Intrinsic value of Energy Transfer Partners - ETP

Previous Close

$19.01

  Intrinsic Value

$13.52

stock screener

  Rating & Target

sell

-29%

Previous close

$19.01

 
Intrinsic value

$13.52

 
Up/down potential

-29%

 
Rating

sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of ETP 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -12.73
  26.10
  23.99
  22.09
  20.38
  18.84
  17.46
  16.21
  15.09
  14.08
  13.17
  12.36
  11.62
  10.96
  10.36
  9.83
  9.34
  8.91
  8.52
  8.17
  7.85
  7.57
  7.31
  7.08
  6.87
  6.68
  6.51
  6.36
  6.23
  6.10
  5.99
Revenue, $m
  9,151
  11,539
  14,308
  17,468
  21,029
  24,991
  29,355
  34,114
  39,263
  44,792
  50,693
  56,957
  63,577
  70,544
  77,855
  85,506
  93,496
  101,826
  110,500
  119,525
  128,908
  138,660
  148,795
  159,326
  170,272
  181,651
  193,486
  205,798
  218,613
  231,957
  245,860
Variable operating expenses, $m
 
  10,849
  13,358
  16,223
  19,451
  23,042
  26,997
  31,311
  35,978
  40,990
  46,339
  51,627
  57,627
  63,942
  70,569
  77,504
  84,746
  92,297
  100,159
  108,339
  116,844
  125,684
  134,870
  144,416
  154,337
  164,651
  175,378
  186,538
  198,154
  210,249
  222,851
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
  8,336
  10,849
  13,358
  16,223
  19,451
  23,042
  26,997
  31,311
  35,978
  40,990
  46,339
  51,627
  57,627
  63,942
  70,569
  77,504
  84,746
  92,297
  100,159
  108,339
  116,844
  125,684
  134,870
  144,416
  154,337
  164,651
  175,378
  186,538
  198,154
  210,249
  222,851
Operating income, $m
  815
  690
  949
  1,245
  1,578
  1,949
  2,357
  2,803
  3,285
  3,802
  4,354
  5,330
  5,950
  6,602
  7,286
  8,002
  8,750
  9,529
  10,341
  11,186
  12,064
  12,977
  13,925
  14,911
  15,935
  17,000
  18,107
  19,260
  20,459
  21,708
  23,009
EBITDA, $m
  1,261
  2,488
  3,085
  3,767
  4,535
  5,389
  6,330
  7,357
  8,467
  9,660
  10,932
  12,283
  13,710
  15,213
  16,790
  18,440
  20,163
  21,959
  23,830
  25,776
  27,799
  29,902
  32,088
  34,359
  36,720
  39,174
  41,726
  44,381
  47,144
  50,022
  53,020
Interest expense (income), $m
  0
  1,140
  1,609
  2,152
  2,771
  3,468
  4,244
  5,098
  6,030
  7,039
  8,122
  9,277
  10,504
  11,800
  13,165
  14,597
  16,095
  17,660
  19,291
  20,990
  22,757
  24,595
  26,505
  28,489
  30,552
  32,696
  34,924
  37,242
  39,653
  42,162
  44,776
Earnings before tax, $m
  736
  -450
  -660
  -906
  -1,192
  -1,519
  -1,886
  -2,295
  -2,746
  -3,237
  -3,767
  -3,947
  -4,554
  -5,198
  -5,879
  -6,594
  -7,345
  -8,130
  -8,950
  -9,804
  -10,693
  -11,618
  -12,580
  -13,579
  -14,617
  -15,696
  -16,817
  -17,982
  -19,194
  -20,455
  -21,767
Tax expense, $m
  27
  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
Net income, $m
  705
  -450
  -660
  -906
  -1,192
  -1,519
  -1,886
  -2,295
  -2,746
  -3,237
  -3,767
  -3,947
  -4,554
  -5,198
  -5,879
  -6,594
  -7,345
  -8,130
  -8,950
  -9,804
  -10,693
  -11,618
  -12,580
  -13,579
  -14,617
  -15,696
  -16,817
  -17,982
  -19,194
  -20,455
  -21,767

