Intrinsic value of Green Plains Partners LP - GPP

Previous Close

$15.99

  Intrinsic Value

$13.95

stock screener

  Rating & Target

hold

-13%

Previous close

$15.99

 
Intrinsic value

$13.95

 
Up/down potential

-13%

 
Rating

hold

We calculate the intrinsic value of GPP 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 0.4

 

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  103
  105
  108
  111
  115
  118
  122
  127
  131
  136
  142
  147
  154
  160
  167
  174
  182
  190
  199
  208
  218
  228
  239
  250
  262
  274
  287
  301
  316
  331
Variable operating expenses, $m
  41
  42
  43
  44
  45
  46
  48
  49
  51
  53
  50
  52
  55
  57
  59
  62
  65
  68
  71
  74
  77
  81
  85
  89
  93
  97
  102
  107
  112
  118
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
  41
  42
  43
  44
  45
  46
  48
  49
  51
  53
  50
  52
  55
  57
  59
  62
  65
  68
  71
  74
  77
  81
  85
  89
  93
  97
  102
  107
  112
  118
Operating income, $m
  62
  64
  66
  68
  70
  72
  75
  77
  81
  84
  91
  95
  99
  103
  108
  112
  117
  123
  128
  134
  140
  147
  154
  161
  169
  177
  185
  194
  204
  214
EBITDA, $m
  71
  72
  74
  76
  78
  81
  84
  87
  90
  93
  97
  101
  105
  110
  114
  119
  125
  130
  136
  143
  149
  156
  163
  171
  179
  188
  197
  206
  216
  227
Interest expense (income), $m
  2
  8
  8
  8
  8
  8
  8
  8
  8
  9
  9
  9
  9
  9
  10
  10
  10
  10
  11
  11
  11
  12
  12
  12
  13
  13
  14
  14
  15
  15
  16
Earnings before tax, $m
  55
  56
  58
  60
  62
  64
  66
  69
  72
  75
  82
  86
  90
  94
  98
  102
  107
  112
  117
  123
  129
  135
  141
  148
  156
  163
  171
  180
  189
  198
Tax expense, $m
  15
  15
  16
  16
  17
  17
  18
  19
  19
  20
  22
  23
  24
  25
  26
  28
  29
  30
  32
  33
  35
  36
  38
  40
  42
  44
  46
  49
  51
  53
Net income, $m
  40
  41
  42
  44
  45
  47
  48
  50
  52
  55
  60
  63
  65
  68
  71
  75
  78
  82
  86
  90
  94
  98
  103
  108
  114
  119
  125
  131
  138
  144

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
  83
  85
  87
  89
  92
  95
  98
  102
  105
  109
  114
  118
  123
  129
  134
  140
  146
  153
  160
  167
  175
  183
  192
  201
  210
  220
  231
  242
  254
  266
Adjusted assets (=assets-cash), $m
  83
  85
  87
  89
  92
  95
  98
  102
  105
  109
  114
  118
  123
  129
  134
  140
  146
  153
  160
  167
  175
  183
  192
  201
  210
  220
  231
  242
  254
  266
Revenue / Adjusted assets
  1.241
  1.235
  1.241
  1.247
  1.250
  1.242
  1.245
  1.245
  1.248
  1.248
  1.246
  1.246
  1.252
  1.240
  1.246
  1.243
  1.247
  1.242
  1.244
  1.246
  1.246
  1.246
  1.245
  1.244
  1.248
  1.245
  1.242
  1.244
  1.244
  1.244
Average production assets, $m
  51
  52
  53
  55
  57
  58
  60
  63
  65
  67
  70
  73
  76
  79
  82
  86
  90
  94
  98
  103
  108
  113
  118
  123
  129
  136
  142
  149
  156
  164
Working capital, $m
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  12
  13
  14
  14
  15
  16
  16
  17
  18
  19
  19
  20
  21
  22
  24
  25
  26
Total debt, $m
  143
  145
  147
  149
  151
  154
  157
  160
  163
  166
  170
  174
  178
  183
  187
  192
  198
  203
  209
  216
  222
  229
  236
  244
  252
  261
  270
  280
  290
  300
Total liabilities, $m
  71
  72
  74
  76
  79
  81
  84
  87
  90
  94
  97
  101
  105
  110
  115
  120
  125
  131
  137
  143
  150
  156
  164
  172
  180
  188
  197
  207
  217
  228
Total equity, $m
  12
  12
  13
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  27
  28
  29
  30
  32
  33
  35
  37
  39
Total liabilities and equity, $m
  83
  84
  87
  89
  92
  95
  98
  102
  105
  110
  114
  118
  123
  129
  134
  140
  146
  153
  160
  167
  175
  183
  192
  201
  210
  220
  230
  242
  254
  267
Debt-to-equity ratio
  11.950
  11.810
  11.670
  11.510
  11.340
  11.170
  11.000
  10.820
  10.650
  10.470
  10.300
  10.130
  9.960
  9.790
  9.630
  9.470
  9.320
  9.170
  9.030
  8.890
  8.760
  8.630
  8.510
  8.390
  8.280
  8.170
  8.070
  7.970
  7.870
  7.780
Adjusted equity ratio
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  40
  41
  42
  44
  45
  47
  48
  50
  52
  55
  60
  63
  65
  68
  71
  75
  78
  82
  86
  90
  94
  98
  103
  108
  114
  119
  125
  131
  138
  144
Depreciation, amort., depletion, $m
  8
  8
  8
  9
  9
  9
  9
  9
  9
  10
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
Funds from operations, $m
  48
  49
  51
  52
  54
  56
  58
  60
  62
  64
  66
  69
  72
  75
  78
  82
  85
  89
  94
  98
  103
  108
  113
  118
  124
  130
  137
  143
  150
  158
Change in working capital, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
Cash from operations, $m
  48
  49
  50
  52
  53
  55
  57
  59
  62
  64
  65
  68
  71
  74
  78
  81
  85
  89
  93
  97
  102
  107
  112
  117
  123
  129
  136
  142
  149
  157
Maintenance CAPEX, $m
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
New CAPEX, $m
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
Cash from investing activities, $m
  -5
  -5
  -5
  -6
  -7
  -7
  -7
  -7
  -7
  -7
  -9
  -9
  -9
  -9
  -9
  -11
  -11
  -11
  -12
  -13
  -13
  -14
  -14
  -16
  -16
  -17
  -18
  -19
  -19
  -21
Free cash flow, $m
  43
  44
  45
  46
  47
  49
  50
  52
  54
  56
  57
  60
  62
  65
  68
  71
  74
  77
  81
  85
  89
  93
  98
  102
  107
  112
  118
  124
  130
  136
Issuance/(repayment) of debt, $m
  1
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
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  
  1
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
Total cash flow (excl. dividends), $m
  44
  45
  47
  48
  50
  51
  53
  55
  57
  60
  61
  64
  66
  69
  72
  76
  79
  83
  87
  91
  95
  100
  105
  110
  115
  121
  127
  133
  140
  147
Retained Cash Flow (-), $m
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
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
  44
  45
  46
  48
  49
  51
  53
  55
  57
  59
  60
  63
  66
  69
  72
  75
  78
  82
  86
  90
  94
  99
  104
  109
  114
  120
  126
  132
  138
  145
Discount rate, %
  9.80
  10.29
  10.80
  11.34
  11.91
  12.51
  13.13
  13.79
  14.48
  15.20
  15.96
  16.76
  17.60
  18.48
  19.40
  20.37
  21.39
  22.46
  23.58
  24.76
  26.00
  27.30
  28.67
  30.10
  31.61
  33.19
  34.85
  36.59
  38.42
  40.34
PV of cash for distribution, $m
  40
  37
  34
  31
  28
  25
  22
  19
  17
  14
  12
  10
  8
  6
  5
  4
  3
  2
  2
  1
  1
  0
  0
  0
  0
  0
  0
  0
  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
  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

