Alliance Holdings GP LP (Alliance Holdings GP LP) Intrinsic Value: DCF (FCF Based) : $83.97 (As of May. 15, 2024)

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What is Alliance Holdings GP LP Intrinsic Value: DCF (FCF Based)?

As of today (2024-05-15), Alliance Holdings GP LP's intrinsic value calculated from the Discounted Cash Flow model is $83.97.

Note: Discounted Cash Flow model is only suitable for predictable companies (Business Predictability Rank higher than 1-Star). If the company's predictability rank is 1-Star or Not Rated, result may not be accurate due to the low predictability of business and the data will not be stored into our database.

Alliance Holdings GP LP's Predictability Rank is Not Rated. Thus, this page is only used for demonstration purposes and the DCF related results in the screener and portfolio will appear as zero.

Margin of Safety (FCF Based) using Discounted Cash Flow model for Alliance Holdings GP LP is 66.21%.

The industry rank for Alliance Holdings GP LP's Intrinsic Value: DCF (FCF Based) or its related term are showing as below:

AHGP's Price-to-DCF (FCF Based) is not ranked ^*
in the Steel industry.
Industry Median: 0.555
* Ranked among companies with meaningful Price-to-DCF (FCF Based) only.

Alliance Holdings GP LP Intrinsic Value: DCF (FCF Based) Historical Data

The historical data trend for Alliance Holdings GP LP's Intrinsic Value: DCF (FCF Based) can be seen below:

* 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.

* Premium members only.

Alliance Holdings GP LP Intrinsic Value: DCF (FCF Based) Chart

Alliance Holdings GP LP Annual Data

Trend

Dec08

Dec09

Dec10

Dec11

Dec12

Dec13

Dec14

Dec15

Dec16

Dec17

Intrinsic Value: DCF (FCF Based)

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66.82

76.41

89.67

109.00

Alliance Holdings GP LP Quarterly Data
	Jun13	Sep13	Dec13	Mar14	Jun14	Sep14	Dec14	Mar15	Jun15	Sep15	Dec15	Mar16	Jun16	Sep16	Dec16	Mar17	Jun17	Sep17	Dec17	Mar18
Intrinsic Value: DCF (FCF Based)	Get a 7-Day Free Trial															126.45	120.36	96.06	-	-

Competitive Comparison of Alliance Holdings GP LP's Intrinsic Value: DCF (FCF Based)

For the Coking Coal subindustry, Alliance Holdings GP LP's Price-to-DCF (FCF Based), along with its competitors' market caps and Price-to-DCF (FCF Based) 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.

Alliance Holdings GP LP's Price-to-DCF (FCF Based) Distribution in the Steel Industry

For the Steel industry and Basic Materials sector, Alliance Holdings GP LP's Price-to-DCF (FCF Based) distribution charts can be found below:

* The bar in red indicates where Alliance Holdings GP LP's Price-to-DCF (FCF Based) falls into.

Alliance Holdings GP LP Intrinsic Value: DCF (FCF Based) Calculation

This is the intrinsic value calculated from the Discounted Cash Flow model with default parameters. In a discounted cash flow model, the future cash flow is estimated based on a cash flow growth rate and a discount rate. The cash flow of the future is discounted to its current value at the discount rate. All of the discounted future cash flow is added together to get the current intrinsic value of the company.

Usually a two-stage model is used when calculating a stock's intrinsic value using a discounted cash flow model. The first stage is called the growth stage; the second is called the terminal stage. In the growth stage the company grows at a faster rate. Because it cannot grow at that rate forever, a lower rate is used for the terminal stage.

GuruFocus DCF calculator is a two-stage model. The default values are defined as:

1. Discount Rate: d = 11%
A reasonable discount rate assumption should be at least the long term average return of the stock market, which can be estimated from risk free rate plus risk premium of stock market. GuruFocus uses 10-Year Treasury Constant Maturity Rate as the risk-free rate and rounded up to the nearest integer. It is updated daily. The current risk-free rate is 4.42%. Please go to Economic Indicators page for more information. Please note that we use the 10-Year Treasury Constant Maturity Rate of the country/region where the company is headquartered. If the data for that country/region is not available, then we will use the 10-Year Treasury Constant Maturity Rate of the United States as default. Then we added a risk premium of 6% to get the estimated discount rate. Some investors use their expected rate of return, which is also reasonable. A typical discount rate can be anywhere between 6% - 20%.

2. Growth Rate in the growth stage: g1 = 5%
The Growth Rate in the growth stage is initially set as the default 10-Year FCF Growth Rate (Per Share). In cases where the 10-year growth rate is unavailable, it defaults to using the 5-Year FCF Growth Rate (Per Share). If both the 10-year and 5-year growth rates are unavailable, the system defaults to the 3-Year FCF Growth Rate (Per Share).
However, it's important to note that there is a growth rate range. If the calculated growth rate exceeds 20%, it will be capped at 20%. Conversely, if the calculated growth rate falls below 5%, it will be adjusted to 5% to maintain a reasonable range.
=> Alliance Holdings GP LP's average Free Cash Flow Growth Rate in the past 3 years was 0.00%, which is less than 5%. GuruFocus defaults => Growth Rate: 5%

3. Years of Growth Stage: y1 = 10

4. Terminal Growth Rate: g2 = 4%

5. Years of Terminal Growth: y2 = 10

6. Free Cash Flow per Share: fcf = $7.276.
However, GuruFocus DCF calculator is actually a Discounted Earnings calculator, the EPS without NRI is used as the default. The reason we are doing this is we found that historically stock prices are more correlated with earnings than free cash flow.

