Intrinsic value of Brookfield Infrastructure Partners - BIP

Previous Close

$39.54

  Intrinsic Value

$573.06

stock screener

  Rating & Target

str. buy

+999%

Previous close

$39.54

 
Intrinsic value

$573.06

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of BIP 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 10.9

 

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, %
  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
  5,656
  8,739
  13,068
  18,962
  26,752
  36,778
  49,367
  64,822
  83,410
  105,354
  130,825
  159,947
  192,789
  229,381
  269,712
  313,739
  361,401
  412,621
  467,315
  525,400
  586,802
  651,457
  719,314
  790,343
  864,534
  941,896
  1,022,462
  1,106,286
  1,193,444
  1,284,033
Variable operating expenses, $m
  2,286
  2,922
  3,816
  5,031
  6,639
  8,707
  11,304
  14,493
  18,328
  22,855
  26,991
  32,999
  39,774
  47,324
  55,644
  64,728
  74,561
  85,128
  96,412
  108,395
  121,063
  134,402
  148,401
  163,056
  178,362
  194,322
  210,944
  228,238
  246,219
  264,909
Fixed operating expenses, $m
  595
  608
  621
  635
  649
  663
  678
  693
  708
  723
  739
  756
  772
  789
  807
  824
  843
  861
  880
  899
  919
  939
  960
  981
  1,003
  1,025
  1,047
  1,070
  1,094
  1,118
Total operating expenses, $m
  2,881
  3,530
  4,437
  5,666
  7,288
  9,370
  11,982
  15,186
  19,036
  23,578
  27,730
  33,755
  40,546
  48,113
  56,451
  65,552
  75,404
  85,989
  97,292
  109,294
  121,982
  135,341
  149,361
  164,037
  179,365
  195,347
  211,991
  229,308
  247,313
  266,027
Operating income, $m
  2,775
  5,208
  8,632
  13,295
  19,465
  27,408
  37,385
  49,636
  64,374
  81,775
  103,095
  126,192
  152,243
  181,268
  213,261
  248,188
  285,998
  326,632
  370,023
  416,106
  464,820
  516,115
  569,952
  626,307
  685,170
  746,549
  810,471
  876,978
  946,131
  1,018,007
EBITDA, $m
  4,718
  7,601
  11,655
  17,177
  24,481
  33,885
  45,696
  60,199
  77,645
  98,242
  122,153
  149,493
  180,327
  214,684
  252,551
  293,892
  338,646
  386,741
  438,099
  492,644
  550,303
  611,017
  674,739
  741,440
  811,111
  883,761
  959,419
  1,038,137
  1,119,987
  1,205,059
Interest expense (income), $m
  366
  620
  1,391
  2,515
  4,093
  6,241
  9,081
  12,735
  17,324
  22,957
  29,733
  37,731
  47,016
  57,630
  69,601
  82,939
  97,640
  113,688
  131,061
  149,730
  169,666
  190,838
  213,219
  236,786
  261,520
  287,410
  314,452
  342,651
  372,017
  402,571
  434,340
Earnings before tax, $m
  2,155
  3,817
  6,117
  9,202
  13,223
  18,327
  24,649
  32,312
  41,417
  52,043
  65,364
  79,177
  94,613
  111,667
  130,322
  150,548
  172,311
  195,572
  220,293
  246,440
  273,982
  302,896
  333,167
  364,787
  397,760
  432,097
  467,820
  504,961
  543,560
  583,667
Tax expense, $m
  582
  1,031
  1,651
  2,485
  3,570
  4,948
  6,655
  8,724
  11,183
  14,051
  17,648
  21,378
  25,545
  30,150
  35,187
  40,648
  46,524
  52,804
  59,479
  66,539
  73,975
  81,782
  89,955
  98,493
  107,395
  116,666
  126,311
  136,339
  146,761
  157,590
Net income, $m
  1,573
  2,786
  4,465
  6,718
  9,653
  13,379
  17,994
  23,588
  30,234
  37,991
  47,716
  57,799
  69,067
  81,517
  95,135
  109,900
  125,787
  142,767
  160,814
  179,901
  200,007
  221,114
  243,212
  266,295
  290,365
  315,431
  341,509
  368,622
  396,799
  426,077

