What is Midcoast Energy Partners LP Graham Number?
Graham Number is a figure that measures a stock's fundamental value by taking into account the company's earnings per share and book value per share. The Graham number is the upper bound of the price range that a defensive investor should pay for the stock. According to the theory, any stock price below the Graham number is considered undervalued, and thus worth investing in.
The historical rank and industry rank for Midcoast Energy Partners LP's Graham Number or its related term are showing as below:
MEP's Price-to-Graham-Number is not ranked *
in the Oil & Gas industry.
Industry Median: 0.87 * Ranked among companies with meaningful Price-to-Graham-Number only.
Graham Number is a combination of asset valuation and earnings power valuation. It is a very conservative way of valuing a stock.
Midcoast Energy Partners LP Graham Number Historical Data
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Competitive Comparison of Midcoast Energy Partners LP's Graham Number
For the Oil & Gas Midstream subindustry, Midcoast Energy Partners LP's Price-to-Graham-Number, along with its competitors' market caps and Price-to-Graham-Number data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Midcoast Energy Partners LP's Price-to-Graham-Number Distribution in the Oil & Gas Industry
For the Oil & Gas industry and Energy sector, Midcoast Energy Partners LP's Price-to-Graham-Number distribution charts can be found below:
* The bar in red indicates where Midcoast Energy Partners LP's Price-to-Graham-Number falls into.
Midcoast Energy Partners LP Graham Number Calculation
Graham Number is a concept based on Ben Graham's conservative valuation of companies.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Midcoast Energy Partners LP (NYSE:MEP) Graham Number Explanation
Ben Graham actually did not publish a formula like this. But he wrote in The Intelligent Investor (1948 version) regarding to the criteria for purchases:
Current price should not be more than 15 times average earnings of the past three years.
Current price should not be more than 1.5 times the book value last reported. However, a multiplier of earnings below 15 could justify a correspondingly higher multiplier of assets. As a rule of thumb we suggest that the product of the multiplier times the ratio of price to book value should not exceed 22.5. (This figure corresponds to 15 times earnings and 1.5 times book value. It would admit an issue selling at only 9 times earnings and 2.5 times asset value, etc.)
Unlike valuation methods such as DCF or Discounted Earnings, the Graham number does not take growth into the valuation. Unlike the valuation methods based on book value alone, it takes into account the earnings power. Therefore, the Graham Number is a combination of asset valuation and earnings power valuation.
In general, the Graham number is a very conservative way of valuing a stock. It cannot be applied to companies with negative book values.
Midcoast Energy Partners LP's Price to Graham number Ratio for today is calculated as
Price to Graham number
=
Share Price (Today)
/
Graham number (Q: Dec. 2016 )
=
7.95
/
N/A
=
N/A
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Be Aware
Please keep these in mind:
1. Graham Number does not take growth into account. Therefore it underestimates the values of the companies that have good earnings growth. We feel that if the earnings per share grows more than 10% a year, Graham Number underestimates the value.
2. Graham Number punishes the companies that have temporarily low earnings. Therefore, an average of earnings makes more sense in the calculation of Graham Number.
3. Graham Numbers underestimates companies that are light with book.
Midcoast Energy Partners LP Graham Number Related Terms
Thank you for viewing the detailed overview of Midcoast Energy Partners LP's Graham Number provided by GuruFocus.com. Please click on the following links to see related term pages.
Midcoast Energy Partners LP (Midcoast Energy Partners LP) Business Description
Midcoast Energy Partners LP is a Delaware limited partnership formed in 2013 to serve as Enbridge Energy Partners, L.P's primary vehicle for owning and growing its natural gas and NGL midstream business in the United States. Its business consists of gathering unprocessed and untreated natural gas from wellhead locations and other receipt points on its systems, processing the natural gas to remove NGLs and impurities at its processing and treating facilities and transporting the processed natural gas and NGLs to intrastate and interstate pipelines for transportation to various customers and market outlets. In addition it also provides marketing services of natural gas and NGLs to wholesale customers. It conducts business through two distinct reporting segments: Gathering, Processing and Transportation and Logistics and Marketing. Its gathering, processing and transportation business includes natural gas and NGL gathering and transportation pipeline systems, natural gas processing and treating facilities, condensate stabilizers and an NGL fractionation facility. It gathers natural gas from the wellhead and central receipt points on its systems, deliver it to facilities for processing and treating and deliver the residue gas to intrastate or interstate pipelines for transmission to wholesale customers such as power plants, industrial customers and local distribution companies. It delivers the NGLs produced at its processing and fractionation facilities to intrastate and interstate pipelines for transportation to the NGL market hubs in Mont Belvieu, Texas and Conway, Kansas. In addition, it delivers NGLs from certain of its facilities to the Texas Express NGL system for transportation on the Texas Express NGL mainline to Mont Belvieu, Texas. The primary role of its logistics and marketing business is to provide marketing services of natural gas, NGLs and condensate received from its gathering, processing and transportation business. It purchases and receives natural gas, NGLs and other products from pipeline systems and processing plants and sell and deliver them to wholesale customers, such as distributors, refiners, fractionators, chemical facilities, various third parties and end users. A majority of the natural gas and NGLs purchased are produced in Texas markets where it has intrastate deliverability alternatives over the past several years. It uses this connectivity to interstate pipelines to improve value for the producers by delivering natural gas into premium markets and NGLs to primary markets where it sells them to customers. It faces competition in the gathering, processing and transportation business, as well as in the marketing and logistics business. The Company's transmission and gathering pipelines, storage and processing facilities, and trucking and railcar operations are subject to extensive environmental, operational and safety regulation at federal and state levels.
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