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  360
  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
  70,191
  88,087
  109,219
  133,347
  160,525
  190,774
  224,082
  260,414
  299,716
  341,924
  386,971
  434,789
  485,318
  538,505
  594,313
  652,716
  713,707
  777,298
  843,515
  912,405
  984,031
  1,058,476
  1,135,837
  1,216,230
  1,299,786
  1,386,652
  1,476,989
  1,570,974
  1,668,798
  1,770,666
  1,876,796
Adjusted assets (=assets-cash), $m
  69,831
  88,087
  109,219
  133,347
  160,525
  190,774
  224,082
  260,414
  299,716
  341,924
  386,971
  434,789
  485,318
  538,505
  594,313
  652,716
  713,707
  777,298
  843,515
  912,405
  984,031
  1,058,476
  1,135,837
  1,216,230
  1,299,786
  1,386,652
  1,476,989
  1,570,974
  1,668,798
  1,770,666
  1,876,796
Revenue / Adjusted assets
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
Average production assets, $m
  33,512
  42,257
  52,395
  63,969
  77,008
  91,519
  107,497
  124,926
  143,780
  164,028
  185,639
  208,578
  232,818
  258,333
  285,105
  313,122
  342,381
  372,887
  404,653
  437,701
  472,061
  507,774
  544,886
  583,452
  623,536
  665,207
  708,544
  753,631
  800,559
  849,427
  900,341
Working capital, $m
  -474
  450
  558
  681
  820
  975
  1,145
  1,330
  1,531
  1,747
  1,977
  2,221
  2,479
  2,751
  3,036
  3,335
  3,646
  3,971
  4,310
  4,661
  5,027
  5,408
  5,803
  6,214
  6,641
  7,084
  7,546
  8,026
  8,526
  9,046
  9,589
Total debt, $m
  32,930
  45,982
  61,472
  79,157
  99,079
  121,252
  145,666
  172,297
  201,105
  232,044
  265,064
  300,115
  337,152
  376,138
  417,045
  459,855
  504,562
  551,173
  599,710
  650,207
  702,709
  757,277
  813,983
  872,911
  934,157
  997,830
  1,064,047
  1,132,938
  1,204,643
  1,279,312
  1,357,106
Total liabilities, $m
  51,516
  64,568
  80,058
  97,743
  117,665
  139,838
  164,252
  190,883
  219,691
  250,630
  283,650
  318,701
  355,738
  394,724
  435,631
  478,441
  523,148
  569,759
  618,296
  668,793
  721,295
  775,863
  832,569
  891,497
  952,743
  1,016,416
  1,082,633
  1,151,524
  1,223,229
  1,297,898
  1,375,692
Total equity, $m
  18,675
  23,519
  29,162
  35,604
  42,860
  50,937
  59,830
  69,530
  80,024
  91,294
  103,321
  116,089
  129,580
  143,781
  158,681
  174,275
  190,560
  207,539
  225,218
  243,612
  262,736
  282,613
  303,269
  324,733
  347,043
  370,236
  394,356
  419,450
  445,569
  472,768
  501,105
Total liabilities and equity, $m
  70,191
  88,087
  109,220
  133,347
  160,525
  190,775
  224,082
  260,413
  299,715
  341,924
  386,971
  434,790
  485,318
  538,505
  594,312
  652,716
  713,708
  777,298
  843,514
  912,405
  984,031
  1,058,476
  1,135,838
  1,216,230
  1,299,786
  1,386,652
  1,476,989
  1,570,974
  1,668,798
  1,770,666
  1,876,797
Debt-to-equity ratio
  1.763
  1.960
  2.110
  2.220
  2.310
  2.380
  2.430
  2.480
  2.510
  2.540
  2.570
  2.590
  2.600
  2.620
  2.630
  2.640
  2.650
  2.660
  2.660
  2.670
  2.670
  2.680
  2.680
  2.690
  2.690
  2.700
  2.700
  2.700
  2.700
  2.710
  2.710
Adjusted equity ratio
  0.262
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  705
  -450
  -660
  -906
  -1,192
  -1,519
  -1,886
  -2,295
  -2,746
  -3,237
  -3,767
  -3,947
  -4,554
  -5,198
  -5,879
  -6,594
  -7,345
  -8,130
  -8,950
  -9,804
  -10,693
  -11,618
  -12,580
  -13,579
  -14,617
  -15,696
  -16,817
  -17,982
  -19,194
  -20,455
  -21,767
Depreciation, amort., depletion, $m
  446
  1,798
  2,136
  2,522
  2,957
  3,440
  3,973
  4,554
  5,182
  5,857
  6,578
  6,953
  7,761
  8,611
  9,503
  10,437
  11,413
  12,430
  13,488
  14,590
  15,735
  16,926
  18,163
  19,448
  20,785
  22,174
  23,618
  25,121
