Intrinsic value of Delek Logistics Partners, L.P. - DKL

Previous Close

$30.45

  Intrinsic Value

$27.45

stock screener

  Rating & Target

hold

-10%

Previous close

$30.45

 
Intrinsic value

$27.45

 
Up/down potential

-10%

 
Rating

hold

We calculate the intrinsic value of DKL 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 0.7

 

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, %
  5.40
  5.36
  5.32
  5.29
  5.26
  5.24
  5.21
  5.19
  5.17
  5.15
  5.14
  5.13
  5.11
  5.10
  5.09
  5.08
  5.07
  5.07
  5.06
  5.05
  5.05
  5.04
  5.04
  5.04
  5.03
  5.03
  5.03
  5.02
  5.02
  5.02
Revenue, $m
  694
  731
  770
  810
  853
  898
  944
  993
  1,045
  1,099
  1,155
  1,214
  1,276
  1,342
  1,410
  1,482
  1,557
  1,636
  1,718
  1,805
  1,896
  1,992
  2,092
  2,198
  2,308
  2,424
  2,546
  2,674
  2,808
  2,949
Variable operating expenses, $m
  473
  498
  524
  550
  579
  608
  639
  671
  705
  740
  761
  800
  841
  884
  929
  976
  1,026
  1,077
  1,132
  1,189
  1,249
  1,312
  1,378
  1,448
  1,521
  1,597
  1,677
  1,762
  1,850
  1,943
Fixed operating expenses, $m
  86
  88
  90
  92
  94
  96
  98
  100
  102
  104
  107
  109
  111
  114
  116
  119
  122
  124
  127
  130
  133
  136
  139
  142
  145
  148
  151
  154
  158
  161
Total operating expenses, $m
  559
  586
  614
  642
  673
  704
  737
  771
  807
  844
  868
  909
  952
  998
  1,045
  1,095
  1,148
  1,201
  1,259
  1,319
  1,382
  1,448
  1,517
  1,590
  1,666
  1,745
  1,828
  1,916
  2,008
  2,104
Operating income, $m
  134
  145
  156
  168
  181
  194
  208
  222
  238
  254
  287
  305
  324
  344
  365
  387
  410
  434
  459
  486
  514
  544
  575
  608
  643
  679
  718
  758
  800
  845
EBITDA, $m
  180
  193
  206
  219
  234
  249
  265
  281
  299
  317
  336
  357
  378
  401
  425
  449
  476
  503
  532
  563
  595
  629
  664
  702
  741
  782
  826
  871
  920
  970
Interest expense (income), $m
  12
  51
  53
  55
  58
  60
  62
  65
  68
  70
  73
  77
  80
  83
  87
  91
  95
  99
  103
  108
  112
  117
  123
  128
  134
  140
  146
  153
  160
  167
  175
Earnings before tax, $m
  83
  92
  101
  111
  121
  132
  143
  155
  167
  180
  211
  226
  241
  257
  274
  292
  311
  331
  352
  374
  397
  422
  447
  474
  503
  533
  565
  598
  633
  670
Tax expense, $m
  22
  25
  27
  30
  33
  36
  39
  42
  45
  49
  57
  61
  65
  69
  74
  79
  84
  89
  95
  101
  107
  114
  121
  128
  136
  144
  152
  161
  171
  181
Net income, $m
  61
  67
  74
  81
  88
  96
  104
  113
  122
  132
  154
  165
  176
  188
  200
  213
  227
  242
  257
  273
  290
  308
  327
  346
  367
  389
  412
  437
  462
  489

