Intrinsic value of Andeavor Logistics - ANDX

Previous Close

$45.69

  Intrinsic Value

$181.87

stock screener

  Rating & Target

str. buy

+298%

Previous close

$45.69

 
Intrinsic value

$181.87

 
Up/down potential

+298%

 
Rating

str. buy

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

We calculate the intrinsic value of ANDX 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 5.0

 

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, %
  9.71
  41.00
  37.40
  34.16
  31.24
  28.62
  26.26
  24.13
  22.22
  20.50
  18.95
  17.55
  16.30
  15.17
  14.15
  13.24
  12.41
  11.67
  11.00
  10.40
  9.86
  9.38
  8.94
  8.55
  8.19
  7.87
  7.58
  7.33
  7.09
  6.88
  6.70
Revenue, $m
  1,220
  1,720
  2,364
  3,171
  4,162
  5,353
  6,758
  8,389
  10,253
  12,355
  14,695
  17,275
  20,090
  23,137
  26,411
  29,907
  33,619
  37,543
  41,674
  46,010
  50,548
  55,287
  60,230
  65,376
  70,731
  76,299
  82,085
  88,099
  94,348
  100,843
  107,595
Variable operating expenses, $m
 
  219
  296
  394
  513
  656
  825
  1,022
  1,246
  1,499
  1,781
  2,080
  2,419
  2,786
  3,180
  3,601
  4,048
  4,521
  5,018
  5,540
  6,086
  6,657
  7,252
  7,872
  8,517
  9,187
  9,884
  10,608
  11,360
  12,143
  12,956
Fixed operating expenses, $m
 
  604
  619
  634
  650
  666
  683
  700
  718
  736
  754
  773
  792
  812
  832
  853
  874
  896
  919
  942
  965
  989
  1,014
  1,039
  1,065
  1,092
  1,119
  1,147
  1,176
  1,205
  1,235
Total operating expenses, $m
  733
  823
  915
  1,028
  1,163
  1,322
  1,508
  1,722
  1,964
  2,235
  2,535
  2,853
  3,211
  3,598
  4,012
  4,454
  4,922
  5,417
  5,937
  6,482
  7,051
  7,646
  8,266
  8,911
  9,582
  10,279
  11,003
  11,755
  12,536
  13,348
  14,191
Operating income, $m
  487
  898
  1,448
  2,143
  2,999
  4,030
  5,250
  6,667
  8,289
  10,120
  12,160
  14,422
  16,879
  19,539
  22,399
  25,453
  28,697
  32,126
  35,738
  39,528
  43,496
  47,641
  51,963
  56,465
  61,149
  66,020
  71,082
  76,344
  81,812
  87,495
  93,404
EBITDA, $m
  677
  1,170
  1,818
  2,635
  3,640
  4,852
  6,284
  7,949
  9,853
  12,001
  14,396
  17,036
  19,920
  23,041
  26,396
  29,979
  33,785
  37,808
  42,045
  46,491
  51,146
  56,009
  61,079
  66,359
  71,854
  77,567
  83,506
  89,677
  96,091
  102,758
  109,689
Interest expense (income), $m
  165
  195
  279
  389
  526
  694
  896
  1,135
  1,412
  1,729
  2,085
  2,483
  2,921
  3,399
  3,917
  4,473
  5,066
  5,697
  6,363
  7,065
  7,801
  8,572
  9,377
  10,216
  11,090
  12,000
  12,945
  13,928
  14,949
  16,010
  17,114
Earnings before tax, $m
  315
  703
  1,169
  1,754
  2,473
  3,336
  4,353
  5,532
  6,877
  8,391
  10,075
  11,939
  13,958
  16,140
  18,482
  20,980
  23,630
  26,429
  29,374
  32,463
  35,695
  39,069
  42,587
  46,249
  50,059
  54,020
  58,137
  62,416
  66,863
  71,485
  76,291
Tax expense, $m
  0
  190
  316
  474
  668
  901
  1,175
  1,494
  1,857
  2,266
  2,720
  3,224
  3,769
  4,358
  4,990
  5,665
  6,380
  7,136
  7,931
  8,765
  9,638
  10,549
  11,498
  12,487
  13,516
  14,585
  15,697
  16,852
  18,053
  19,301
  20,599
Net income, $m
  315
  513
  853
  1,281
  1,805
  2,435
  3,178
  4,038
  5,020
  6,126
  7,355
  8,715
  10,189
  11,782
  13,492
  15,316
  17,250
  19,293
  21,443
  23,698
  26,057
  28,520
  31,088
  33,762
  36,543
  39,435
  42,440
  45,564
  48,810
  52,184
  55,692