  26,685
  28,314
  30,011
Funds from operations, $m
  790
  1,349
  1,476
  1,616
  1,764
  1,922
  2,087
  2,258
  2,437
  2,621
  2,811
  3,006
  3,206
  3,413
  3,625
  3,843
  4,068
  4,299
  4,539
  4,786
  5,042
  5,308
  5,583
  5,870
  6,168
  6,478
  6,802
  7,139
  7,491
  7,860
  8,244
Change in working capital, $m
  -98
  93
  108
  123
  139
  155
  170
  186
  201
  216
  230
  244
  258
  272
  285
  298
  312
  325
  338
  352
  366
  380
  395
  411
  427
  444
  462
  480
  500
  520
  542
Cash from operations, $m
  888
  1,255
  1,368
  1,492
  1,626
  1,767
  1,916
  2,073
  2,236
  2,405
  2,580
  2,761
  2,948
  3,141
  3,340
  3,545
  3,756
  3,974
  4,200
  4,434
  4,676
  4,927
  5,188
  5,459
  5,741
  6,034
  6,340
  6,659
  6,992
  7,339
  7,702
Maintenance CAPEX, $m
  0
  -1,117
  -1,409
  -1,746
  -2,132
  -2,567
  -3,051
  -3,583
  -4,164
  -4,793
  -5,468
  -6,188
  -6,953
  -7,761
  -8,611
  -9,503
  -10,437
  -11,413
  -12,430
  -13,488
  -14,590
  -15,735
  -16,926
  -18,163
  -19,448
  -20,785
  -22,174
  -23,618
  -25,121
  -26,685
  -28,314
New CAPEX, $m
  -1,949
  -8,746
  -10,138
  -11,575
  -13,038
  -14,511
  -15,979
  -17,429
  -18,854
  -20,248
  -21,610
  -22,940
  -24,240
  -25,515
  -26,772
  -28,017
  -29,259
  -30,506
  -31,766
  -33,048
  -34,361
  -35,713
  -37,112
  -38,566
  -40,084
  -41,671
  -43,337
  -45,087
  -46,928
  -48,868
  -50,913
Cash from investing activities, $m
  -3,038
  -9,863
  -11,547
  -13,321
  -15,170
  -17,078
  -19,030
  -21,012
  -23,018
  -25,041
  -27,078
  -29,128
  -31,193
  -33,276
  -35,383
  -37,520
  -39,696
  -41,919
  -44,196
  -46,536
  -48,951
  -51,448
  -54,038
  -56,729
  -59,532
  -62,456
  -65,511
  -68,705
  -72,049
  -75,553
  -79,227
Free cash flow, $m
  -2,150
  -8,607
  -10,178
  -11,829
  -13,545
  -15,311
  -17,113
  -18,939
  -20,782
  -22,636
  -24,497
  -26,366
  -28,244
  -30,135
  -32,043
  -33,976
  -35,940
  -37,944
  -39,995
  -42,102
  -44,275
  -46,521
  -48,850
  -51,270
  -53,791
  -56,422
  -59,170
  -62,046
  -65,058
  -68,214
  -71,525
Issuance/(repayment) of debt, $m
  1,729
  13,412
  15,490
  17,686
  19,922
  22,172
  24,415
  26,631
  28,808
  30,939
  33,019
  35,051
  37,037
  38,986
  40,907
  42,809
  44,707
  46,612
  48,537
  50,496
  52,502
  54,568
  56,706
  58,928
  61,247
  63,673
  66,217
  68,891
  71,705
  74,669
  77,794
Issuance/(repurchase) of shares, $m
  1,388
  5,294
  6,302
  7,348
  8,449
  9,595
  10,780
  11,996
  13,239
  14,506
  15,795
  16,714
  18,045
  19,399
  20,779
  22,188
  23,630
  25,109
  26,630
  28,198
  29,818
  31,495
  33,235
  35,044
  36,926
  38,889
  40,937
  43,076
  45,313
  47,653
  50,104
Cash from financing (excl. dividends), $m  
  3,115
  18,706
  21,792
  25,034
  28,371
  31,767
  35,195
  38,627
  42,047
  45,445
  48,814
  51,765
  55,082
  58,385
  61,686
  64,997
  68,337
  71,721
  75,167
  78,694
  82,320
  86,063
  89,941
  93,972
  98,173
  102,562
  107,154
  111,967
  117,018
  122,322
  127,898
Total cash flow (excl. dividends), $m
  965
  10,098
  11,614
  13,205
  14,826
  16,457
  18,082
  19,687
  21,265
  22,809
  24,317
  25,399
  26,839
  28,251
  29,643
  31,021
  32,396
  33,777
  35,172
  36,592
  38,045
  39,542
  41,091
  42,702
  44,382
  46,140
  47,983
  49,921
  51,960
  54,108
  56,372
Retained Cash Flow (-), $m
  -10,868
  -5,294
  -6,302
  -7,348
  -8,449
  -9,595
  -10,780
  -11,996
  -13,239
  -14,506
  -15,795
  -16,714
  -18,045
  -19,399
  -20,779
  -22,188
  -23,630
  -25,109
  -26,630
  -28,198
  -29,818
  -31,495
  -33,235
  -35,044
  -36,926
  -38,889
  -40,937
  -43,076
  -45,313
  -47,653
  -50,104
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
 
