Intrinsic value of Andeavor Logistics LP - ANDX

Previous Close

$34.31

  Intrinsic Value

$7.30

stock screener

  Rating & Target

str. sell

-79%

Previous close

$34.31

 
Intrinsic value

$7.30

 
Up/down potential

-79%

 
Rating

str. sell

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 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 8.4

 

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  2,428
  2,483
  2,547
  2,619
  2,698
  2,785
  2,880
  2,983
  3,094
  3,212
  3,339
  3,475
  3,619
  3,773
  3,935
  4,108
  4,290
  4,483
  4,687
  4,903
  5,130
  5,370
  5,622
  5,888
  6,169
  6,464
  6,774
  7,101
  7,445
  7,807
Variable operating expenses, $m
  1,964
  2,005
  2,051
  2,102
  2,160
  2,222
  2,291
  2,365
  2,444
  2,530
  2,406
  2,503
  2,607
  2,718
  2,835
  2,959
  3,091
  3,230
  3,377
  3,532
  3,696
  3,869
  4,051
  4,242
  4,444
  4,657
  4,881
  5,116
  5,364
  5,625
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
  1,964
  2,005
  2,051
  2,102
  2,160
  2,222
  2,291
  2,365
  2,444
  2,530
  2,406
  2,503
  2,607
  2,718
  2,835
  2,959
  3,091
  3,230
  3,377
  3,532
  3,696
  3,869
  4,051
  4,242
  4,444
  4,657
  4,881
  5,116
  5,364
  5,625
Operating income, $m
  463
  479
  497
  517
  539
  563
  590
  618
  649
  682
  933
  971
  1,012
  1,055
  1,100
  1,148
  1,199
  1,253
  1,310
  1,371
  1,434
  1,501
  1,572
  1,646
  1,724
  1,807
  1,894
  1,985
  2,081
  2,182
EBITDA, $m
  1,008
  1,031
  1,057
  1,087
  1,120
  1,156
  1,196
  1,238
  1,284
  1,333
  1,386
  1,442
  1,502
  1,566
  1,634
  1,705
  1,781
  1,861
  1,946
  2,035
  2,129
  2,229
  2,334
  2,444
  2,561
  2,683
  2,812
  2,948
  3,091
  3,241
Interest expense (income), $m
  165
  268
  255
  267
  281
  296
  312
  331
  351
  372
  395
  420
  447
  476
  506
  538
  573
  609
  647
  688
  731
  776
  824
  874
  927
  983
  1,042
  1,105
  1,170
  1,239
  1,311
Earnings before tax, $m
  195
  223
  229
  236
  243
  251
  259
  268
  277
  287
  513
  524
  536
  549
  562
  576
  590
  606
  622
  640
  658
  677
  697
  719
  741
  764
  789
  815
  843
  871
Tax expense, $m
  53
  60
  62
  64
  66
  68
  70
  72
  75
  77
  139
  142
  145
  148
  152
  155
  159
  164
  168
  173
  178
  183
  188
  194
  200
  206
  213
  220
  228
  235
Net income, $m
  142
  163
  168
  172
  178
  183
  189
  195
  202
  210
  375
  383
  391
  400
  410
  420
  431
  442
  454
  467
  480
  494
  509
  525
  541
  558
  576
  595
  615
  636