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  688
  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
  5,860
  7,289
  10,015
  13,436
  17,634
  22,681
  28,637
  35,547
  43,445
  52,350
  62,269
  73,199
  85,128
  98,040
  111,913
  126,725
  142,455
  159,080
  176,585
  194,956
  214,185
  234,268
  255,210
  277,018
  299,708
  323,299
  347,820
  373,301
  399,781
  427,302
  455,913
Adjusted assets (=assets-cash), $m
  5,172
  7,289
  10,015
  13,436
  17,634
  22,681
  28,637
  35,547
  43,445
  52,350
  62,269
  73,199
  85,128
  98,040
  111,913
  126,725
  142,455
  159,080
  176,585
  194,956
  214,185
  234,268
  255,210
  277,018
  299,708
  323,299
  347,820
  373,301
  399,781
  427,302
  455,913
Revenue / Adjusted assets
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
Average production assets, $m
  4,524
  6,379
  8,764
  11,758
  15,431
  19,848
  25,060
  31,107
  38,018
  45,811
  54,491
  64,055
  74,494
  85,793
  97,934
  110,896
  124,660
  139,209
  154,528
  170,604
  187,431
  205,006
  223,331
  242,415
  262,271
  282,915
  304,373
  326,671
  349,843
  373,927
  398,964
Working capital, $m
  726
  53
  73
  98
  129
  166
  210
  260
  318
  383
  456
  536
  623
  717
  819
  927
  1,042
  1,164
  1,292
  1,426
  1,567
  1,714
  1,867
  2,027
  2,193
  2,365
  2,545
  2,731
  2,925
  3,126
  3,335
Total debt, $m
  4,053
  5,821
  8,098
  10,954
  14,460
  18,674
  23,647
  29,417
  36,012
  43,447
  51,730
  60,856
  70,817
  81,598
  93,182
  105,551
  118,685
  132,567
  147,184
  162,523
  178,579
  195,349
  212,835
  231,045
  249,991
  269,690
  290,165
  311,441
  333,552
  356,532
  380,422
Total liabilities, $m
  4,318
  6,086
  8,363
  11,219
  14,725
  18,939
  23,912
  29,682
  36,277
  43,712
  51,995
  61,121
  71,082
  81,863
  93,447
  105,816
  118,950
  132,832
  147,449
  162,788
  178,844
  195,614
  213,100
  231,310
  250,256
  269,955
  290,430
  311,706
  333,817
  356,797
  380,687
Total equity, $m
  1,542
  1,203
  1,652
  2,217
  2,910
  3,742
  4,725
  5,865
  7,168
  8,638
  10,274
  12,078
  14,046
  16,177
  18,466
  20,910
  23,505
  26,248
  29,137
  32,168
  35,341
  38,654
  42,110
  45,708
  49,452
  53,344
  57,390
  61,595
  65,964
  70,505
  75,226
Total liabilities and equity, $m
  5,860
  7,289
  10,015
  13,436
  17,635
  22,681
  28,637
  35,547
  43,445
  52,350
  62,269
  73,199
  85,128
  98,040
  111,913
  126,726
  142,455
  159,080
  176,586
  194,956
  214,185
  234,268
  255,210
  277,018
  299,708
  323,299
  347,820
  373,301
  399,781
  427,302
  455,913
Debt-to-equity ratio
  2.628
  4.840
  4.900
  4.940
  4.970
  4.990
  5.000
  5.020
  5.020
  5.030
  5.030
  5.040
  5.040
  5.040
  5.050
  5.050
  5.050
  5.050
  5.050
  5.050
  5.050
  5.050
  5.050
  5.050
  5.060
  5.060
  5.060
  5.060
  5.060
  5.060
  5.060
Adjusted equity ratio
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  315
  513
  853
  1,281
  1,805
  2,435
  3,178
  4,038
  5,020
  6,126
  7,355
  8,715
  10,189
  11,782
  13,492
  15,316
  17,250
  19,293
  21,443
  23,698
  26,057
  28,520
  31,088
  33,762
  36,543
  39,435
  42,440
  45,564
  48,810
  52,184
  55,692
Depreciation, amort., depletion, $m
  190
  272
  369
  492
  642
  822
  1,035
  1,281
  1,563
  1,882
  2,236
  2,615
  3,041
  3,502
  3,997
  4,526
  5,088
  5,682
  6,307
  6,963
