Intrinsic value of AmeriGas Partners, L.P. - APU

Previous Close

$31.89

  Intrinsic Value

$20.18

stock screener

  Rating & Target

sell

-37%

Previous close

$31.89

 
Intrinsic value

$20.18

 
Up/down potential

-37%

 
Rating

sell

We calculate the intrinsic value of APU 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 3.0

 

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, %
  4.20
  4.28
  4.35
  4.42
  4.48
  4.53
  4.57
  4.62
  4.66
  4.69
  4.72
  4.75
  4.77
  4.80
  4.82
  4.84
  4.85
  4.87
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.94
  4.94
  4.95
  4.95
  4.96
  4.96
Revenue, $m
  2,942
  3,067
  3,201
  3,342
  3,492
  3,650
  3,817
  3,993
  4,179
  4,375
  4,582
  4,799
  5,028
  5,270
  5,523
  5,791
  6,071
  6,367
  6,678
  7,004
  7,348
  7,709
  8,088
  8,487
  8,906
  9,346
  9,808
  10,294
  10,804
  11,341
Variable operating expenses, $m
  2,467
  2,563
  2,665
  2,772
  2,886
  3,006
  3,134
  3,268
  3,409
  3,558
  3,487
  3,653
  3,827
  4,011
  4,204
  4,407
  4,621
  4,846
  5,083
  5,331
  5,593
  5,867
  6,156
  6,459
  6,778
  7,113
  7,465
  7,835
  8,224
  8,632
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
  2,467
  2,563
  2,665
  2,772
  2,886
  3,006
  3,134
  3,268
  3,409
  3,558
  3,487
  3,653
  3,827
  4,011
  4,204
  4,407
  4,621
  4,846
  5,083
  5,331
  5,593
  5,867
  6,156
  6,459
  6,778
  7,113
  7,465
  7,835
  8,224
  8,632
Operating income, $m
  474
  504
  536
  570
  606
  644
  683
  726
  770
  817
  1,094
  1,146
  1,201
  1,259
  1,319
  1,383
  1,450
  1,521
  1,595
  1,673
  1,755
  1,841
  1,932
  2,027
  2,127
  2,232
  2,343
  2,459
  2,581
  2,709
EBITDA, $m
  832
  868
  905
  945
  988
  1,032
  1,080
  1,129
  1,182
  1,237
  1,296
  1,357
  1,422
  1,490
  1,562
  1,638
  1,717
  1,801
  1,889
  1,981
  2,078
  2,180
  2,288
  2,400
  2,519
  2,643
  2,774
  2,912
  3,056
  3,208
Interest expense (income), $m
  152
  165
  154
  163
  173
  183
  194
  206
  218
  231
  245
  259
  275
  291
  308
  326
  344
  364
  385
  407
  429
  454
  479
  506
  534
  563
  594
  627
  661
  697
  734
Earnings before tax, $m
  309
  351
  373
  397
  423
  449
  478
  507
  539
  572
  835
  872
  910
  951
  994
  1,039
  1,086
  1,136
  1,189
  1,244
  1,302
  1,362
  1,426
  1,494
  1,564
  1,638
  1,716
  1,798
  1,884
  1,975
Tax expense, $m
  83
  95
  101
  107
  114
  121
  129
  137
  145
  154
  225
  235
  246
  257
  268
  281
  293
  307
  321
  336
  351
  368
  385
  403
  422
  442
  463
  486
  509
  533
Net income, $m
  226
  256
  273
  290
  309
  328
  349
  370
  393
  417
  610
  636
  665
  694
  726
  758
  793
  829
  868
  908
  950
  995
  1,041
  1,090
  1,142
  1,196
  1,253
  1,313
  1,376
  1,442