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
  47,133
  72,821
  108,904
  158,014
  222,935
  306,484
  411,391
  540,183
  695,084
  877,947
  1,090,211
  1,332,888
  1,606,578
  1,911,511
  2,247,597
  2,614,495
  3,011,679
  3,438,508
  3,894,289
  4,378,337
  4,890,021
  5,428,805
  5,994,283
  6,586,195
  7,204,451
  7,849,137
  8,520,521
  9,219,053
  9,945,368
  10,700,278
Adjusted assets (=assets-cash), $m
  47,133
  72,821
  108,904
  158,014
  222,935
  306,484
  411,391
  540,183
  695,084
  877,947
  1,090,211
  1,332,888
  1,606,578
  1,911,511
  2,247,597
  2,614,495
  3,011,679
  3,438,508
  3,894,289
  4,378,337
  4,890,021
  5,428,805
  5,994,283
  6,586,195
  7,204,451
  7,849,137
  8,520,521
  9,219,053
  9,945,368
  10,700,278
Revenue / Adjusted assets
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
Average production assets, $m
  21,340
  32,970
  49,307
  71,542
  100,936
  138,764
  186,261
  244,573
  314,706
  397,499
  493,604
  603,478
  727,394
  865,456
  1,017,622
  1,183,739
  1,363,568
  1,556,819
  1,763,178
  1,982,336
  2,214,006
  2,457,946
  2,713,971
  2,981,966
  3,261,887
  3,553,775
  3,857,751
  4,174,018
  4,502,865
  4,844,658
Working capital, $m
  130
  201
  301
  436
  615
  846
  1,135
  1,491
  1,918
  2,423
  3,009
  3,679
  4,434
  5,276
  6,203
  7,216
  8,312
  9,490
  10,748
  12,084
  13,496
  14,984
  16,544
  18,178
  19,884
  21,664
  23,517
  25,445
  27,449
  29,533
Total debt, $m
  25,765
  46,572
  75,799
  115,578
  168,164
  235,839
  320,814
  425,135
  550,605
  698,724
  870,658
  1,067,226
  1,288,915
  1,535,911
  1,808,141
  2,105,328
  2,427,047
  2,772,778
  3,141,961
  3,534,040
  3,948,504
  4,384,919
  4,842,956
  5,322,405
  5,823,193
  6,345,388
  6,889,209
  7,455,020
  8,043,335
  8,654,812
Total liabilities, $m
  38,178
  58,985
  88,212
  127,991
  180,577
  248,252
  333,227
  437,548
  563,018
  711,137
  883,071
  1,079,639
  1,301,328
  1,548,324
  1,820,554
  2,117,741
  2,439,460
  2,785,191
  3,154,374
  3,546,453
  3,960,917
  4,397,332
  4,855,369
  5,334,818
  5,835,606
  6,357,801
  6,901,622
  7,467,433
  8,055,748
  8,667,225
Total equity, $m
  8,955
  13,836
  20,692
  30,023
  42,358
  58,232
  78,164
  102,635
  132,066
  166,810
  207,140
  253,249
  305,250
  363,187
  427,043
  496,754
  572,219
  653,316
  739,915
  831,884
  929,104
  1,031,473
  1,138,914
  1,251,377
  1,368,846
  1,491,336
  1,618,899
  1,751,620
  1,889,620
  2,033,053
Total liabilities and equity, $m
  47,133
  72,821
  108,904
  158,014
  222,935
  306,484
  411,391
  540,183
  695,084
  877,947
  1,090,211
  1,332,888
  1,606,578
  1,911,511
  2,247,597
  2,614,495
  3,011,679
  3,438,507
  3,894,289
  4,378,337
  4,890,021
  5,428,805
  5,994,283
  6,586,195
  7,204,452
  7,849,137
  8,520,521
  9,219,053
  9,945,368
  10,700,278
Debt-to-equity ratio
  2.880
  3.370
  3.660
  3.850
  3.970
  4.050
  4.100
  4.140
  4.170
  4.190
  4.200
  4.210
  4.220
  4.230
  4.230
  4.240
  4.240
  4.240
  4.250
  4.250
  4.250
  4.250
  4.250
  4.250
  4.250
  4.250
  4.260
  4.260
  4.260
  4.260
Adjusted equity ratio
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,573
  2,786
  4,465
  6,718
  9,653
  13,379
  17,994
  23,588
  30,234
  37,991
  47,716
  57,799
  69,067
  81,517
  95,135
  109,900
  125,787
  142,767
  160,814
  179,901
  200,007
  221,114
  243,212
  266,295
  290,365
  315,431
  341,509
  368,622
  396,799
  426,077
Depreciation, amort., depletion, $m
  1,943
  2,392
  3,023
  3,882
  5,017
  6,477
  8,311
  10,562
  13,270
  16,467
  19,058
  23,300
  28,085
  33,415
  39,290
  45,704
  52,647
  60,109
  68,076
  76,538
  85,483
  94,901
  104,787
  115,134
  125,942
  137,211
  148,948
  161,159
  173,856
  187,052
Funds from operations, $m
  3,517
  5,179
  7,488
  10,599
  14,670
  19,856
  26,305
  34,151
  43,505
  54,458
  66,774
  81,099
  97,152
  114,932
  134,425
  155,604
  178,434
  202,876
  228,890
  256,439
  285,490
  316,016
  347,998
  381,428
  416,306
  452,642
  490,457
  529,781
  570,655
  613,129
Change in working capital, $m
  49
  71
  100
  136
  179
  231
  290
  355
  428
  505
  586
  670
  755