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
  659
  694
  731
  770
  810
  852
  897
  943
  992
  1,043
  1,097
  1,153
  1,212
  1,274
  1,339
  1,407
  1,478
  1,553
  1,632
  1,714
  1,801
  1,892
  1,987
  2,087
  2,192
  2,302
  2,418
  2,540
  2,667
  2,801
Adjusted assets (=assets-cash), $m
  659
  694
  731
  770
  810
  852
  897
  943
  992
  1,043
  1,097
  1,153
  1,212
  1,274
  1,339
  1,407
  1,478
  1,553
  1,632
  1,714
  1,801
  1,892
  1,987
  2,087
  2,192
  2,302
  2,418
  2,540
  2,667
  2,801
Revenue / Adjusted assets
  1.053
  1.053
  1.053
  1.052
  1.053
  1.054
  1.052
  1.053
  1.053
  1.054
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
  1.053
Average production assets, $m
  350
  369
  389
  409
  431
  453
  477
  502
  528
  555
  583
  613
  645
  678
  712
  748
  786
  826
  868
  912
  958
  1,006
  1,057
  1,110
  1,166
  1,224
  1,286
  1,350
  1,418
  1,489
Working capital, $m
  -9
  -9
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -30
  -32
  -33
  -35
  -37
  -38
Total debt, $m
  729
  758
  789
  821
  855
  890
  927
  966
  1,006
  1,049
  1,093
  1,140
  1,189
  1,241
  1,295
  1,351
  1,411
  1,473
  1,538
  1,607
  1,679
  1,755
  1,834
  1,917
  2,004
  2,096
  2,192
  2,294
  2,400
  2,511
Total liabilities, $m
  548
  577
  608
  640
  674
  709
  746
  785
  826
  868
  913
  960
  1,009
  1,060
  1,114
  1,171
  1,230
  1,292
  1,358
  1,426
  1,498
  1,574
  1,653
  1,736
  1,824
  1,916
  2,012
  2,113
  2,219
  2,330
Total equity, $m
  111
  117
  123
  129
  136
  143
  151
  159
  167
  175
  184
  194
  204
  214
  225
  236
  248
  261
  274
  288
  303
  318
  334
  351
  368
  387
  406
  427
  448
  471
Total liabilities and equity, $m
  659
  694
  731
  769
  810
  852
  897
  944
  993
  1,043
  1,097
  1,154
  1,213
  1,274
  1,339
  1,407
  1,478
  1,553
  1,632
  1,714
  1,801
  1,892
  1,987
  2,087
  2,192
  2,303
  2,418
  2,540
  2,667
  2,801
Debt-to-equity ratio
  6.580
  6.500
  6.420
  6.350
  6.280
  6.210
  6.150
  6.090
  6.040
  5.980
  5.930
  5.880
  5.840
  5.800
  5.760
  5.720
  5.680
  5.640
  5.610
  5.580
  5.550
  5.520
  5.490
  5.470
  5.440
  5.420
  5.400
  5.380
  5.360
  5.340
Adjusted equity ratio
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  61
  67
  74
  81
  88
  96
  104
  113
  122
  132
  154
  165
  176
  188
  200
  213
  227
  242
  257
  273
  290
  308
  327
  346
  367
  389
  412
  437
  462
  489
Depreciation, amort., depletion, $m
  46
  48
  49
  51
  53
  55
  57
  59
  61
  63
  49
  52
  54
  57
  60
  63
  66
  69
  73
  77
  80
  85
  89
  93
  98
  103
  108
  113
  119
  125
Funds from operations, $m
  107
  115
  123
  132
  141
  151
  161
  172
  183
  195
  203
  216
  230
  245
  260
  276
  293
  311
  330
  350
  370
  392
  415
  440
  465
  492
  520
  550
  581
  614
Change in working capital, $m
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
Cash from operations, $m
  107
  115
  124
  132
  142
  151
  162
  172
  184
  196
  204
  217
  231
  245
  261
  277
  294
  312
  331
  351
  372
  394
  417
  441
  467
  494
  522
  552
  583
  616
Maintenance CAPEX, $m
  -28
  -29
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -44
  -47
  -49
  -52
  -54
  -57
  -60
  -63
  -66
  -69
  -73
  -77
  -80
  -85
  -89
  -93
  -98
  -103
  -108
  -113
  -119
New CAPEX, $m
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -51
  -53
  -56
  -59
  -62
  -65
  -68
  -71
Cash from investing activities, $m
  -46
  -48
  -51
  -54
  -56
  -59
  -62
  -65
  -68
  -71
  -76
  -79
  -83
  -87
  -91
  -96
  -101
  -106
  -111
  -117
  -123
  -128
  -136
  -142
  -149
  -157
  -165
  -173
  -181
  -190
Free cash flow, $m
  61
  67
  73
  79
  86
  93
  100
  108
  116
  124
  129
  138
  148
  158
  169
  181
  193
  206
  220
  234
  249
  265
  281
  299
  317
  337
  357
  379
  402
  426
Issuance/(repayment) of debt, $m
  28
  29
  31
  32
  34
  35
  37
  39
  41
  43
  45
  47
  49
  51
  54
  57
  59
  62
  65
  69
  72
  76
  79
  83
  87
  92
  96
  101
  106
  111
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  
  28
  29
  31
  32
  34
  35
  37
  39
  41
  43
  45
  47
  49
  51
  54
  57
  59
  62
  65
  69
  72
  76
  79
  83
  87
  92
  96
  101
  106
  111
Total cash flow (excl. dividends), $m
  90
  96
  104
  111
  119
  128
  137
  146
  156
  167
  173
  185
  197
  210
  223
  238
  253
  268
  285
  303
  321
  340
  361
  382
  405
  429
  454
  480
  508
  537
Retained Cash Flow (-), $m
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
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
  84
  90
  97
  105
  113
  121
  129
  138
  148
  158
  164
  175
  187
  199
  212
  226
  241
  256
  272
  289
  306
  325
  345
  365
  387
  410
  434
  460
  486
  515
Discount rate, %
  11.20
  11.76
  12.35
  12.97
  13.61
  14.29
  15.01
  15.76
  16.55
  17.37
  18.24
  19.16
  20.11
  21.12
  22.18
  23.28
  24.45
  25.67
  26.95
  28.30
  29.72
  31.20
  32.76
  34.40
  36.12
  37.93
  39.82
  41.81
  43.91
  46.10
PV of cash for distribution, $m
  75
  72
  69
  64
  59
  54
  49
  43
  37
  32
  26
  21
  17
  14
  11
  8
  6
  4
  3
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
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Delek Logistics Partners, LP owns and operates logistics and marketing assets for crude oil, and intermediate and refined products. The Company's business primarily consists of certain crude oil, intermediate and refined products pipelines and transportation, storage, wholesale marketing, terminaling and offloading assets, which were previously owned, operated or held by Delek US Holdings, Inc. (Delek), and assets acquired from unrelated third parties. The Company operates through two segments: Pipelines and Transportation segment, and Wholesale Marketing and Terminalling segment. The Company engaged in the gathering, transporting and storing crude oil; storing intermediate products and feed stocks, and marketing, distributing, transporting, offloading and storing refined products. The Company also provides crude oil, intermediate and refined products transportation services for terminaling, and marketing services to third parties primarily in Texas, Tennessee and Arkansas.

