EPB  El Paso Pipeline Partners Lp

Exchange

NYSE

Sector

Public Utilities

Industry

Natural Gas Distribution

Market Cap.

10.282B

Vuru Grade

51.71/100

Current Price

$43.05
+1.05 (+2.44%)

Growth Price

$30.67
Overvalued by 28.75%

Stability Price

$14.94
Overvalued by 65.29%

Company Metrics

  • P/E 26.73
  • P/S 6.96
  • P/B 2.27
  • EPS 0
  • Cash ROIC 8.38%
  • Cash Ratio 0.28
  • Dividend 2.6 / 6.04%
  • Avg. Vol. 2.42M
  • Shares 217.00M
  • Market Cap. 10.282B

Company Description

El Paso Pipeline Partners, L.P. engages in the ownership and operation of natural gas transportation pipelines and storage assets in the United States. The company holds a 100% interest in Wyoming Interstate Company, Ltd. (WIC), an interstate pipeline transportation company located in Wyoming, Utah, and Colorado. It operates approximately 800-mile WIC interstate natural gas pipeline system with a ... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

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Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for EPB to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate EPB's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$43.05 Current Price

$30.67 Growth Price (DCF)

Overvalued by 28.75%


Growth Rate Assumed by Market: 11.25%


Future Free Cash Flow Growth Rate: 0.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$14.94 Stability Price (EPV)

Overvalued by 65.29%


Discount Rate: 15.0%

$56.39 Book Price

Undervalued by 30.98%


Poor Cash Return on Invested Capital over the past 5 years

EPB has been unable to consistently generate sufficient returns from its investments in buildings, projects and equipment. This could be due to poor management, lack of an economic moat or the capital intensive nature of the business.

EPB has only created $8.38 of cash for every $100 invested.
Figures in USD. Fiscal year ends in December
20092010201120122013
Free Cash Flow 193.00M 259.60M 484.00M 600.00M 733.00M
divided by
Invested Capital 2.54B 5.83B 5.88B 6.19B 6.14B
Cash ROIC 7.59% 4.45% 8.23% 9.70% 11.94%

Excellent Return on Equity over the past 5 years

Over the past 5 years, EPB has generated strong profits with money shareholders have invested. This is considered one of the best indicators of quality management. Beware of extremely high Return on Equity (> 50%) as this is often unsustainable.

EPB has generated $29.22 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in December
20092010201120122013
Net Income 279.50M 378.50M 472.00M 589.00M 610.00M
divided by
Stockholders' Equity 818.20M 1.43B 1.94B 1.99B 1.94B
Return on Equity 34.16% 26.49% 24.36% 29.64% 31.46%

Mediocre Business Performance over the past 10 years

EPB isn't a strong business and might be consistently attempting to fuel growth with debt or has trouble staying profitable. The lack of predictability in free cash flow should be concerning for the reliability of future earnings.

EPB has been unable to consistently create value for shareholders.
Figures in USD. Fiscal year ends in December
2004200520062007200820092010201120122013
Free Cash Flow - -5.00M -20.00M -83.00M 12.00M 193.00M 259.60M 484.00M 600.00M 733.00M

Weak Balance Sheet

EPB's financial position is not ideal. The key is to check whether EPB is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in USD. Fiscal year ends in December
2004200520062007200820092010201120122013
Cash - - - 5.00M 10.90M 17.40M 68.80M 105.00M 114.00M 78.00M
Current Assets - 19.00M 23.00M 22.00M 62.10M 166.00M 221.40M 306.00M 355.00M 304.00M
Total Assets - 407.00M 465.00M 902.00M 1.43B 2.67B 6.18B 6.30B 6.58B 6.50B
Current Liabilities - 118.00M 129.00M 48.00M 21.40M 109.60M 280.60M 312.00M 281.00M 277.00M
Total Liabilities 124.00M 135.00M 138.00M 511.00M 800.20M 1.85B 4.75B 4.36B 4.59B 4.56B
Stockholder' Equity 215.00M 272.00M 327.00M 391.00M 634.40M 818.20M 1.43B 1.94B 1.99B 1.94B
Current Ratio - 0.16 0.18 0.46 2.90 1.51 0.79 0.98 1.26 1.10
TL-to-TA - 0.33 0.30 0.57 0.56 0.69 0.77 0.69 0.70 0.70

