Intrinsic value of Andeavor Logistics - ANDX

Previous Close

$49.04

  Intrinsic Value

$647.35

stock screener

  Rating & Target

str. buy

+999%

Previous close

$49.04

 
Intrinsic value

$647.35

 
Up/down potential

+999%

 
Rating

str. buy

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 2017), $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 6.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  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
  5,141
  7,943
  11,878
  17,234
  24,315
  33,428
  44,870
  58,917
  75,812
  95,757
  118,909
  145,377
  175,228
  208,487
  245,144
  285,161
  328,482
  375,036
  424,747
  477,542
  533,351
  592,116
  653,792
  718,352
  785,785
  856,100
  929,327
  1,005,516
  1,084,734
  1,167,072
Variable operating expenses, $m
  2,953
  4,462
  6,582
  9,467
  13,280
  18,188
  24,351
  31,916
  41,015
  51,757
  64,041
  78,297
  94,374
  112,286
  132,029
  153,581
  176,913
  201,986
  228,759
  257,193
  287,251
  318,900
  352,117
  386,888
  423,205
  461,076
  500,514
  541,548
  584,213
  628,558
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
  2,953
  4,462
  6,582
  9,467
  13,280
  18,188
  24,351
  31,916
  41,015
  51,757
  64,041
  78,297
  94,374
  112,286
  132,029
  153,581
  176,913
  201,986
  228,759
  257,193
  287,251
  318,900
  352,117
  386,888
  423,205
  461,076
  500,514
  541,548
  584,213
  628,558
Operating income, $m
  2,188
  3,480
  5,296
  7,768
  11,035
  15,240
  20,520
  27,001
  34,797
  44,000
  54,867
  67,080
  80,854
  96,201
  113,115
  131,580
  151,569
  173,050
  195,988
  220,349
  246,100
  273,216
  301,675
  331,464
  362,579
  395,024
  428,813
  463,968
  500,521
  538,514
EBITDA, $m
  3,313
  5,119
  7,656
  11,108
  15,672
  21,545
  28,920
  37,974
  48,863
  61,718
  76,639
  93,699
  112,939
  134,375
  158,001
  183,793
  211,714
  241,719
  273,759
  307,787
  343,757
  381,632
  421,384
  462,994
  506,456
  551,776
  598,973
  648,078
  699,136
  752,205
Interest expense (income), $m
  165
  326
  636
  1,143
  1,855
  2,824
  4,105
  5,754
  7,824
  10,365
  13,422
  17,030
  21,218
  26,007
  31,408
  37,425
  44,056
  51,296
  59,134
  67,556
  76,550
  86,101
  96,198
  106,829
  117,987
  129,667
  141,867
  154,588
  167,836
  181,620
  195,952
Earnings before tax, $m
  1,862
  2,844
  4,153
  5,913
  8,211
  11,135
  14,766
  19,178
  24,432
  30,578
  37,837
  45,862
  54,847
  64,793
  75,690
  87,523
  100,273
  113,916
  128,432
  143,799
  159,999
  177,018
  194,846
  213,477
  232,912
  253,157
  274,225
  296,132
  318,901
  342,562
Tax expense, $m
  503
  768
  1,121
  1,597
  2,217
  3,006
  3,987
  5,178
  6,597
  8,256
  10,216
  12,383
  14,809
  17,494
  20,436
  23,631
  27,074
  30,757
  34,677
  38,826
  43,200
  47,795
  52,608
  57,639
  62,886
  68,352
  74,041
  79,956
  86,103
  92,492
Net income, $m
  1,359
  2,076
  3,032
  4,316
  5,994
  8,129
  10,779
  14,000
  17,835
  22,322
  27,621
  33,479
  40,039
  47,299
  55,254
  63,892
  73,199
  83,159
  93,756
  104,974
  116,800
  129,223
  142,237
  155,838
  170,026
  184,805
  200,184
  216,176
  232,798
  250,070

