What is PAA Natural Gas Storage, L.P. 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 PAA Natural Gas Storage, L.P.'s Graham Number or its related term are showing as below:
FRA:4PN's Price-to-Graham-Number is not ranked *
in the Utilities - Regulated industry.
Industry Median: 1.14 * 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.
PAA Natural Gas Storage, L.P. 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 PAA Natural Gas Storage, L.P.'s Graham Number
For the Utilities - Regulated Gas subindustry, PAA Natural Gas Storage, L.P.'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.
PAA Natural Gas Storage, L.P.'s Price-to-Graham-Number Distribution in the Utilities - Regulated Industry
For the Utilities - Regulated industry and Utilities sector, PAA Natural Gas Storage, L.P.'s Price-to-Graham-Number distribution charts can be found below:
* The bar in red indicates where PAA Natural Gas Storage, L.P.'s Price-to-Graham-Number falls into.
PAA Natural Gas Storage, L.P. 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.
PAA Natural Gas Storage, L.P. (FRA:4PN) 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.
PAA Natural Gas Storage, L.P.'s Price to Graham number Ratio for today is calculated as
Price to Graham number
=
Share Price (Today)
/
Graham number (Q: Sep. 2013 )
=
16.21
/
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.
PAA Natural Gas Storage, L.P. Graham Number Related Terms
Thank you for viewing the detailed overview of PAA Natural Gas Storage, L.P.'s Graham Number provided by GuruFocus.com. Please click on the following links to see related term pages.
PAA Natural Gas Storage, L.P. (FRA:4PN) Business Description
PAA Natural Gas Storage, L.P., is a Delaware corporation formed by Plains All American Pipeline, L.P. on January 15, 2010. The Company is engaged in acquisition, development, operation and commercial management of natural gas storage facilities. The Company owns and operates three natural gas storage facilities located in Louisiana, Mississippi and Michigan. It also leases storage capacity and pipeline transportation capacity from third parties from time to time in order to increase its operational flexibility and enhance the services it offers to its customers. The Company provides natural gas storage services to a broad mix of customers, including local gas distribution companies, or LDCs, electric utilities, pipelines, direct industrial users, electric power generators, marketers, producers, LNG importers and affiliates of such entities. It generates revenue mainly from the provision of fee-based gas storage services to its customers. The majority of its net revenue from firm storage services is derived from contracts with initial terms that generally range from one year to 10 years in length and pursuant to which customers receive the assured or "firm" right to store gas in its facilities. Under its firm storage contracts, its customers are obligated to pay it fixed monthly capacity reservation fees, which is owed to it regardless of the actual storage capacity utilized. The Company also generate net revenue from the provision of hub services at its facilities and through the merchant storage activities of its commercial marketing group, which captures short term market opportunities by utilizing a portion of its storage capacity and engaging in related commercial marketing activities. The Company's merchant storage activities generate revenue through the hedged purchase and sale of natural gas net of any storage related costs incurred. It utilizes physical storage at its facilities and derivatives to hedge expected margin from these activities. The Company competes with several regional high-deliverability storage facilities along the Gulf Coast as well as the storage services offered by interstate and intrastate pipelines. The Company is subject to regulatory oversight by numerous federal, state, and local regulatory agencies.
Quick Browse
Personalize
Premium Gurus 
Create New Portfolio
Portfolio Contest
FRA:4PN has been successfully added to your 