Low or No Reinvestment of Profits over the past 10 years

EPB has either been retaining a small amount of their earnings or has done so inconsistently. A lack of consistency could be due to EPB operating at a loss or them having such a strong economic moat they feel comfortable spending profits on growth. Be wary of future prospects and if applicable, inspect the moat's sustainability.
Figures in USD. Fiscal year ends in December
2004200520062007200820092010201120122013
Retained Earnings - - - - - - - - - -
Retained Earnings Growth - - - - - - - - - -

Varying Competitive Advantage over the past 10 years

EPB likely has a competitive advantage which prevents other companies from entering or competing in their industry. However, there is a substantial variation in their Net Profit Margins from year-to-year, which indicates inconsistent performance. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

$50.39 of every $100 of Revenue have been pure profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2004200520062007200820092010201120122013
Net Income 41.00M 38.00M 65.00M 66.00M 114.50M 279.50M 378.50M 472.00M 589.00M 610.00M
divided by
Revenue 73.00M 81.00M 97.00M 110.00M 141.10M 537.60M 1.34B 1.43B 1.52B 1.51B
Net Profit Margin 56.16% 46.91% 67.01% 60.00% 81.15% 51.99% 28.16% 33.12% 38.88% 40.53%

Strong Pricing Power over the past 10 years

EPB has maintained substantial gross margins, suggesting that they have been able to set prices without consideration of the cost of goods sold. This potentially leaves flexibility in inflationary environments to raise prices on consumers and maintain profitability.

$100.00 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2004200520062007200820092010201120122013
Gross Profit 73.00M 81.00M 97.00M 110.00M 141.10M 537.60M 1.34B 1.43B 1.52B 1.51B
divided by
Revenue 73.00M 81.00M 97.00M 110.00M 141.10M 537.60M 1.34B 1.43B 1.52B 1.51B
Gross Margin 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

High Capital Intensity over the past 10 years

EPB spends large amounts of capital buying new equipment or investing in new facilities to stay competitive. Over the long term, those costs may have to be fuelled by debt. Look at the growth of Shareholders' Equity to see if this strategy is having a positive or negative impact.

95.18% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in December
2004200520062007200820092010201120122013
Capital Expenditure - 64.00M 73.00M 160.00M 84.00M 154.00M 412.10M 264.00M 116.00M 125.00M
divided by
Net Income 41.00M 38.00M 65.00M 66.00M 114.50M 279.50M 378.50M 472.00M 589.00M 610.00M
Capital Expenditure Ratio - 168.42% 112.31% 242.42% 73.36% 55.10% 108.88% 55.93% 19.69% 20.49%

Strong Dividend History over the past 10 years

EPB has consistently distributed a dividend for the past 9 years. This suggests EPB is established and will likely continue to distribute its dividend for the foreseeable future.
Figures in USD. Fiscal year ends in December
2004200520062007200820092010201120122013
Dividend Paid - 15.00M 10.00M 793.00M 96.10M 237.20M 525.40M 471.00M 796.00M 746.00M
divided by
Shares Outstanding - - - 507.69M 64.24M 91.80M 281.80M 197.40M 209.00M 217.00M
Dividend Paid Per Share - - - 1.56 1.50 2.58 1.86 2.39 3.81 3.44
Price at Year End - - - 19.66 12.50 22.76 31.30 34.14 36.20 35.64
Dividend Yield - - - 7.94% 11.97% 11.35% 5.96% 6.99% 10.52% 9.65%

History of Stock Buybacks over the past 10 years

EPB has some history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in December
2004200520062007200820092010201120122013
Shares Outstanding - - - 507.69M 64.24M 91.80M 281.80M 197.40M 209.00M 217.00M
Stock Bought Back - - - -100.00% 690.27% -30.02% -67.42% 42.76% -5.55% -3.69%
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