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
  13,081
  20,210
  30,224
  43,854
  61,871
  85,059
  114,173
  149,917
  192,907
  243,657
  302,566
  369,916
  445,874
  530,502
  623,776
  725,601
  835,831
  954,289
  1,080,782
  1,215,120
  1,357,128
  1,506,657
  1,663,594
  1,827,867
  1,999,452
  2,178,371
  2,364,700
  2,558,564
  2,760,138
  2,969,649
Adjusted assets (=assets-cash), $m
  13,081
  20,210
  30,224
  43,854
  61,871
  85,059
  114,173
  149,917
  192,907
  243,657
  302,566
  369,916
  445,874
  530,502
  623,776
  725,601
  835,831
  954,289
  1,080,782
  1,215,120
  1,357,128
  1,506,657
  1,663,594
  1,827,867
  1,999,452
  2,178,371
  2,364,700
  2,558,564
  2,760,138
  2,969,649
Revenue / Adjusted assets
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
Average production assets, $m
  9,413
  14,543
  21,749
  31,556
  44,521
  61,207
  82,157
  107,878
  138,812
  175,331
  217,722
  266,186
  320,843
  381,740
  448,858
  522,130
  601,450
  686,690
  777,712
  874,380
  976,566
  1,084,164
  1,197,094
  1,315,302
  1,438,771
  1,567,519
  1,701,598
  1,841,099
  1,986,149
  2,136,909
Working capital, $m
  -576
  -890
  -1,330
  -1,930
  -2,723
  -3,744
  -5,025
  -6,599
  -8,491
  -10,725
  -13,318
  -16,282
  -19,626
  -23,351
  -27,456
  -31,938
  -36,790
  -42,004
  -47,572
  -53,485
  -59,735
  -66,317
  -73,225
  -80,455
  -88,008
  -95,883
  -104,085
  -112,618
  -121,490
  -130,712
Total debt, $m
  8,051
  14,467
  23,480
  35,746
  51,962
  72,831
  99,034
  131,203
  169,894
  215,569
  268,588
  329,203
  397,564
  473,729
  557,676
  649,319
  748,526
  855,138
  968,982
  1,089,886
  1,217,693
  1,352,269
  1,493,512
  1,641,358
  1,795,785
  1,956,812
  2,124,508
  2,298,986
  2,480,403
  2,668,962
Total liabilities, $m
  11,773
  18,189
  27,202
  39,468
  55,684
  76,553
  102,756
  134,925
  173,616
  219,291
  272,310
  332,925
  401,286
  477,451
  561,398
  653,041
  752,248
  858,860
  972,704
  1,093,608
  1,221,415
  1,355,991
  1,497,234
  1,645,080
  1,799,507
  1,960,534
  2,128,230
  2,302,708
  2,484,125
  2,672,684
Total equity, $m
  1,308
  2,021
  3,022
  4,385
  6,187
  8,506
  11,417
  14,992
  19,291
  24,366
  30,257
  36,992
  44,587
  53,050
  62,378
  72,560
  83,583
  95,429
  108,078
  121,512
  135,713
  150,666
  166,359
  182,787
  199,945
  217,837
  236,470
  255,856
  276,014
  296,965
Total liabilities and equity, $m
  13,081
  20,210
  30,224
  43,853
  61,871
  85,059
  114,173
  149,917
  192,907
  243,657
  302,567
  369,917
  445,873
  530,501
  623,776
  725,601
  835,831
  954,289
  1,080,782
  1,215,120
  1,357,128
  1,506,657
  1,663,593
  1,827,867
  1,999,452
  2,178,371
  2,364,700
  2,558,564
  2,760,139
  2,969,649
Debt-to-equity ratio
  6.150
  7.160
  7.770
  8.150
  8.400
  8.560
  8.670
  8.750
  8.810
  8.850
  8.880
  8.900
  8.920
  8.930
  8.940
  8.950
  8.960
  8.960
  8.970
  8.970
  8.970
  8.980
  8.980
  8.980
  8.980
  8.980
  8.980
  8.990
  8.990
  8.990
Adjusted equity ratio
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,359
  2,076
  3,032
  4,316
  5,994
  8,129
  10,779
  14,000
  17,835
  22,322
  27,621
  33,479
  40,039
  47,299
  55,254
  63,892
  73,199
  83,159
  93,756
  104,974
  116,800
  129,223
  142,237
  155,838
  170,026
  184,805
  200,184
  216,176
  232,798
  250,070
Depreciation, amort., depletion, $m
  1,126
  1,639
  2,359
  3,340
  4,637
  6,305
  8,400
  10,972
  14,066
  17,718
  21,772
  26,619
  32,084
  38,174
  44,886
  52,213
  60,145
  68,669
  77,771
  87,438
  97,657
  108,416
  119,709
  131,530
  143,877
  156,752
  170,160
  184,110
  198,615
  213,691
Funds from operations, $m
  2,485
  3,715
  5,391
  7,657
  10,631
  14,434
  19,179
  24,972
  31,901
  40,040
  49,393
  60,098
  72,123
  85,473
  100,140
  116,105
  133,344
  151,828
  171,527
  192,411
  214,456
  237,640
  261,947
  287,368
  313,903
  341,557
  370,344
  400,286
  431,413
  463,761
Change in working capital, $m
  -216
  -314
  -441
  -600
  -793
  -1,021
  -1,282
  -1,573
  -1,892
  -2,234
  -2,593
  -2,964
  -3,343
  -3,725
  -4,106
  -4,482
  -4,852
  -5,214
  -5,568
  -5,913
  -6,251
  -6,582
  -6,908
  -7,231
  -7,552
  -7,875
  -8,201
  -8,533
  -8,872
  -9,222
Cash from operations, $m
  2,701
  4,029
  5,832
  8,257
  11,424
  15,454
  20,461
  26,545
  33,793
  42,274