FINANCIAL RATIOS  of  Delek Logistics Partners, L.P. (DKL)

Valuation Ratios
P/E Ratio 11.8
Price to Sales 1.7
Price to Book -57
Price to Tangible Book
Price to Cash Flow 7.3
Price to Free Cash Flow 8.2
Growth Rates
Sales Growth Rate -24.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -45%
Cap. Spend. - 3 Yr. Gr. Rate -15.8%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 6
Management Effectiveness
Return On Assets 19%
Ret/ On Assets - 3 Yr. Avg. 21.6%
Return On Total Capital -525%
Ret/ On T. Cap. - 3 Yr. Avg. 13.5%
Return On Equity -525%
Return On Equity - 3 Yr. Avg. 13.5%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 32.1%
Gross Margin - 3 Yr. Avg. 25.2%
EBITDA Margin 21.4%
EBITDA Margin - 3 Yr. Avg. 16.2%
Operating Margin 17.4%
Oper. Margin - 3 Yr. Avg. 13.3%
Pre-Tax Margin 14.1%
Pre-Tax Margin - 3 Yr. Avg. 11.2%
Net Profit Margin 14.1%
Net Profit Margin - 3 Yr. Avg. 11.2%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 38.1%

DKL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DKL stock intrinsic value calculation we used $658 million for the last fiscal year's total revenue generated by Delek Logistics Partners, L.P.. The default revenue input number comes from 0001 income statement of Delek Logistics 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 DKL stock valuation model: a) initial revenue growth rate of 5.4% 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 11.2%, whose default value for DKL is calculated based on our internal credit rating of Delek Logistics 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 Delek Logistics 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 DKL stock the variable cost ratio is equal to 68.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $84 million in the base year in the intrinsic value calculation for DKL 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 7.3% for Delek Logistics Partners, L.P..

Corporate tax rate of 27% is the nominal tax rate for Delek Logistics 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 DKL 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 DKL are equal to 50.5%.

Life of production assets of 11.9 years is the average useful life of capital assets used in Delek Logistics 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 DKL is equal to -1.3%. 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 - $104.77 million for Delek Logistics 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 24.407 million for Delek Logistics 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 Delek Logistics Partners, L.P. at the current share price and the inputted number of shares is $0.7 billion.

RELATED COMPANIES Price Int.Val. Rating
DK Delek US Holdi 35.39 263.15  str.buy

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