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
  10,509
  10,751
  11,027
  11,337
  11,681
  12,058
  12,469
  12,913
  13,392
  13,906
  14,456
  15,043
  15,667
  16,331
  17,036
  17,782
  18,573
  19,408
  20,291
  21,224
  22,207
  23,245
  24,339
  25,491
  26,704
  27,982
  29,327
  30,742
  32,231
  33,797
Adjusted assets (=assets-cash), $m
  10,509
  10,751
  11,027
  11,337
  11,681
  12,058
  12,469
  12,913
  13,392
  13,906
  14,456
  15,043
  15,667
  16,331
  17,036
  17,782
  18,573
  19,408
  20,291
  21,224
  22,207
  23,245
  24,339
  25,491
  26,704
  27,982
  29,327
  30,742
  32,231
  33,797
Revenue / Adjusted assets
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
Average production assets, $m
  7,766
  7,945
  8,149
  8,378
  8,632
  8,911
  9,214
  9,543
  9,896
  10,276
  10,683
  11,116
  11,578
  12,068
  12,589
  13,141
  13,725
  14,342
  14,995
  15,684
  16,411
  17,177
  17,985
  18,837
  19,734
  20,678
  21,672
  22,717
  23,818
  24,975
Working capital, $m
  -36
  -37
  -38
  -39
  -40
  -42
  -43
  -45
  -46
  -48
  -50
  -52
  -54
  -57
  -59
  -62
  -64
  -67
  -70
  -74
  -77
  -81
  -84
  -88
  -93
  -97
  -102
  -107
  -112
  -117
Total debt, $m
  4,729
  4,947
  5,195
  5,475
  5,784
  6,123
  6,493
  6,893
  7,324
  7,787
  8,281
  8,809
  9,372
  9,969
  10,603
  11,275
  11,986
  12,738
  13,533
  14,372
  15,258
  16,191
  17,176
  18,213
  19,305
  20,455
  21,665
  22,939
  24,279
  25,688
Total liabilities, $m
  9,458
  9,676
  9,924
  10,204
  10,513
  10,852
  11,222
  11,622
  12,053
  12,516
  13,010
  13,538
  14,101
  14,698
  15,332
  16,004
  16,715
  17,467
  18,262
  19,101
  19,987
  20,920
  21,905
  22,942
  24,034
  25,184
  26,394
  27,668
  29,008
  30,417
Total equity, $m
  1,051
  1,075
  1,103
  1,134
  1,168
  1,206
  1,247
  1,291
  1,339
  1,391
  1,446
  1,504
  1,567
  1,633
  1,704
  1,778
  1,857
  1,941
  2,029
  2,122
  2,221
  2,324
  2,434
  2,549
  2,670
  2,798
  2,933
  3,074
  3,223
  3,380
Total liabilities and equity, $m
  10,509
  10,751
  11,027
  11,338
  11,681
  12,058
  12,469
  12,913
  13,392
  13,907
  14,456
  15,042
  15,668
  16,331
  17,036
  17,782
  18,572
  19,408
  20,291
  21,223
  22,208
  23,244
  24,339
  25,491
  26,704
  27,982
  29,327
  30,742
  32,231
  33,797
Debt-to-equity ratio
  4.500
  4.600
  4.710
  4.830
  4.950
  5.080
  5.210
  5.340
  5.470
  5.600
  5.730
  5.860
  5.980
  6.100
  6.220
  6.340
  6.450
  6.560
  6.670
  6.770
  6.870
  6.970
  7.060
  7.140
  7.230
  7.310
  7.390
  7.460
  7.530
  7.600
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
  142
  163
  168
  172
  178
  183
  189
  195
  202
  210
  375
  383
  391
  400
  410
  420
  431
  442
  454
  467
  480
  494
  509
  525
  541
  558
  576
  595
  615
  636
Depreciation, amort., depletion, $m
  545
  552
  561
  570
  581
  593
  606
  620
  635
  651
  453
  471
  491
  511
  533
  557
  582
  608
  635
  665
  695
  728
  762
  798
  836
  876
  918
  963
  1,009
  1,058
Funds from operations, $m
  687
  715
  728
  743
  759
  776
  795
  815
  837
  860
  827
  854
  882
  912
  944
  977
  1,013
  1,050
  1,090
  1,132
  1,176
  1,222
  1,271
  1,323
  1,377
  1,434
  1,494
  1,558
  1,624
  1,694
Change in working capital, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
Cash from operations, $m
  688
  716
  729
  744
  760
  777
  796
  817
  839
  862
  829
  856
  884
  914
  946
  980
  1,015
  1,053
  1,093
  1,135
  1,179
  1,226
  1,275
  1,327
  1,381
  1,439
  1,499
  1,563
  1,629
  1,700
Maintenance CAPEX, $m
  -323
  -329
  -337
  -345
  -355
  -366
  -378
  -390
  -404
  -419
  -435
  -453
  -471
  -491
  -511
  -533