  842
  928
  1,013
  1,096
  1,178
  1,258
  1,336
  1,412
  1,487
  1,561
  1,634
  1,706
  1,779
  1,853
  1,928
  2,005
  2,084
Cash from operations, $m
  3,468
  5,108
  7,389
  10,464
  14,490
  19,625
  26,016
  33,795
  43,077
  53,953
  66,188
  80,430
  96,396
  114,091
  133,498
  154,592
  177,338
  201,698
  227,632
  255,103
  284,078
  314,529
  346,438
  379,795
  414,600
  450,863
  488,604
  527,853
  568,650
  611,046
Maintenance CAPEX, $m
  -515
  -824
  -1,273
  -1,904
  -2,762
  -3,897
  -5,358
  -7,192
  -9,443
  -12,151
  -15,347
  -19,058
  -23,300
  -28,085
  -33,415
  -39,290
  -45,704
  -52,647
  -60,109
  -68,076
  -76,538
  -85,483
  -94,901
  -104,787
  -115,134
  -125,942
  -137,211
  -148,948
  -161,159
  -173,856
New CAPEX, $m
  -8,003
  -11,630
  -16,337
  -22,235
  -29,394
  -37,828
  -47,498
  -58,312
  -70,133
  -82,793
  -96,105
  -109,874
  -123,916
  -138,061
  -152,166
  -166,117
  -179,829
  -193,251
  -206,360
  -219,157
  -231,670
  -243,940
  -256,026
  -267,994
  -279,922
  -291,888
  -303,976
  -316,268
  -328,846
  -341,793
Cash from investing activities, $m
  -8,518
  -12,454
  -17,610
  -24,139
  -32,156
  -41,725
  -52,856
  -65,504
  -79,576
  -94,944
  -111,452
  -128,932
  -147,216
  -166,146
  -185,581
  -205,407
  -225,533
  -245,898
  -266,469
  -287,233
  -308,208
  -329,423
  -350,927
  -372,781
  -395,056
  -417,830
  -441,187
  -465,216
  -490,005
  -515,649
Free cash flow, $m
  -5,050
  -7,346
  -10,221
  -13,675
  -17,665
  -22,100
  -26,840
  -31,708
  -36,499
  -40,991
  -45,264
  -48,503
  -50,820
  -52,056
  -52,084
  -50,816
  -48,195
  -44,200
  -38,836
  -32,131
  -24,130
  -14,894
  -4,489
  7,014
  19,544
  33,033
  47,417
  62,637
  78,645
  95,397
Issuance/(repayment) of debt, $m
  14,288
  20,807
  29,227
  39,779
  52,586
  67,675
  84,975
  104,321
  125,470
  148,119
  171,934
  196,568
  221,689
  246,996
  272,230
  297,187
  321,719
  345,731
  369,183
  392,079
  414,464
  436,416
  458,037
  479,449
  500,788
  522,196
  543,821
  565,811
  588,315
  611,477
Issuance/(repurchase) of shares, $m
  1,795
  2,094
  2,391
  2,613
  2,682
  2,496
  1,938
  882
  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  
  16,083
  22,901
  31,618
  42,392
  55,268
  70,171
  86,913
  105,203
  125,470
  148,119
  171,934
  196,568
  221,689
  246,996
  272,230
  297,187
  321,719
  345,731
  369,183
  392,079
  414,464
  436,416
  458,037
  479,449
  500,788
  522,196
  543,821
  565,811
  588,315
  611,477
Total cash flow (excl. dividends), $m
  11,033
  15,555
  21,397
  28,718
  37,602
  48,071
  60,073
  73,495
  88,971
  107,129
  126,670
  148,065
  170,869
  194,940
  220,146
  246,372
  273,524
  301,531
  330,347
  359,948
  390,333
  421,521
  453,547
  486,463
  520,332
  555,229
  591,237
  628,448
  666,960
  706,874
Retained Cash Flow (-), $m
  -3,368
  -4,881
  -6,856
  -9,331
  -12,335
  -15,874
  -19,932
  -24,470
  -29,431
  -34,744
  -40,330
  -46,109
  -52,001
  -57,937
  -63,856
  -69,711
  -75,465
  -81,097
  -86,598
  -91,969
  -97,220
  -102,369
  -107,441
  -112,463
  -117,469
  -122,490
  -127,563
  -132,721
  -138,000
  -143,433
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
  7,665
  10,674
  14,541
  19,387
  25,268
  32,197
  40,141
  49,025
  59,540
  72,385
  86,340
  101,957
  118,868
  137,003
  156,289
  176,661
  198,059
  220,433
  243,748
  267,979
  293,113
  319,152
  346,107
  374,000
  402,863
  432,738
  463,674
  495,727
  528,960
  563,441
Discount rate, %
  9.60
  10.08
  10.58
  11.11
  11.67
  12.25
  12.86
  13.51
  14.18
  14.89
  15.64
  16.42
  17.24
  18.10
  19.01
  19.96
  20.96
  22.00
  23.10
  24.26
  25.47
  26.75
  28.08
  29.49
  30.96
  32.51
  34.13
  35.84
  37.63
  39.51
PV of cash for distribution, $m
  6,993
  8,809
  10,753
  12,719
  14,551
  16,093
  17,206
  17,791
  18,046
  18,060
  17,463
  16,448
  15,034
  13,339
  11,490
  9,609
  7,801
  6,146
  4,697
  3,480
  2,498
  1,736
  1,167
  758
  475
  287
  167
  93
  50
  26
Current shareholders' claim on cash, %
  85.9
  76.7
  70.5
  66.2
  63.3
  61.5
  60.5
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1
  60.1

