462
  20,649
  21,811
  22,950
  24,074
  25,188
  26,300
  27,417
  28,546
  29,696
  30,874
  32,088
Cash from operations, $m
  3,451
  4,997
  7,171
  10,132
  14,049
  19,097
  25,441
  33,239
  42,627
  53,721
  66,480
  81,232
  97,884
  116,452
  136,932
  159,306
  183,541
  209,600
  237,440
  267,019
  298,299
  331,246
  365,836
  402,050
  439,883
  479,339
  520,434
  563,195
  607,659
  653,876
Maintenance CAPEX, $m
  -917
  -1,459
  -2,239
  -3,329
  -4,804
  -6,743
  -9,226
  -12,330
  -16,125
  -20,673
  -26,023
  -32,215
  -39,275
  -47,218
  -56,048
  -65,761
  -76,347
  -87,790
  -100,071
  -113,170
  -127,069
  -141,749
  -157,197
  -173,400
  -190,354
  -208,056
  -226,509
  -245,723
  -265,711
  -286,491
New CAPEX, $m
  -8,229
  -11,866
  -16,564
  -22,414
  -29,473
  -37,745
  -47,182
  -57,687
  -69,125
  -81,328
  -94,118
  -107,309
  -120,728
  -134,217
  -147,644
  -160,906
  -173,930
  -186,670
  -199,111
  -211,258
  -223,140
  -234,800
  -246,296
  -257,694
  -269,067
  -280,492
  -292,048
  -303,814
  -315,868
  -328,288
Cash from investing activities, $m
  -9,146
  -13,325
  -18,803
  -25,743
  -34,277
  -44,488
  -56,408
  -70,017
  -85,250
  -102,001
  -120,141
  -139,524
  -160,003
  -181,435
  -203,692
  -226,667
  -250,277
  -274,460
  -299,182
  -324,428
  -350,209
  -376,549
  -403,493
  -431,094
  -459,421
  -488,548
  -518,557
  -549,537
  -581,579
  -614,779
Free cash flow, $m
  -5,696
  -8,327
  -11,632
  -15,612
  -20,227
  -25,390
  -30,966
  -36,778
  -42,623
  -48,280
  -53,661
  -58,292
  -62,119
  -64,983
  -66,760
  -67,362
  -66,736
  -64,861
  -61,742
  -57,409
  -51,910
  -45,303
  -37,657
  -29,045
  -19,538
  -9,209
  1,877
  13,658
  26,080
  39,096
Issuance/(repayment) of debt, $m
  11,027
  15,938
  22,249
  30,107
  39,589
  50,700
  63,376
  77,487
  92,850
  109,243
  126,422
  144,141
  162,165
  180,284
  198,320
  216,134
  233,628
  250,741
  267,451
  283,768
  299,728
  315,390
  330,832
  346,142
  361,418
  376,765
  392,287
  408,091
  424,283
  440,965
Issuance/(repurchase) of shares, $m
  3,497
  4,928
  6,694
  8,757
  11,060
  13,514
  15,998
  18,369
  20,467
  22,126
  22,830
  23,140
  22,571
  21,016
  18,395
  14,653
  9,760
  3,711
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  14,524
  20,866
  28,943
  38,864
  50,649
  64,214
  79,374
  95,856
  113,317
  131,369
  149,252
  167,281
  184,736
  201,300
  216,715
  230,787
  243,388
  254,452
  267,451
  283,768
  299,728
  315,390
  330,832
  346,142
  361,418
  376,765
  392,287
  408,091
  424,283
  440,965
Total cash flow (excl. dividends), $m
  8,828
  12,539
  17,311
  23,253
  30,422
  38,823
  48,408
  59,078
  70,694
  83,089
  95,591
  108,988
  122,617
  136,317
  149,954
  163,424
  176,652
  189,591
  205,709
  226,358
  247,818
  270,087
  293,174
  317,097
  341,880
  367,556
  394,164
  421,749
  450,363
  480,062
Retained Cash Flow (-), $m
  -5,804
  -8,358
  -11,667
  -15,788
  -20,760
  -26,586
  -33,234
  -40,633
  -48,690
  -57,286
  -66,294
  -75,586
  -85,038
  -94,539
  -103,997
  -113,339
  -122,512
  -131,486
  -140,249
  -148,805
  -157,174
  -165,387
  -173,485
  -181,513
  -189,524
  -197,572
  -205,711
  -213,999
  -222,490
  -231,238
Prev. year cash balance distribution, $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 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
  3,024
  4,181
  5,644
  7,465
  9,662
  12,237
  15,174
  18,444
  22,004
  25,803
  29,296
  33,402
  37,579
  41,778
  45,958
  50,086
  54,140
  58,105
  65,460
  77,553
  90,644
  104,700
  119,690
  135,584
  152,356
  169,984
  188,453
  207,750
  227,873
  248,824
Discount rate, %
  6.80
  7.14
  7.50
  7.87
  8.27
  8.68
  9.11
  9.57
  10.05
  10.55
  11.08
  11.63
  12.21
  12.82
  13.46
  14.14
  14.84
  15.59
  16.37
  17.18
  18.04
  18.94
  19.89
  20.89
  21.93
  23.03
  24.18
  25.39
  26.66
  27.99
PV of cash for distribution, $m
  2,832
  3,643
  4,543
  5,513
  6,496
  7,427
  8,241
  8,879
  9,296
  9,465
  9,225
  8,921
  8,403
  7,716
  6,911
  6,038
  5,149
  4,285
  3,676
  3,253
  2,783
  2,303
  1,845
  1,429
  1,072
  777
  544
  368
  241
  152
Current shareholders' claim on cash, %
  87.0
  76.8
  68.8
  62.3
  57.2
  53.0
  49.6
  46.9
  44.7
  42.9
  41.4
  40.3
  39.4
  38.7
  38.3
  37.9
  37.7
  37.7
  37.7
  37.7
  37.7
  37.7
  37.7
  37.7
  37.7
  37.7
  37.7
  37.7
  37.7
  37.7

