Intrinsic value of Capital Product Partners - CPLP

Previous Close

$3.01

  Intrinsic Value

$1.88

stock screener

  Rating & Target

sell

-38%

Previous close

$3.01

 
Intrinsic value

$1.88

 
Up/down potential

-38%

 
Rating

sell

We calculate the intrinsic value of CPLP 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 0.4

 

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, %
  3.10
  3.29
  3.46
  3.61
  3.75
  3.88
  3.99
  4.09
  4.18
  4.26
  4.34
  4.40
  4.46
  4.52
  4.57
  4.61
  4.65
  4.68
  4.71
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
  4.91
Revenue, $m
  257
  265
  274
  284
  295
  306
  319
  332
  345
  360
  376
  392
  410
  428
  448
  469
  490
  513
  538
  563
  590
  618
  648
  679
  712
  747
  783
  822
  862
  904
Variable operating expenses, $m
  176
  182
  188
  195
  202
  210
  219
  227
  237
  247
  258
  269
  281
  294
  307
  321
  336
  352
  369
  386
  405
  424
  445
  466
  489
  512
  537
  564
  591
  620
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
  176
  182
  188
  195
  202
  210
  219
  227
  237
  247
  258
  269
  281
  294
  307
  321
  336
  352
  369
  386
  405
  424
  445
  466
  489
  512
  537
  564
  591
  620
Operating income, $m
  81
  83
  86
  89
  93
  96
  100
  104
  108
  113
  118
  123
  129
  135
  141
  147
  154
  161
  169
  177
  185
  194
  203
  213
  224
  235
  246
  258
  271
  284
EBITDA, $m
  216
  223
  231
  239
  248
  258
  268
  279
  291
  303
  317
  331
  345
  361
  377
  395
  413
  433
  453
  474
  497
  521
  546
  572
  600
  629
  660
  692
  726
  762
Interest expense (income), $m
  24
  25
  25
  26
  27
  29
  30
  31
  32
  34
  36
  37
  39
  41
  43
  45
  47
  50
  52
  55
  58
  61
  64
  67
  70
  74
  78
  82
  86
  90
  95
Earnings before tax, $m
  56
  58
  60
  62
  64
  66
  69
  72
  75
  78
  81
  84
  88
  92
  96
  100
  104
  109
  114
  119
  125
  130
  136
  143
  150
  157
  164
  172
  180
  189
Tax expense, $m
  15
  16
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  34
  35
  37
  39
  40
  42
  44
  46
  49
  51
Net income, $m
  41
  42
  44
  45
  47
  49
  50
  52
  54
  57
  59
  61
  64
  67
  70
  73
  76
  80
  83
  87
  91
  95
  100
  104
  109
  114
  120
  126
  132
  138

