As of June 16, 2025, Magellan Midstream Partners LP's estimated intrinsic value ranges from $42.54 to $153.27 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $153.27 | +122.1% |
| Discounted Cash Flow (5Y) | $115.07 | +66.8% |
| Dividend Discount Model (Multi-Stage) | $117.45 | +70.2% |
| Dividend Discount Model (Stable) | $73.07 | +5.9% |
| Earnings Power Value | $42.54 | -38.3% |
Is Magellan Midstream Partners LP (MMP) undervalued or overvalued?
With the current market price at $69.00, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Magellan Midstream Partners LP's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.77 | 0.82 |
| Cost of equity | 7.4% | 9.4% |
| Cost of debt | 5.0% | 5.0% |
| Tax rate | 0.2% | 0.3% |
| Debt/Equity ratio | 0.36 | 0.36 |
| After-tax WACC | 6.8% | 8.3% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $74 | $19,822M | 79.4% |
| 10-Year Growth | $104 | $25,886M | 64.6% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $1,001M |
| Discount Rate (WACC) | 8.3% - 6.8% |
| Enterprise Value | $12,127M - $14,780M |
| Net Debt | $4,856M |
| Equity Value | $7,271M - $9,924M |
| Outstanding Shares | 202M |
| Fair Value | $36 - $49 |
| Selected Fair Value | $42.54 |
| Metric | Value |
|---|---|
| Market Capitalization | $13945M |
| Enterprise Value | $18801M |
| Trailing P/E | 13.50 |
| Forward P/E | 14.20 |
| Trailing EV/EBITDA | 10.55 |
| Current Dividend Yield | 612.84% |
| Dividend Growth Rate (5Y) | 0.13% |
| Debt-to-Equity Ratio | 0.36 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $45.98 |
| Discounted Cash Flow (5Y) | 25% | $28.77 |
| Dividend Discount Model (Multi-Stage) | 20% | $23.49 |
| Dividend Discount Model (Stable) | 15% | $10.96 |
| Earnings Power Value | 10% | $4.25 |
| Weighted Average | 100% | $113.46 |
Based on our comprehensive valuation analysis, Magellan Midstream Partners LP's weighted average intrinsic value is $113.46, which is approximately 64.4% above the current market price of $69.00.
Key investment considerations:
Given these factors, we believe Magellan Midstream Partners LP is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.