Green Plains Partners LP provides fuel storage and transportation services. The Company owns, operates, develops and acquires ethanol and fuel storage facilities, terminals, transportation assets, and other related assets and businesses. The Company's parent company is Green Plains Inc. (Green Plains). The Company was formed by Green Plains, a vertically integrated ethanol producer, to support its marketing and distribution activities as its primary downstream logistics provider. The Company's ethanol storage assets are the principal method of storing ethanol produced at its parent's ethanol production plants. Ethanol can be distributed from its storage facilities to bulk terminals through truck, railcar or barge. As of December 31, 2016, the Company owned or leased 39 ethanol storage facilities and approximately 56 acres of land. As of December 31, 2016, its storage tanks were located at or near its parent's 17 ethanol production plants in Indiana and Illinois, among others

FINANCIAL RATIOS  of  Green Plains Partners LP (GPP)

Valuation Ratios
P/E Ratio 8.9
Price to Sales 4.9
Price to Book -7.9
Price to Tangible Book
Price to Cash Flow 8.2
Price to Free Cash Flow -17.5
Growth Rates
Sales Growth Rate 103.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 4450%
Cap. Spend. - 3 Yr. Gr. Rate 146.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity -214.1%
Total Debt to Equity -214.1%
Interest Coverage 30
Management Effectiveness
Return On Assets 62.1%
Ret/ On Assets - 3 Yr. Avg. 22.4%
Return On Total Capital 74.5%
Ret/ On T. Cap. - 3 Yr. Avg. 27.3%
Return On Equity 1425%
Return On Equity - 3 Yr. Avg. 477.4%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 61.5%
EBITDA Margin - 3 Yr. Avg. -6.2%
Operating Margin 57.7%
Oper. Margin - 3 Yr. Avg. -24.2%
Pre-Tax Margin 54.8%
Pre-Tax Margin - 3 Yr. Avg. -27.7%
Net Profit Margin 54.8%
Net Profit Margin - 3 Yr. Avg. -0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 1.6%
Payout Ratio 0%

GPP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GPP stock intrinsic value calculation we used $101 million for the last fiscal year's total revenue generated by Green Plains Partners LP. The default revenue input number comes from 0001 income statement of Green Plains Partners LP. 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 GPP stock valuation model: a) initial revenue growth rate of 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 9.8%, whose default value for GPP is calculated based on our internal credit rating of Green Plains Partners LP, 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 Green Plains Partners LP.
    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 GPP stock the variable cost ratio is equal to 39.6%.

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 GPP 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 Green Plains Partners LP.

Corporate tax rate of 27% is the nominal tax rate for Green Plains Partners LP. 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 GPP 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 GPP are equal to 49.4%.

Life of production assets of 12.2 years is the average useful life of capital assets used in Green Plains Partners LP 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 GPP is equal to 7.8%. 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 - $11.748 million for Green Plains Partners LP - 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 23.137 million for Green Plains Partners LP 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 Green Plains Partners LP at the current share price and the inputted number of shares is $0.4 billion.

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