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 24.6
Price to Sales 0.7
Price to Book 3.3
Price to Tangible Book
Price to Cash Flow 13.9
Price to Free Cash Flow 44.1
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 $34975 million for the last fiscal year's total revenue generated by Andeavor. The default revenue input number comes from 0001 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 58.9% 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 6.8%, 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 94%.

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 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 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 39.9%.

Life of production assets of 15.2 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 3.9%. 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 - $9815 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 151.126 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 $23.4 billion.

COMPANY NEWS

▶ Massive 2013 oil spill in North Dakota finally cleaned up   [Sep-19-18 05:10PM  Associated Press]
▶ Andeavor Honors Top Suppliers   [Sep-17-18 04:48PM  GlobeNewswire]
▶ Marathon makes credit deals worth $6B before vote on buying Andeavor   [Sep-06-18 07:51AM  American City Business Journals]
▶ Money-Making Enterprises Boom in the Permian Basin   [Sep-05-18 12:36PM  TheStreet.com]
▶ Andeavor is Looking Vulnerable to a Downward Correction   [Aug-30-18 02:41PM  TheStreet.com]
▶ Speedway adds high-level exec as $23B acquisition nears completion   [Aug-15-18 05:00AM  American City Business Journals]
▶ Marathon releases leadership roster for post-Andeavor acquisition   [Aug-10-18 06:17PM  American City Business Journals]
▶ Andeavor: 2Q Earnings Snapshot   [05:21PM  Associated Press]
▶ Andeavor deal paves way for another round of expansion in Mexico   [Jul-24-18 02:42PM  American City Business Journals]
▶ Can Mexico's president-elect end gasoline imports as pledged?   [Jul-16-18 08:36AM  American City Business Journals]
▶ Andeavor to Release Second Quarter 2018 Earnings   [Jul-11-18 04:31PM  GlobeNewswire]
▶ Is It Time To Buy Andeavor (NYSE:ANDV) Based Off Its PE Ratio?   [Jun-25-18 09:14AM  Simply Wall St.]
▶ The Return of Shag CarpetMinus the Cocaine-Dealer Connotations   [Jun-15-18 08:03PM  The Wall Street Journal]
▶ 8 Energy Stocks For The New Oil Boom   [May-25-18 02:00PM  Investopedia]
▶ Mexico Gas Summit to highlight SA companies' projects   [May-23-18 03:51PM  American City Business Journals]
▶ Andeavor Completes Asphalt Terminals Acquisition   [May-21-18 05:31PM  GlobeNewswire]
▶ Buy These Energy Stocks on Crude Oil Price Surge   [May-18-18 01:34PM  Investopedia]
▶ Marathon Petroleum CEO visits San Antonio to meet Andeavor employees   [May-11-18 02:23PM  American City Business Journals]
▶ Marathon deal not expected to affect Andeavor's philanthropy, civic involvement   [May-10-18 03:00PM  American City Business Journals]
▶ Houston midstream co. cancels pipeline open season   [May-08-18 02:13PM  American City Business Journals]
▶ CEO: Marathon to switch most Andeavor-owned gas stations to its brands   [06:20AM  American City Business Journals]
▶ Andeavor: 1Q Earnings Snapshot   [05:19PM  Associated Press]
▶ Andeavor Reports First Quarter 2018 Results   [04:54PM  GlobeNewswire]
▶ Oil Refiners ETF Pumping Strong This Year   [May-03-18 03:29PM  ETF Trends]
▶ WeissLaw LLP Investigates Andeavor Acquisition   [May-01-18 06:20PM  PR Newswire]
▶ Marathon, Andeavor to make bigger play in Mexican fuels market   [03:01PM  American City Business Journals]
▶ Tokyo stocks higher in quiet Labor Day trading   [12:24AM  Associated Press]
▶ Business Highlights   [05:29PM  Associated Press]
▶ Marathon Petroleum, Walmart, Prologis Lead Busy Merger News   [04:04PM  Investor's Business Daily]
▶ Closing Bell: LIVE MARKETS BLOG   [04:04PM  TheStreet.com]

CONTACT US       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.