  51,986
  63,062
  75,466
  89,198
  104,245
  120,587
  138,196
  157,042
  177,095
  198,325
  220,707
  244,221
  268,854
  294,599
  321,455
  349,432
  378,545
  408,819
  440,285
  472,983
Maintenance CAPEX, $m
  -588
  -941
  -1,454
  -2,175
  -3,156
  -4,452
  -6,121
  -8,216
  -10,788
  -13,881
  -17,533
  -21,772
  -26,619
  -32,084
  -38,174
  -44,886
  -52,213
  -60,145
  -68,669
  -77,771
  -87,438
  -97,657
  -108,416
  -119,709
  -131,530
  -143,877
  -156,752
  -170,160
  -184,110
  -198,615
New CAPEX, $m
  -3,530
  -5,130
  -7,206
  -9,808
  -12,965
  -16,685
  -20,951
  -25,720
  -30,935
  -36,519
  -42,390
  -48,464
  -54,658
  -60,897
  -67,118
  -73,272
  -79,320
  -85,240
  -91,022
  -96,667
  -102,186
  -107,598
  -112,929
  -118,208
  -123,469
  -128,748
  -134,079
  -139,501
  -145,049
  -150,760
Cash from investing activities, $m
  -4,118
  -6,071
  -8,660
  -11,983
  -16,121
  -21,137
  -27,072
  -33,936
  -41,723
  -50,400
  -59,923
  -70,236
  -81,277
  -92,981
  -105,292
  -118,158
  -131,533
  -145,385
  -159,691
  -174,438
  -189,624
  -205,255
  -221,345
  -237,917
  -254,999
  -272,625
  -290,831
  -309,661
  -329,159
  -349,375
Free cash flow, $m
  -1,417
  -2,042
  -2,828
  -3,726
  -4,697
  -5,683
  -6,610
  -7,391
  -7,929
  -8,126
  -7,937
  -7,174
  -5,810
  -3,783
  -1,047
  2,430
  6,663
  11,657
  17,403
  23,886
  31,083
  38,966
  47,509
  56,681
  66,456
  76,807
  87,714
  99,158
  111,126
  123,608
Issuance/(repayment) of debt, $m
  3,924
  6,416
  9,013
  12,267
  16,216
  20,869
  26,203
  32,169
  38,691
  45,675
  53,019
  60,615
  68,362
  76,165
  83,947
  91,643
  99,207
  106,612
  113,844
  120,904
  127,807
  134,576
  141,243
  147,846
  154,426
  161,028
  167,696
  174,477
  181,417
  188,559
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  3,924
  6,416
  9,013
  12,267
  16,216
  20,869
  26,203
  32,169
  38,691
  45,675
  53,019
  60,615
  68,362
  76,165
  83,947
  91,643
  99,207
  106,612
  113,844
  120,904
  127,807
  134,576
  141,243
  147,846
  154,426
  161,028
  167,696
  174,477
  181,417
  188,559
Total cash flow (excl. dividends), $m
  2,506
  4,374
  6,185
  8,541
  11,519
  15,186
  19,593
  24,778
  30,762
  37,549
  45,081
  53,441
  62,552
  72,382
  82,900
  94,072
  105,871
  118,269
  131,247
  144,790
  158,889
  173,542
  188,752
  204,527
  220,882
  237,835
  255,410
  273,636
  292,543
  312,167
Retained Cash Flow (-), $m
  -988
  -713
  -1,001
  -1,363
  -1,802
  -2,319
  -2,911
  -3,574
  -4,299
  -5,075
  -5,891
  -6,735
  -7,596
  -8,463
  -9,327
  -10,183
  -11,023
  -11,846
  -12,649
  -13,434
  -14,201
  -14,953
  -15,694
  -16,427
  -17,158
  -17,892
  -18,633
  -19,386
  -20,157
  -20,951
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
  10
  15
  24
  36
  52
  73
  100
  135
  177
  227
  287
  357
  436
  526
  625
  735
  855
  985
  1,125
  1,274
  1,433
  1,600
  1,776
  1,961
  2,155
  2,357
  2,568
  2,788
  3,017
  3,254
Cash available for distribution, $m
  1,518
  3,661
  5,183
  7,178
  9,717
  12,867
  16,682
  21,204
  26,463
  32,474
  39,191
  46,706
  54,956
  63,919
  73,572
  83,890
  94,847
  106,423
  118,598
  131,356
  144,689
  158,589
  173,058
  188,100
  203,723
  219,943
  236,778
  254,249
  272,386
  291,216
Discount rate, %
  11.50
  12.08
  12.68
  13.31
  13.98
  14.68
  15.41
  16.18
  16.99
  17.84
  18.73
  19.67
  20.65
  21.68
  22.77
  23.91
  25.10
  26.36
  27.68
  29.06
  30.51
  32.04
  33.64
  35.32
  37.09
  38.94
  40.89
  42.93
  45.08
  47.34
PV of cash for distribution, $m
  1,362
  2,915
  3,623
  4,354
  5,052
  5,657
  6,117
  6,387
  6,446
  6,289
  5,928
  5,415
  4,787
  4,096
  3,391
  2,717
  2,106
  1,578
  1,143
  799
  539
  351
  220
  132
  77
  43
  23
  12
  6
  3
Current shareholders' claim on cash, %
  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 16
Price to Sales 4.1
Price to Book 3.3
Price to Tangible Book
Price to Cash Flow 10.1
Price to Free Cash Flow 21.2
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 $3213 million for the last fiscal year's total revenue generated by Andeavor Logistics. The default revenue input number comes from 2017 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 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 11.5%, 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 59.6%.