All of the default settings can be changed and the results are calculated automatically.

Alliance Holdings GP LP's Intrinsic Value: DCF (FCF Based) for today is calculated as

Intrinsic Value: DCF (FCF Based)	=	Free Cash Flow per Share	*	{[(1+g1)/(1+d)	+	(1+g1)^2/(1+d)^2	+	...	+	(1+g1)^10/(1+d)^10]
	+	(1+g1)^10/(1+d)^10	*	[(1+g2)/(1+d)	+	(1+g2)^2/(1+d)^2	+	...	+	(1+g2)^10/(1+d)^10]}

set x = (1+g1)/(1+d) = (1+0.05)/(1+0.11) = 0.94594594594595
and y = (1+g2)/(1+d) = (1+0.04)/(1+0.11) = 0.93693693693694

Intrinsic Value: DCF (FCF Based)

Free Cash Flow per Share

{[x

x^2

...

x^10]

x^10

y^2

...

y^10]}

Free Cash Flow per Share

(1-x^10)

(1-x)

x^10

(1-y^10)

(1-y)]

7.276

11.5406

83.97

Margin of Safety (FCF Based)	=	(Intrinsic Value: DCF (FCF Based)	-	Current Price)	/	Intrinsic Value: DCF (FCF Based)
	=	(83.97	-	28.37)	/	83.97
	=	66.21 %

Alliance Holdings GP LP (NAS:AHGP) Intrinsic Value: DCF (FCF Based) Explanation

Unlike valuation methods such as Net Current Asset Value, Tangible Book per Share, Graham Number, Median PS Value etc, discounted Cash Flow model evaluates the companies based on their future earnings power instead of their assets.

Be Aware

What you need to know about the DCF model:

1. The DCF model evaluates a company based on its future earnings power
2. Growth is taken into account; therefore a faster growth company is worth more if everything else is the same.
3. Since we are projecting future growth, it is assumed that the company will grow at the same rate as it did during the past 10 years. Therefore this model works better for the companies that have relatively consistent performance.
4. The DCF model works poorly for inconsistent performers such as cyclicals.
5. What discount rate should you use? Your expected return from the investment is a good discount rate assumption.
6. A larger margin of safety should be required for companies with less predictable businesses.

You can screen for stocks that trade below their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) with the GuruFocus All-in-One Screener. Companies with a high Predictability Rank that trade at a discount to their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) can be found in the screen of Undervalued Predictable Companies.

Alliance Holdings GP LP Intrinsic Value: DCF (FCF Based) Related Terms

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Alliance Holdings GP LP (Alliance Holdings GP LP) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Basic Materials » Steel » Alliance Holdings GP LP (NAS:AHGP) » Definitions » Intrinsic Value: DCF (FCF Based)

Comparable Companies

Traded in Other Exchanges

N/A

Address

Website

http://www.ahgp.com

Alliance Holdings GP LP is a diversified producer and marketer of coal to U.S. utilities and industrial users that operate approximately ten underground mining complexes in Illinois, Indiana, Kentucky, Maryland and West Virginia. The company operates in five reportable segments which are the Illinois Basin, Central Appalachia, Northern Appalachia, White Oak and Other and Corporate.

Executives

Robert J Druten	director	6503 SENECA ROAD, MISSION HILLS KS 66208
Craft Joseph W Iii	director, 10 percent owner, officer: President and Chief Executive	PO BOX 22027, TULSA OK 74121-2027
Cary P Marshall	officer: Vice President and Treasurer	PO BOX 22027, C/O ALLIANCE RESOURCE PARTNERS LP, TULSA OK 74121
Wilson M Torrence	director	1717 SOUTH BOULDER, SUITE 400, TULSA OK 74119
Michael J Hall	director	7438 EAST 68TH PLACE, TULSA OK 74133
Kathleen S. Craft	10 percent owner	2502 E. 45TH ST., TULSA OK 74105
Charles R Wesley	other: Member of 13d group (over 10%)	PO BOX 22027, C/O ALLIANCE RESOURCE PARTNERS LP, TULSA OK 74121
Thomas M Wynne	other: Member of 13d group (over 10%)	PO BOX 22027, C/O ALLIANCE RESOURCE PARTNERS LP, TULSA OK 74121
R Eberley Davis	officer: SVP-Law&Admin,General Counsel	1717 SOUTH BOULDER, SUITE 400, TULSA OK 74119
Brian L Cantrell	officer: Senior VP and CFO	P O BOX 22027, TULSA OK 74121
Dave A Gilbert	other: Member of 13d group (over 10%)	PO BOX 22027, C/O ALLIANCE RESOURCE PARTNERS LP, TULSA OK 74121
Dale G Wilkerson	other: Member of 13d group (over 10%)	PO BOX 22027, C/O ALLIANCE RESOURCE PARTNERS LP, TULSA OK 74121
A Wellford Tabor	other: Member of 13d group (over 10%)	2820 SELWYN AVE. SUITE 550 CHARLOTTE NC 28209
Thomas L Pearson	officer: Senior VP-Law & Adminstration	PO BOX 22027, C/O ALLIANCE RESOURCE PARTNERS LP, TULSA OK 74121
Gary J Rathburn	other: Member of 13d group (over 10%)	PO BOX 22027, C/O ALLIANCE RESOURCE PARTNERS LP, TULSA OK 74121