  7,650
  8,368
  9,116
  9,894
  10,705
  11,548
  12,423
  13,334
  14,279
  15,262
  16,284
Funds from operations, $m
  454
  785
  1,223
  1,772
  2,447
  3,257
  4,213
  5,320
  6,584
  8,007
  9,590
  11,330
  13,230
  15,284
  17,489
  19,842
  22,338
  24,975
  27,750
  30,662
  33,708
  36,888
  40,204
  43,656
  47,248
  50,982
  54,864
  58,897
  63,089
  67,446
  71,977
Change in working capital, $m
  -44
  16
  20
  25
  31
  37
  44
  51
  58
  65
  73
  80
  87
  94
  101
  108
  115
  122
  128
  134
  141
  147
  153
  160
  166
  173
  179
  186
  194
  201
  209
Cash from operations, $m
  498
  770
  1,203
  1,747
  2,416
  3,220
  4,169
  5,269
  6,526
  7,942
  9,518
  11,250
  13,143
  15,190
  17,388
  19,734
  22,223
  24,854
  27,622
  30,527
  33,567
  36,741
  40,051
  43,497
  47,082
  50,810
  54,684
  58,711
  62,895
  67,245
  71,767
Maintenance CAPEX, $m
  0
  -185
  -260
  -358
  -480
  -630
  -810
  -1,023
  -1,270
  -1,552
  -1,870
  -2,224
  -2,615
  -3,041
  -3,502
  -3,997
  -4,526
  -5,088
  -5,682
  -6,307
  -6,963
  -7,650
  -8,368
  -9,116
  -9,894
  -10,705
  -11,548
  -12,423
  -13,334
  -14,279
  -15,262
New CAPEX, $m
  -260
  -1,855
  -2,386
  -2,994
  -3,674
  -4,416
  -5,212
  -6,047
  -6,912
  -7,793
  -8,680
  -9,564
  -10,439
  -11,299
  -12,140
  -12,962
  -13,764
  -14,549
  -15,318
  -16,076
  -16,827
  -17,575
  -18,326
  -19,084
  -19,855
  -20,645
  -21,458
  -22,298
  -23,172
  -24,083
  -25,037
Cash from investing activities, $m
  -318
  -2,040
  -2,646
  -3,352
  -4,154
  -5,046
  -6,022
  -7,070
  -8,182
  -9,345
  -10,550
  -11,788
  -13,054
  -14,340
  -15,642
  -16,959
  -18,290
  -19,637
  -21,000
  -22,383
  -23,790
  -25,225
  -26,694
  -28,200
  -29,749
  -31,350
  -33,006
  -34,721
  -36,506
  -38,362
  -40,299
Free cash flow, $m
  180
  -1,269
  -1,443
  -1,604
  -1,737
  -1,826
  -1,853
  -1,801
  -1,655
  -1,402
  -1,032
  -539
  89
  850
  1,746
  2,774
  3,932
  5,217
  6,622
  8,144
  9,777
  11,516
  13,357
  15,297
  17,332
  19,460
  21,679
  23,989
  26,390
  28,882
  31,468
Issuance/(repayment) of debt, $m
  1,225
  1,768
  2,276
  2,857
  3,505
  4,214
  4,973
  5,770
  6,595
  7,436
  8,282
  9,126
  9,961
  10,781
  11,584
  12,368
  13,134
  13,882
  14,617
  15,340
  16,056
  16,770
  17,486
  18,210
  18,946
  19,699
  20,475
  21,277
  22,111
  22,980
  23,890
Issuance/(repurchase) of shares, $m
  364
  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  
  1,713
  1,768
  2,276
  2,857
  3,505
  4,214
  4,973
  5,770
  6,595
  7,436
  8,282
  9,126
  9,961
  10,781
  11,584
  12,368
  13,134
  13,882
  14,617
  15,340
  16,056
  16,770
  17,486
  18,210
  18,946
  19,699
  20,475
  21,277
  22,111
  22,980
  23,890
Total cash flow (excl. dividends), $m
  1,893
  499
  833
  1,252
  1,768
  2,388
  3,120
  3,969
  4,940
  6,033
  7,250
  8,588
  10,050
  11,631
  13,330
  15,143
  17,066
  19,099
  21,239
  23,483
  25,833
  28,286
  30,843
  33,507
  36,278
  39,159
  42,154
  45,266
  48,500
  51,862
  55,358
Retained Cash Flow (-), $m
  357
  -349
  -450
  -564
  -693
  -833
  -983
  -1,140
  -1,303
  -1,469
  -1,637
  -1,803
  -1,968
  -2,130
  -2,289
  -2,444
  -2,595
  -2,743
  -2,888
  -3,031
  -3,173
  -3,314
  -3,455
  -3,598
  -3,744
  -3,893
  -4,046
  -4,204
  -4,369
  -4,541
  -4,721
Prev. year cash balance distribution, $m
 