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
  4,091
  4,266
  4,452
  4,649
  4,857
  5,077
  5,309
  5,554
  5,812
  6,085
  6,372
  6,675
  6,994
  7,329
  7,682
  8,054
  8,444
  8,855
  9,287
  9,742
  10,219
  10,721
  11,249
  11,803
  12,386
  12,998
  13,641
  14,317
  15,027
  15,773
Adjusted assets (=assets-cash), $m
  4,091
  4,266
  4,452
  4,649
  4,857
  5,077
  5,309
  5,554
  5,812
  6,085
  6,372
  6,675
  6,994
  7,329
  7,682
  8,054
  8,444
  8,855
  9,287
  9,742
  10,219
  10,721
  11,249
  11,803
  12,386
  12,998
  13,641
  14,317
  15,027
  15,773
Revenue / Adjusted assets
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
Average production assets, $m
  2,444
  2,549
  2,660
  2,777
  2,902
  3,033
  3,172
  3,318
  3,473
  3,636
  3,807
  3,988
  4,179
  4,379
  4,590
  4,812
  5,045
  5,291
  5,549
  5,821
  6,106
  6,406
  6,721
  7,052
  7,401
  7,766
  8,151
  8,554
  8,979
  9,424
Working capital, $m
  -32
  -34
  -35
  -37
  -38
  -40
  -42
  -44
  -46
  -48
  -50
  -53
  -55
  -58
  -61
  -64
  -67
  -70
  -73
  -77
  -81
  -85
  -89
  -93
  -98
  -103
  -108
  -113
  -119
  -125
Total debt, $m
  2,603
  2,760
  2,928
  3,105
  3,292
  3,490
  3,699
  3,919
  4,152
  4,397
  4,656
  4,928
  5,215
  5,517
  5,835
  6,169
  6,521
  6,891
  7,279
  7,688
  8,118
  8,570
  9,045
  9,544
  10,068
  10,619
  11,198
  11,806
  12,445
  13,116
Total liabilities, $m
  3,682
  3,840
  4,007
  4,184
  4,371
  4,569
  4,778
  4,998
  5,231
  5,477
  5,735
  6,007
  6,294
  6,596
  6,914
  7,248
  7,600
  7,970
  8,359
  8,768
  9,197
  9,649
  10,124
  10,623
  11,147
  11,698
  12,277
  12,885
  13,524
  14,195
Total equity, $m
  409
  427
  445
  465
  486
  508
  531
  555
  581
  609
  637
  667
  699
  733
  768
  805
  844
  886
  929
  974
  1,022
  1,072
  1,125
  1,180
  1,239
  1,300
  1,364
  1,432
  1,503
  1,577
Total liabilities and equity, $m
  4,091
  4,267
  4,452
  4,649
  4,857
  5,077
  5,309
  5,553
  5,812
  6,086
  6,372
  6,674
  6,993
  7,329
  7,682
  8,053
  8,444
  8,856
  9,288
  9,742
  10,219
  10,721
  11,249
  11,803
  12,386
  12,998
  13,641
  14,317
  15,027
  15,772
Debt-to-equity ratio
  6.360
  6.470
  6.580
  6.680
  6.780
  6.870
  6.970
  7.060
  7.140
  7.230
  7.310
  7.380
  7.460
  7.530
  7.600
  7.660
  7.720
  7.780
  7.840
  7.890
  7.940
  7.990
  8.040
  8.090
  8.130
  8.170
  8.210
  8.250
  8.280
  8.320
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
  226
  256
  273
  290
  309
  328
  349
  370
  393
  417
  610
  636
  665
  694
  726
  758
  793
  829
  868
  908
  950
  995
  1,041
  1,090
  1,142
  1,196
  1,253
  1,313
  1,376
  1,442
Depreciation, amort., depletion, $m
  358
  363
  369
  375
  382
  389
  396
  404
  412
  421
  201
  211
  221
  232
  243
  255
  267
  280
  294
  308
  323
  339
  356
  373
  392
  411
  431
  453
  475
  499
Funds from operations, $m
  583
  619
  642
  665
  690
  717
  745
  774
  805
  838
  811
  847
  886
  926
  968
  1,013
  1,060
  1,109
  1,161
  1,216
  1,273
  1,333
  1,397
  1,463
  1,533
  1,607
  1,684
  1,765
  1,851
  1,940
Change in working capital, $m
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
Cash from operations, $m
  585
  621
  643
  667
  692
  719
  747
  776
  807
  840
  813
  850
  888
  929
  971
  1,016
  1,063
  1,113
  1,165
  1,219
  1,277
  1,337
  1,401
  1,468
  1,538
  1,612
  1,689
  1,771
  1,856
  1,946
Maintenance CAPEX, $m
  -124
  -129
  -135
  -141
  -147
  -154
  -160
  -168
  -176
  -184
  -192
  -201
  -211
  -221
  -232
  -243
  -255
  -267
  -280
  -294
  -308
  -323
  -339
  -356
  -373
  -392
  -411
  -431
  -453
  -475
New CAPEX, $m
  -98
  -105
  -111
  -117
  -124
  -131
  -139
  -146
  -154
  -163
  -172
  -181
  -190
  -200
  -211
  -222
  -233
  -246
  -258
  -271
  -285
  -300
  -315
  -331
  -348
  -366
  -384
  -404
  -424
  -446
Cash from investing activities, $m
  -222
  -234
  -246
  -258
  -271
  -285
  -299
  -314
  -330
  -347
  -364
  -382
  -401
  -421
  -443
  -465
  -488
  -513
  -538
  -565
  -593
  -623
  -654
  -687
  -721
  -758
  -795
  -835
  -877
  -921
Free cash flow, $m
  362
  387
  397
  409
  421
  434
  447
  462
  477
  494
  449
  468
  487
  507
  529
  551
  575
  600
  627
  654
  684
  714
  747
  781
  817
  854
  894
  936
  979
  1,025
Issuance/(repayment) of debt, $m
  -199
  158
  167
  177
  187
  198
  209
  221
  233
  245
  259
  272
  287
  302
  318
  334
  352
  370
  389
  409
  430
  452
  475
  499
  524
  551
  579
  608
  639
  671
Issuance/(repurchase) of shares, $m
  138
  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  
  -61
  158
  167
  177
  187
  198
  209
  221
  233
  245
  259
  272
  287
  302
  318
  334
  352
  370
  389
  409
  430
  452
  475
  499
  524
  551
  579
  608
  639
  671
Total cash flow (excl. dividends), $m
  302
  544
  564
  586
  608
  632
  656
  683
  710
  739
  708
  740
  774
  809
  846
  885
  927
  970
  1,015
  1,063
  1,113
  1,166
  1,222
  1,280
  1,341
  1,405
  1,473
  1,544
  1,618
  1,697
Retained Cash Flow (-), $m
  -364
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -30
  -32
  -34
  -35
  -37
  -39
  -41
  -43
  -45
  -48
  -50
  -53
  -55
  -58
  -61
  -64
  -68
  -71
  -75
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
  -62
  527
  546
  566
  587
  610
  633
  658
  684
  712
  679
  710
  742
  775
  811
  848
  888
  929
  972
  1,018
  1,066
  1,116
  1,169
  1,225
  1,283
  1,344
  1,409
  1,476
  1,547
  1,622
Discount rate, %
  13.30
  13.97
  14.66
  15.40
  16.17
  16.97
  17.82
  18.71
  19.65
  20.63
  21.66
  22.75
  23.88
  25.08
  26.33
  27.65
  29.03
  30.48
  32.01
  33.61
  35.29
  37.05
  38.91
  40.85
  42.89
  45.04
  47.29
  49.65
  52.14
  54.74
PV of cash for distribution, $m
  -55
  406
  362
  319
  278
  238
  201
  167
  136
  109
  79
  61
  46
  34
  24
  17
  12
  8
  5
  3
  2
  1
  1
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  76.5
  76.5
  76.5
  76.5
  76.5
  76.5
  76.5
  76.5
  76.5
  76.5
  76.5
  76.5
  76.5
  76.5
  76.5
  76.5
  76.5
  76.5
  76.5
  76.5
  76.5
  76.5
  76.5
  76.5
  76.5
  76.5
  76.5
  76.5
  76.5
  76.5