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
  1,510
  1,560
  1,614
  1,672
  1,735
  1,802
  1,874
  1,951
  2,032
  2,119
  2,211
  2,308
  2,411
  2,520
  2,635
  2,757
  2,885
  3,020
  3,162
  3,312
  3,470
  3,637
  3,812
  3,996
  4,190
  4,393
  4,608
  4,833
  5,070
  5,319
Adjusted assets (=assets-cash), $m
  1,510
  1,560
  1,614
  1,672
  1,735
  1,802
  1,874
  1,951
  2,032
  2,119
  2,211
  2,308
  2,411
  2,520
  2,635
  2,757
  2,885
  3,020
  3,162
  3,312
  3,470
  3,637
  3,812
  3,996
  4,190
  4,393
  4,608
  4,833
  5,070
  5,319
Revenue / Adjusted assets
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
Average production assets, $m
  1,357
  1,401
  1,450
  1,502
  1,559
  1,619
  1,684
  1,753
  1,826
  1,904
  1,986
  2,074
  2,166
  2,264
  2,368
  2,477
  2,592
  2,713
  2,841
  2,976
  3,118
  3,267
  3,425
  3,590
  3,764
  3,947
  4,140
  4,342
  4,555
  4,778
Working capital, $m
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -50
  -53
  -55
  -58
  -61
  -64
  -67
Total debt, $m
  469
  487
  507
  528
  551
  575
  601
  629
  659
  690
  724
  759
  796
  836
  878
  922
  968
  1,017
  1,069
  1,123
  1,181
  1,241
  1,305
  1,372
  1,442
  1,516
  1,594
  1,675
  1,761
  1,852
Total liabilities, $m
  548
  566
  586
  607
  630
  654
  680
  708
  738
  769
  803
  838
  875
  915
  957
  1,001
  1,047
  1,096
  1,148
  1,202
  1,260
  1,320
  1,384
  1,450
  1,521
  1,595
  1,673
  1,754
  1,840
  1,931
Total equity, $m
  962
  994
  1,028
  1,065
  1,105
  1,148
  1,194
  1,243
  1,295
  1,350
  1,408
  1,470
  1,536
  1,605
  1,679
  1,756
  1,838
  1,924
  2,014
  2,110
  2,211
  2,317
  2,428
  2,545
  2,669
  2,799
  2,935
  3,079
  3,229
  3,388
Total liabilities and equity, $m
  1,510
  1,560
  1,614
  1,672
  1,735
  1,802
  1,874
  1,951
  2,033
  2,119
  2,211
  2,308
  2,411
  2,520
  2,636
  2,757
  2,885
  3,020
  3,162
  3,312
  3,471
  3,637
  3,812
  3,995
  4,190
  4,394
  4,608
  4,833
  5,069
  5,319
Debt-to-equity ratio
  0.490
  0.490
  0.490
  0.500
  0.500
  0.500
  0.500
  0.510
  0.510
  0.510
  0.510
  0.520
  0.520
  0.520
  0.520
  0.520
  0.530
  0.530
  0.530
  0.530
  0.530
  0.540
  0.540
  0.540
  0.540
  0.540
  0.540
  0.540
  0.550
  0.550
Adjusted equity ratio
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  41
  42
  44
  45
  47
  49
  50
  52
  54
  57
  59
  61
  64
  67
  70
  73
  76
  80
  83
  87
  91
  95
  100
  104
  109
  114
  120
  126
  132
  138
Depreciation, amort., depletion, $m
  136
  140
  145
  150
  156
  162
  168
  175
  183
  190
  199
  207
  217
  226
  237
  248
  259
  271
  284
  298
  312
  327
  342
  359
  376
  395
  414
  434
  455
  478
Funds from operations, $m
  177
  182
  189
  195
  203
  210
  219
  228
  237
  247
  258
  269
  281
  293
  306
  320
  335
  351
  367
  385
  403
  422
  442
  463
  486
  509
  534
  560
  587
  616
Change in working capital, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
Cash from operations, $m
  177
  183
  189
  196
  203
  211
  220
  229
  238
  248
  259
  270
  282
  295
  308
  322
  337
  353
  369
  386
  405
  424
  444
  466
  488
  512
  536
  563
  590
  619
Maintenance CAPEX, $m
  -132
  -136
  -140
  -145
  -150
  -156
  -162
  -168
  -175
  -183
  -190
  -199
  -207
  -217
  -226
  -237
  -248
  -259
  -271
  -284
  -298
  -312
  -327
  -342
  -359
  -376
  -395
  -414
  -434
  -455
New CAPEX, $m
  -40
  -45
  -49
  -52
  -56
  -60
  -65
  -69
  -73
  -78
  -83
  -87
  -93
  -98
  -103
  -109
  -115
  -121
  -128
  -135
  -142
  -149
  -157
  -165
  -174
  -183
  -193
  -202
  -213
  -224
Cash from investing activities, $m
  -172
  -181
  -189
  -197
  -206
  -216
  -227
  -237
  -248
  -261
  -273
  -286
  -300
  -315
  -329
  -346
  -363
  -380
  -399
  -419
  -440
  -461
  -484
  -507
  -533
  -559
  -588
  -616
  -647
  -679
Free cash flow, $m
  5
  3
  1
  -1
  -3
  -5
  -7
  -9
  -11
  -12
  -14
  -16
  -18
  -20
  -22
  -24
  -26
  -28
  -30
  -32
  -35
  -37
  -40
  -42
  -45
  -48
  -51
  -54
  -57
  -60
Issuance/(repayment) of debt, $m
  15
  18
  20
  21
  23
  24
  26
  28
  30
  31
  33
  35
  37
  40
  42
  44
  47
  49
  52
  54
  57
  60
  64
  67
  70
  74
  78
  82
  86
  90
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  2
  3
  4
  5
  6
  7
  8
  9
  10
  11
  12
  13
  14
  15
  17
  18
  19
  21
Cash from financing (excl. dividends), $m  
  15
  18
  20
  21
  23
  24
  26
  28
  30
  31
  33
  36
  39
  43
  46
  49
  53
  56
  60
  63
  67
  71
  76
  80
  84
  89
  95
  100
  105
  111
Total cash flow (excl. dividends), $m
  20
  21
  20
  20
  20
  19
  19
  19
  19
  19
  19
  20
  21
  22
  23
  25
  26
  28
  29
  31
  32
  34
  36
  38
  40
  42
  44
  46
  48
  51
Retained Cash Flow (-), $m
  -29
  -32
  -34
  -37
  -40
  -43
  -46
  -49
  -52
  -55
  -59
  -62
  -66
  -69
  -73
  -77
  -82
  -86
  -91
  -96
  -101
  -106
  -111
  -117
  -123
  -130
  -136
  -144
  -151
  -159
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
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
Cash available for distribution, $m
  -9
  -11
  -14
  -17
  -20
  -23
  -27
  -30
  -33
  -36
  -39
  -42
  -45
  -47
  -50
  -53
  -55
  -59
  -62
  -65
  -68
  -72
  -76
  -80
  -84
  -88
  -93
  -98
  -103
  -108
Discount rate, %
  5.40
  5.67
  5.95
  6.25
  6.56
  6.89
  7.24
  7.60
  7.98
  8.38
  8.80
  9.24
  9.70
  10.18
  10.69
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.04
  15.80
  16.59
  17.42
  18.29
  19.20
  20.16
  21.17
  22.23
PV of cash for distribution, $m
  -8
  -10
  -12
  -14
  -15
  -16
  -16
  -17
  -16
  -16
  -16
  -15
  -13
  -12
  -11
  -10
  -8
  -7
  -6
  -5
  -4
  -3
  -3
  -2
  -2
  -1
  -1
  -1
  0
  0
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
  99.9
  99.8
  99.5
  99.2
  98.9
  98.4
  97.9
  97.4
  96.8
  96.1
  95.5
  94.8
  94.1
  93.3
  92.5
  91.8
  91.0
  90.2
  89.3