  -557
  -582
  -608
  -635
  -665
  -695
  -728
  -762
  -798
  -836
  -876
  -918
  -963
  -1,009
New CAPEX, $m
  -153
  -179
  -204
  -229
  -254
  -279
  -303
  -328
  -354
  -380
  -406
  -434
  -462
  -491
  -521
  -552
  -584
  -618
  -653
  -689
  -727
  -767
  -808
  -851
  -897
  -944
  -994
  -1,046
  -1,100
  -1,157
Cash from investing activities, $m
  -476
  -508
  -541
  -574
  -609
  -645
  -681
  -718
  -758
  -799
  -841
  -887
  -933
  -982
  -1,032
  -1,085
  -1,141
  -1,200
  -1,261
  -1,324
  -1,392
  -1,462
  -1,536
  -1,613
  -1,695
  -1,780
  -1,870
  -1,964
  -2,063
  -2,166
Free cash flow, $m
  212
  208
  188
  169
  151
  133
  115
  98
  81
  63
  -13
  -30
  -49
  -67
  -86
  -105
  -125
  -146
  -167
  -190
  -212
  -236
  -261
  -287
  -314
  -342
  -371
  -401
  -433
  -467
Issuance/(repayment) of debt, $m
  -235
  218
  249
  279
  309
  339
  370
  400
  431
  463
  495
  528
  562
  598
  634
  672
  711
  752
  795
  839
  885
  934
  984
  1,037
  1,092
  1,150
  1,210
  1,274
  1,340
  1,409
Issuance/(repurchase) of shares, $m
  307
  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  
  72
  218
  249
  279
  309
  339
  370
  400
  431
  463
  495
  528
  562
  598
  634
  672
  711
  752
  795
  839
  885
  934
  984
  1,037
  1,092
  1,150
  1,210
  1,274
  1,340
  1,409
Total cash flow (excl. dividends), $m
  284
  426
  437
  449
  460
  472
  485
  498
  512
  526
  482
  498
  514
  530
  548
  566
  586
  606
  627
  650
  673
  697
  723
  750
  779
  808
  839
  872
  907
  943
Retained Cash Flow (-), $m
  -449
  -24
  -28
  -31
  -34
  -38
  -41
  -44
  -48
  -51
  -55
  -59
  -62
  -66
  -70
  -75
  -79
  -84
  -88
  -93
  -98
  -104
  -109
  -115
  -121
  -128
  -134
  -142
  -149
  -157
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
  -165
  402
  409
  418
  426
  435
  444
  454
  464
  474
  427
  439
  451
  464
  478
  492
  507
  522
  539
  556
  575
  594
  614
  635
  657
  680
  705
  731
  758
  786
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
  -148
  320
  286
  253
  221
  191
  163
  137
  113
  92
  65
  51
  39
  30
  22
  16
  11
  8
  5
  3
  2
  1
  1
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2
  95.2

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 LP (ANDX)

Valuation Ratios
P/E Ratio 11.2
Price to Sales 2.9
Price to Book 2.3
Price to Tangible Book
Price to Cash Flow 7.1
Price to Free Cash Flow 14.8
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 $2380 million for the last fiscal year's total revenue generated by Andeavor Logistics LP. The default revenue input number comes from 0001 income statement of Andeavor Logistics LP. 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 2% 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 LP, 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 LP.
    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 81.1%.

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 5.4% for Andeavor Logistics LP.

Corporate tax rate of 27% is the nominal tax rate for Andeavor Logistics LP. 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 319.9%.

Life of production assets of 23.6 years is the average useful life of capital assets used in Andeavor Logistics LP 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 -1.5%. 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 - $602 million for Andeavor Logistics LP - 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 245.433 million for Andeavor Logistics LP 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 LP at the current share price and the inputted number of shares is $8.4 billion.

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