AmeriGas Partners, L.P. is a holding company. The Company is a retail propane distributor in the United States. It serves approximately two million residential, commercial, industrial, agricultural, wholesale and motor fuel customers in all 50 states from approximately 2,000 propane distribution locations. It operates through the segment that engages in the distribution of propane and related equipment and supplies. The Company conducts its business through its subsidiary, AmeriGas Propane, L.P. The Partnership also sells, installs and services propane appliances, including heating systems, and operates a residential heating, ventilation, air conditioning, plumbing, and related services business in certain counties of Pennsylvania, Delaware, and Maryland. The Partnership operates as an interstate carrier in all states across the continental United States. The Company's AmeriGas Cylinder Exchange program enables consumers to purchase or exchange propane cylinders at retail locations.

FINANCIAL RATIOS  of  AmeriGas Partners, L.P. (APU)

Valuation Ratios
P/E Ratio 18.3
Price to Sales 1.2
Price to Book 4
Price to Tangible Book
Price to Cash Flow 8.3
Price to Free Cash Flow 11.4
Growth Rates
Sales Growth Rate 6.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -3.9%
Cap. Spend. - 3 Yr. Gr. Rate -3%
Financial Strength
Quick Ratio 0
Current Ratio 0.1
LT Debt to Equity 342.8%
Total Debt to Equity 362.6%
Interest Coverage 2
Management Effectiveness
Return On Assets 7.7%
Ret/ On Assets - 3 Yr. Avg. 8.5%
Return On Total Capital 4.7%
Ret/ On T. Cap. - 3 Yr. Avg. 5.5%
Return On Equity 18.7%
Return On Equity - 3 Yr. Avg. 18.3%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 20.8%
EBITDA Margin - 3 Yr. Avg. 21.7%
Operating Margin 13.4%
Oper. Margin - 3 Yr. Avg. 14.2%
Pre-Tax Margin 6.8%
Pre-Tax Margin - 3 Yr. Avg. 7.8%
Net Profit Margin 6.6%
Net Profit Margin - 3 Yr. Avg. 7.6%
Effective Tax Rate 1.2%
Eff/ Tax Rate - 3 Yr. Avg. 0.7%
Payout Ratio 246.3%

APU stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the APU stock intrinsic value calculation we used $2823 million for the last fiscal year's total revenue generated by AmeriGas Partners, L.P.. The default revenue input number comes from 0001 income statement of AmeriGas Partners, L.P.. 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 APU stock valuation model: a) initial revenue growth rate of 4.2% 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 13.3%, whose default value for APU is calculated based on our internal credit rating of AmeriGas Partners, L.P., 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 AmeriGas Partners, L.P..
    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 APU stock the variable cost ratio is equal to 84.2%.

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 APU 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 5.9% for AmeriGas Partners, L.P..

Corporate tax rate of 27% is the nominal tax rate for AmeriGas Partners, L.P.. 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 APU 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 APU are equal to 83.1%.

Life of production assets of 18.9 years is the average useful life of capital assets used in AmeriGas Partners, L.P. 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 APU is equal to -1.1%. 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 - $45.008 million for AmeriGas Partners, L.P. - 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 92.926 million for AmeriGas Partners, L.P. 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 AmeriGas Partners, L.P. at the current share price and the inputted number of shares is $3.0 billion.

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