  4,804
  5,312
  5,857
  6,377
  6,862
  7,302
  7,692
  8,026
  8,303
  8,522
  8,685
  8,793
  8,852
  8,863
  8,833
  8,766
  8,668
  8,542
  8,394
  8,228
  8,047
  7,856
  7,658
  7,455
  7,251
  7,047
  6,845
  6,647
  6,455
  6,269
Discount rate, %
 
  10.90
  11.45
  12.02
  12.62
  13.25
  13.91
  14.61
  15.34
  16.10
  16.91
  17.75
  18.64
  19.57
  20.55
  21.58
  22.66
  23.79
  24.98
  26.23
  27.54
  28.92
  30.37
  31.89
  33.48
  35.15
  36.91
  38.76
  40.69
  42.73
  44.87
PV of cash for distribution, $m
 
  4,332
  4,277
  4,167
  3,964
  3,683
  3,342
  2,962
  2,563
  2,166
  1,787
  1,439
  1,130
  866
  647
  471
  334
  230
  154
  100
  63
  39
  23
  13
  7
  4
  2
  1
  0
  0
  0
Current shareholders' claim on cash, %
  100
  80.7
  65.8
  54.2
  45.2
  38.0
  32.2
  27.5
  23.7
  20.6
  17.9
  15.8
  13.9
  12.4
  11.0
  9.9
  8.9
  8.0
  7.2
  6.5
  5.9
  5.3
  4.9
  4.4
  4.0
  3.7
  3.4
  3.1
  2.8
  2.6
  2.4

Energy Transfer Partners, L.P., formerly Sunoco Logistics Partners L.P., owns and operates a logistics business. The Company is engaged in the transport, terminaling and storage of crude oil, refined products and natural gas liquids (NGLs). The Company's segments include Crude Oil, Natural Gas Liquids and Refined Products. In addition to logistics services, it also owns acquisition and marketing assets. The Crude Oil segment provides transportation, terminaling and acquisition and marketing services to crude oil markets throughout the southwest, midwest and northeastern United States. The Natural Gas Liquids segment transports, stores, and executes acquisition and marketing activities utilizing a network of pipelines, storage and blending facilities, and strategic off-take locations that provide access to multiple NGL markets. The Refined Products segment provides transportation and terminaling services, using refined products pipelines and refined products marketing terminals.

FINANCIAL RATIOS  of  Energy Transfer Partners (ETP)

Valuation Ratios
P/E Ratio 21.4
Price to Sales 1.7
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 17
Price to Free Cash Flow -14.2
Growth Rates
Sales Growth Rate -12.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -28%
Cap. Spend. - 3 Yr. Gr. Rate 16.8%
Financial Strength
Quick Ratio 0
Current Ratio 0.1
LT Debt to Equity 170%
Total Debt to Equity 176.3%
Interest Coverage 0
Management Effectiveness
Return On Assets 1.6%
Ret/ On Assets - 3 Yr. Avg. 2.2%
Return On Total Capital 2.2%
Ret/ On T. Cap. - 3 Yr. Avg. 2.8%
Return On Equity 5.3%
Return On Equity - 3 Yr. Avg. 5.1%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 14.4%
Gross Margin - 3 Yr. Avg. 11.5%
EBITDA Margin 12.9%
EBITDA Margin - 3 Yr. Avg. 8%
Operating Margin 8.9%
Oper. Margin - 3 Yr. Avg. 5.3%
Pre-Tax Margin 8%
Pre-Tax Margin - 3 Yr. Avg. 4.6%
Net Profit Margin 7.7%
Net Profit Margin - 3 Yr. Avg. 4.4%
Effective Tax Rate 3.7%
Eff/ Tax Rate - 3 Yr. Avg. 5.5%
Payout Ratio 136.3%

ETP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ETP stock intrinsic value calculation we used $9151 million for the last fiscal year's total revenue generated by Energy Transfer Partners. The default revenue input number comes from 2016 income statement of Energy Transfer 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 ETP stock valuation model: a) initial revenue growth rate of 26.1% 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 10.9%, whose default value for ETP is calculated based on our internal credit rating of Energy Transfer 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 Energy Transfer 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 ETP stock the variable cost ratio is equal to 94.9%.

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 ETP 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 3.5% for Energy Transfer Partners.

Corporate tax rate of 27% is the nominal tax rate for Energy Transfer 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 ETP 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 ETP are equal to 366.2%.

Life of production assets of 81 years is the average useful life of capital assets used in Energy Transfer 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 ETP is equal to 3.9%. 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 - $18675 million for Energy Transfer 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 1161.83 million for Energy Transfer 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 Energy Transfer Partners at the current share price and the inputted number of shares is $22.1 billion.

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Financial statements of ETP
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