Brookfield Infrastructure Partners L.P. owns and operates utilities, transport, energy and communications infrastructure businesses in North and South America, Europe and Asia Pacific. The Company's segments include utilities, transport, energy, communications infrastructure and other. The utilities segment consists of regulated businesses, including regulated distribution (electricity and natural gas connections), electricity transmission and a regulated terminal (coal export terminal). The transport segment consists of open access systems that provide transportation, storage and handling services for freight, bulk commodities and passengers. The Company's energy segment consists of systems that provide transportation, storage and distribution services. The Company's communications infrastructure segment provides services and infrastructure to the media broadcasting and telecommunication sectors.

FINANCIAL RATIOS  of  Brookfield Infrastructure Partners (BIP)

Valuation Ratios
P/E Ratio 27.5
Price to Sales 4.9
Price to Book 2
Price to Tangible Book
Price to Cash Flow 13.6
Price to Free Cash Flow 162.8
Growth Rates
Sales Growth Rate 14%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 32.7%
Cap. Spend. - 3 Yr. Gr. Rate 10.2%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 155.5%
Total Debt to Equity 166.9%
Interest Coverage 2
Management Effectiveness
Return On Assets 3.7%
Ret/ On Assets - 3 Yr. Avg. 3.2%
Return On Total Capital 3%
Ret/ On T. Cap. - 3 Yr. Avg. 2.2%
Return On Equity 8.2%
Return On Equity - 3 Yr. Avg. 6.1%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 49.7%
Gross Margin - 3 Yr. Avg. 54.3%
EBITDA Margin 64.1%
EBITDA Margin - 3 Yr. Avg. 58.8%
Operating Margin 20.8%
Oper. Margin - 3 Yr. Avg. 26.9%
Pre-Tax Margin 25.7%
Pre-Tax Margin - 3 Yr. Avg. 21%
Net Profit Margin 17.6%
Net Profit Margin - 3 Yr. Avg. 12.6%
Effective Tax Rate 2.8%
Eff/ Tax Rate - 3 Yr. Avg. 8.9%
Payout Ratio 145.8%

BIP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BIP stock intrinsic value calculation we used $3535 million for the last fiscal year's total revenue generated by Brookfield Infrastructure Partners. The default revenue input number comes from 0001 income statement of Brookfield Infrastructure Partners. 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 BIP 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 9.6%, whose default value for BIP is calculated based on our internal credit rating of Brookfield Infrastructure Partners, 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 Brookfield Infrastructure Partners.
    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 BIP stock the variable cost ratio is equal to 52.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $582 million in the base year in the intrinsic value calculation for BIP 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 Brookfield Infrastructure Partners.

Corporate tax rate of 27% is the nominal tax rate for Brookfield Infrastructure Partners. 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 BIP 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 BIP are equal to 377.3%.

Life of production assets of 25.9 years is the average useful life of capital assets used in Brookfield Infrastructure Partners 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 BIP is equal to 2.3%. 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 - $5587 million for Brookfield Infrastructure Partners - 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 276.573 million for Brookfield Infrastructure Partners 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 Brookfield Infrastructure Partners at the current share price and the inputted number of shares is $10.9 billion.

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