LRR Energy LP (LRR Energy LP) Intrinsic Value: DCF (Dividends Based) : $7.58 (As of Apr. 29, 2024)

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LRR Energy LP Intrinsic Value: DCF (Dividends Based) Chart

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Competitive Comparison of LRR Energy LP's Intrinsic Value: DCF (Dividends Based)

For the Oil & Gas E&P subindustry, LRR Energy LP's Price-to-DCF (Dividends Based), along with its competitors' market caps and Price-to-DCF (Dividends 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.

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LRR Energy LP's Price-to-DCF (Dividends Based) Distribution in the Oil & Gas Industry

For the Oil & Gas industry and Energy sector, LRR Energy LP's Price-to-DCF (Dividends Based) distribution charts can be found below:

* The bar in red indicates where LRR Energy LP's Price-to-DCF (Dividends Based) falls into.

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LRR Energy LP Intrinsic Value: DCF (Dividends Based) Calculation

This is the intrinsic value calculated from the Discounted Dividend Model with default parameters. The calculation method is the same as Discounted Cash Flow model except adjusted dividend are used in the calculation instead of free cash flow. This is the default method of calculation with GuruFocus DCF calculator.

Usually a two-stage model is used in calculating the intrinsic value with discounted cash flow model. The first stage is called 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 DDM 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 4.61%. 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. Dividend Growth Rate in the growth stage: g1 = 5%
The Growth Rate in the growth stage is initially set as the default 10-Year Dividend Growth Rate. In cases where the 10-year growth rate is unavailable, it defaults to using the 5-Year Dividend Growth Rate. If both the 10-year and 5-year growth rates are unavailable, the system defaults to the 3-Year Dividend Growth Rate.
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.
=> LRR Energy LP's average Dividend 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. Dividends per Share: adjusted dividends per share = $0.657.
GuruFocus uses adjusted dividends per share by default to ensure that the valuation reflects the total value of the company, as the actual dividend is only a portion of the total value.

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

LRR Energy LP's Intrinsic Value: DCF (Dividends Based) for today is calculated as:

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

* 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.

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LRR Energy LP  (NYSE:LRE) Intrinsic Value: DCF (Dividends Based) Explanation

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

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Be Aware

What you need to know about Discounted Dividends model:

1. The Discounted Dividends model evaluates a company based on its future dividends distribution power
2. Dividend growth is taken into account; therefore a company with a higher dividend growth rate 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 with consistently steady dividends distributed.
4. The Discounted Dividends model works poorly for inconsistent dividends distributor like high growth companies.
5. Your expected return from the investment is a reasonable discount rate assumption.
6. A larger margin of safety should be required for companies with less dividends distributed.

You can screen for stocks that trade below their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) and Intrinsic Value: DCF (Dividends 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.

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LRR Energy LP Intrinsic Value: DCF (Dividends Based) Related Terms

Thank you for viewing the detailed overview of LRR Energy LP's Intrinsic Value: DCF (Dividends Based) provided by GuruFocus.com. Please click on the following links to see related term pages.

Predictability Rank Intrinsic Value: Projected FCF Intrinsic Value: DCF (FCF Based) Intrinsic Value: DCF (Earnings Based) Margin of Safety % (DCF Dividends Based) Margin of Safety % (DCF FCF Based) Margin of Safety % (DCF Earnings Based) 5-Year Dividend Growth Rate Dividends per Share

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LRR Energy LP (LRR Energy LP) Business Description

Executives

Eric D. Mullins	director, officer: Co-CEO & Chairman of the Board	HERITAGE PLAZA, 1111 BAGBY STREET, SUITE 4600, HOUSTON TX 77002
John T Reynolds	10 percent owner, other: Director by Deputization	C/O C/O LIME ROCK PARTNERS, 518 RIVER SIDE AVE BLDG 11 2ND FL, WESTPORT CT 06880
Jonathan C. Farber	director, 10 percent owner	HERITAGE PLAZA, 1111 BAGBY STREET, SUITE 4600, HOUSTON TX 77002
Jaime R. Casas	officer: V.P. and CFO	HERITAGE PLAZA, 1111 BAGBY STREET, SUITE 4600, HOUSTON TX 77002
Jonathan P Carroll	director	4265 SAN FELIPE, 8TH FLOOR, HOUSTON TX 77027
John A Bailey	director	64 PERCH BAY WACCABUC NY 10597
Robert T Oconnell	director	C/O CENTERPOINT ENERGY, INC., 1111 LOUISIANA, HOUSTON TX 77002
Dawn Smajstrla	officer: V.P., Controller and CAO	801 LOUISIANA, STE 700, HOUSTON X1 77479
Milton Carroll	director	C/O CENTERPOINT ENERGY, INC., 1111 LOUISIANA STREET, HOUSTON TX 77002