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 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 7.9% 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 0.3%.

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 183.1%.

Life of production assets of 10 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 -11.2%. 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 - $320 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 126 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 $6.2 billion.

COMPANY NEWS

▶ Marathon releases leadership roster for post-Andeavor acquisition   [Aug-10-18 06:17PM  American City Business Journals]
▶ Andeavor to Release Second Quarter 2018 Earnings   [Jul-11-18 04:31PM  GlobeNewswire]
▶ 1 High-Yield Dividend Stock to Buy in July   [Jul-01-18 09:38AM  Motley Fool]
▶ Andeavor Logistics faces opposition to North Dakota expansion   [Jun-01-18 10:30AM  American City Business Journals]
▶ Andeavor Completes Asphalt Terminals Acquisition   [May-21-18 05:31PM  GlobeNewswire]
▶ A New Question Now Hovers Over MPLX's Earnings   [May-08-18 09:32AM  Motley Fool]
▶ Andeavor Reports First Quarter 2018 Results   [May-07-18 04:54PM  GlobeNewswire]
▶ Why Andeavors Stock Is Skyrocketing Today   [11:43AM  Motley Fool]
▶ 3 Dividend Stocks That Give You a Raise Each Quarter   [Apr-05-18 05:07PM  Motley Fool]
▶ Andeavor to Release First Quarter 2018 Earnings   [Apr-04-18 04:31PM  GlobeNewswire]
▶ Can Andeavor Logistics LP Keep Increasing Its Dividend?   [Feb-28-18 09:37AM  Motley Fool]
▶ Andeavor Logistics LP Files 2017 Form 10-K   [Feb-26-18 04:32PM  GlobeNewswire]
▶ Andeavor Reports Fourth Quarter and Full Year 2017 Results   [Feb-15-18 04:55PM  GlobeNewswire]
▶ Andeavor Expands Asphalt Offering Through Acquisition   [Feb-12-18 08:01AM  GlobeNewswire]
▶ Andeavor Logistics LP Reports Third Quarter 2017 Results   [Nov-08-17 05:02PM  GlobeNewswire]
▶ Andeavor Reports Third Quarter 2017 Results   [05:01PM  GlobeNewswire]
▶ 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]
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