Capital Product Partners L.P. is an international owner of tanker, container and drybulk vessels. The Company's fleet consisted of 36 high specification vessels with an average age of approximately 7.4 years, as of December 31, 2016. As of December 31, 2016, its fleet consisted of four Suezmax crude oil tankers, 21 medium range product tankers, 10 post-panamax container carrier vessels and one Capesize bulk carrier. The Company's vessels are capable of carrying a range of cargoes, including crude oil, refined oil products, such as gasoline, diesel, fuel oil and jet fuel, edible oils and certain chemicals, such as ethanol, as well as dry cargo and containerized goods. Its fleet consists of product tankers, such as Aktoras, Aiolos, Agisilaos, Akeraios and Apostolos; crude tankers, such as Amoureux, Aias, Amore Mio II and Miltiadis M II; drybulk vessels, such as Cape Agamemnon, and container carrier vessels, such as Archimidis, Agamemnon and Hyundai Platinum.

FINANCIAL RATIOS  of  Capital Product Partners (CPLP)

Valuation Ratios
P/E Ratio 7.1
Price to Sales 1.5
Price to Book 0.4
Price to Tangible Book
Price to Cash Flow 2.4
Price to Free Cash Flow 5.7
Growth Rates
Sales Growth Rate 10%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -56.3%
Cap. Spend. - 3 Yr. Gr. Rate -24.2%
Financial Strength
Quick Ratio 3
Current Ratio 0
LT Debt to Equity 60.6%
Total Debt to Equity 64.9%
Interest Coverage 3
Management Effectiveness
Return On Assets 4.8%
Ret/ On Assets - 3 Yr. Avg. 4.6%
Return On Total Capital 3.4%
Ret/ On T. Cap. - 3 Yr. Avg. 3.4%
Return On Equity 5.6%
Return On Equity - 3 Yr. Avg. 5.7%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 95.5%
Gross Margin - 3 Yr. Avg. 96.4%
EBITDA Margin 67.4%
EBITDA Margin - 3 Yr. Avg. 68.3%
Operating Margin 31.4%
Oper. Margin - 3 Yr. Avg. 32.1%
Pre-Tax Margin 21.5%
Pre-Tax Margin - 3 Yr. Avg. 23.1%
Net Profit Margin 21.5%
Net Profit Margin - 3 Yr. Avg. 23.1%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 130.8%

CPLP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CPLP stock intrinsic value calculation we used $249 million for the last fiscal year's total revenue generated by Capital Product Partners. The default revenue input number comes from 2017 income statement of Capital Product 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 CPLP stock valuation model: a) initial revenue growth rate of 3.1% 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 5.4%, whose default value for CPLP is calculated based on our internal credit rating of Capital Product 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 Capital Product 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 CPLP stock the variable cost ratio is equal to 68.6%.

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 CPLP 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 Capital Product Partners.

Corporate tax rate of 27% is the nominal tax rate for Capital Product 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 CPLP stock is equal to 0.5%.

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 CPLP are equal to 528.5%.

Life of production assets of 10 years is the average useful life of capital assets used in Capital Product 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 CPLP is equal to -7.4%. 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 - $933 million for Capital Product 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 124 million for Capital Product 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 Capital Product Partners at the current share price and the inputted number of shares is $0.4 billion.

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COMPANY NEWS

▶ Seadrill Partners And Other Great Cheap Energy Stocks   [May-08-18 09:02AM  Simply Wall St.]
▶ Capital Product Partners L.P. Announces Cash Distribution   [Apr-18-18 04:05PM  GlobeNewswire]
▶ April Undervalued Energy Stocks To Look Out For   [Apr-03-18 09:02AM  Simply Wall St.]
▶ Capital Product Partners L.P. Announces Cash Distribution   [Jan-17-18 04:05PM  GlobeNewswire]
▶ The Biggest MLP Losses Last Week   [Sep-18-17 01:00PM  Market Realist]
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