  688
  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
 
  838
  383
  688
  1,075
  1,555
  2,137
  2,829
  3,637
  4,564
  5,614
  6,784
  8,082
  9,501
  11,041
  12,698
  14,471
  16,356
  18,350
  20,452
  22,660
  24,972
  27,388
  29,908
  32,534
  35,266
  38,108
  41,061
  44,131
  47,321
  50,637
Discount rate, %
 
  9.20
  9.66
  10.14
  10.65
  11.18
  11.74
  12.33
  12.95
  13.59
  14.27
  14.99
  15.74
  16.52
  17.35
  18.22
  19.13
  20.08
  21.09
  22.14
  23.25
  24.41
  25.63
  26.91
  28.26
  29.67
  31.15
  32.71
  34.35
  36.07
  37.87
PV of cash for distribution, $m
 
  768
  319
  515
  717
  915
  1,098
  1,254
  1,373
  1,449
  1,479
  1,460
  1,399
  1,302
  1,176
  1,032
  880
  729
  586
  457
  346
  254
  181
  125
  83
  53
  33
  20
  11
  6
  3
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 Logistics LP, formerly Tesoro Logistics LP, is a full-service logistics company operating in the western and mid-continent regions of the United States. The Company operates through three segments. Its Gathering segment consists of crude oil, natural gas and produced water gathering systems in the Bakken Region and Rockies Region. Its Processing segment consists of the Vermillion processing complex, the Uinta Basin processing complex, the Blacks Fork processing complex and the Emigrant Trail processing complex. Its Terminalling and Transportation segment consists of the Northwest Products Pipeline, which includes a regulated common carrier products, a regulated common carrier refined products pipeline system connecting Tesoro Corporation's Kenai refinery to Anchorage, Alaska, and crude oil and refined products terminals and storage facilities in the western and midwestern United States; marine terminals in California; a petroleum coke handling and storage facility.

FINANCIAL RATIOS  of  Andeavor Logistics (ANDX)

Valuation Ratios
P/E Ratio 14.9
Price to Sales 3.9
Price to Book 3.1
Price to Tangible Book
Price to Cash Flow 9.4
Price to Free Cash Flow 19.8
Growth Rates
Sales Growth Rate 9.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -32.1%
Cap. Spend. - 3 Yr. Gr. Rate 26.9%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 262.8%
Total Debt to Equity 262.8%
Interest Coverage 3
Management Effectiveness
Return On Assets 8.7%
Ret/ On Assets - 3 Yr. Avg. 6.7%
Return On Total Capital 6.1%
Ret/ On T. Cap. - 3 Yr. Avg. 4.4%
Return On Equity 18.3%
Return On Equity - 3 Yr. Avg. 12.6%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 61.4%
Gross Margin - 3 Yr. Avg. 55.1%
EBITDA Margin 54.9%
EBITDA Margin - 3 Yr. Avg. 47.4%
Operating Margin 39.9%
Oper. Margin - 3 Yr. Avg. 34.2%
Pre-Tax Margin 25.8%
Pre-Tax Margin - 3 Yr. Avg. 19.2%
Net Profit Margin 25.8%
Net Profit Margin - 3 Yr. Avg. 18.4%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0.1%
Payout Ratio 387.6%

ANDX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ANDX stock intrinsic value calculation we used $1220 million for the last fiscal year's total revenue generated by Andeavor Logistics. The default revenue input number comes from 2016 income statement of Andeavor Logistics. 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 ANDX stock valuation model: a) initial revenue growth rate of 41% 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 9.2%, whose default value for ANDX is calculated based on our internal credit rating of Andeavor Logistics, 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 Logistics.
    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 ANDX stock the variable cost ratio is equal to 13%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $589 million in the base year in the intrinsic value calculation for ANDX 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 4.8% for Andeavor Logistics.

Corporate tax rate of 27% is the nominal tax rate for Andeavor Logistics. 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 ANDX 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 ANDX are equal to 370.8%.

Life of production assets of 24.5 years is the average useful life of capital assets used in Andeavor Logistics 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 ANDX is equal to 3.1%. 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 - $1542 million for Andeavor Logistics - 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 110.12 million for Andeavor Logistics 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 Logistics at the current share price and the inputted number of shares is $5.0 billion.

COMPANY NEWS

▶ Andeavor to Release Third Quarter 2017 Earnings   [Oct-05-17 05:01PM  GlobeNewswire]
▶ Alerian Index Series September 2017 Index Review   [Sep-08-17 08:30AM  PR Newswire]
▶ Andeavor Logistics LP Reports Second Quarter 2017 Results   [Aug-08-17 04:42PM  GlobeNewswire]
▶ Andeavor Reports Second Quarter 2017 Results   [04:41PM  GlobeNewswire]
Financial statements of ANDX
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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