Intrinsic value of Paramount Resources Ltd. Class A Common - POU

Previous Close

$14.49

  Intrinsic Value

$3.03

stock screener

  Rating & Target

str. sell

-79%

Previous close

$14.49

 
Intrinsic value

$3.03

 
Up/down potential

-79%

 
Rating

str. sell

We calculate the intrinsic value of POU stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 2.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  395
  611
  913
  1,325
  1,869
  2,570
  3,449
  4,529
  5,828
  7,361
  9,141
  11,176
  13,471
  16,027
  18,845
  21,922
  25,252
  28,831
  32,653
  36,711
  41,001
  45,519
  50,260
  55,223
  60,407
  65,813
  71,442
  77,299
  83,389
  89,719
Variable operating expenses, $m
  1,239
  1,914
  2,862
  4,152
  5,858
  8,054
  10,810
  14,195
  18,265
  23,070
  28,648
  35,025
  42,217
  50,230
  59,062
  68,703
  79,140
  90,356
  102,333
  115,053
  128,499
  142,657
  157,516
  173,070
  189,317
  206,257
  223,900
  242,256
  261,342
  281,179
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  1,239
  1,914
  2,862
  4,152
  5,858
  8,054
  10,810
  14,195
  18,265
  23,070
  28,648
  35,025
  42,217
  50,230
  59,062
  68,703
  79,140
  90,356
  102,333
  115,053
  128,499
  142,657
  157,516
  173,070
  189,317
  206,257
  223,900
  242,256
  261,342
  281,179
Operating income, $m
  -843
  -1,303
  -1,949
  -2,827
  -3,989
  -5,484
  -7,361
  -9,665
  -12,437
  -15,709
  -19,507
  -23,849
  -28,747
  -34,203
  -40,216
  -46,781
  -53,888
  -61,525
  -69,681
  -78,342
  -87,497
  -97,138
  -107,256
  -117,847
  -128,909
  -140,445
  -152,458
  -164,957
  -177,952
  -191,460
EBITDA, $m
  -722
  -1,115
  -1,668
  -2,420
  -3,414
  -4,694
  -6,301
  -8,273
  -10,645
  -13,446
  -16,697
  -20,413
  -24,605
  -29,275
  -34,422
  -40,041
  -46,124
  -52,661
  -59,642
  -67,055
  -74,891
  -83,143
  -91,803
  -100,868
  -110,337
  -120,211
  -130,493
  -141,191
  -152,315
  -163,876
Interest expense (income), $m
  71
  0
  20
  48
  88
  143
  215
  308
  425
  568
  740
  943
  1,179
  1,449
  1,753
  2,092
  2,466
  2,874
  3,315
  3,790
  4,297
  4,835
  5,404
  6,003
  6,631
  7,289
  7,977
  8,693
  9,440
  10,216
  11,024
Earnings before tax, $m
  -843
  -1,323
  -1,997
  -2,916
  -4,132
  -5,699
  -7,669
  -10,090
  -13,005
  -16,449
  -20,451
  -25,029
  -30,196
  -35,956
  -42,309
  -49,247
  -56,762
  -64,841
  -73,471
  -82,638
  -92,332
  -102,541
  -113,258
  -124,478
  -136,199
  -148,421
  -161,151
  -174,396
  -188,169
  -202,484
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -843
  -1,323
  -1,997
  -2,916
  -4,132
  -5,699
  -7,669
  -10,090
  -13,005
  -16,449
  -20,451
  -25,029
  -30,196
  -35,956
  -42,309
  -49,247
  -56,762
  -64,841
  -73,471
  -82,638
  -92,332
  -102,541
  -113,258
  -124,478
  -136,199
  -148,421
  -161,151
  -174,396
  -188,169
  -202,484

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  2,113
  3,265
  4,883
  7,085
  9,996
  13,742
  18,446
  24,221
  31,166
  39,365
  48,883
  59,764
  72,036
  85,709
  100,778
  117,229
  135,038
  154,176
  174,613
  196,316
  219,259
  243,417
  268,772
  295,312
  323,034
  351,940
  382,044
  413,365
  445,931
  479,780
Adjusted assets (=assets-cash), $m
  2,113
  3,265
  4,883
  7,085
  9,996
  13,742
  18,446
  24,221
  31,166
  39,365
  48,883
  59,764
  72,036
  85,709
  100,778
  117,229
  135,038
  154,176
  174,613
  196,316
  219,259
  243,417
  268,772
  295,312
  323,034
  351,940
  382,044
  413,365
  445,931
  479,780
Revenue / Adjusted assets
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
Average production assets, $m
  2,333
  3,604
  5,390
  7,821
  11,034
  15,169
  20,362
  26,736
  34,403
  43,454
  53,960
  65,971
  79,518
  94,610
  111,245
  129,405
  149,063
  170,189
  192,748
  216,706
  242,032
  268,699
  296,687
  325,984
  356,585
  388,493
  421,723
  456,297
  492,246
  529,611
Working capital, $m
  -290
  -448
  -669
  -971
  -1,370
  -1,884
  -2,528
  -3,320
  -4,272
  -5,396
  -6,700
  -8,192
  -9,874
  -11,748
  -13,814
  -16,069
  -18,510
  -21,133
  -23,934
  -26,909
  -30,054
  -33,365
  -36,841
  -40,479
  -44,279
  -48,241
  -52,367
  -56,660
  -61,124
  -65,764
Total debt, $m
  257
  627
  1,148
  1,857
  2,795
  4,001
  5,516
  7,375
  9,612
  12,252
  15,316
  18,820
  22,772
  27,174
  32,027
  37,324
  43,058
  49,221
  55,801
  62,790
  70,177
  77,956
  86,121
  94,667
  103,593
  112,901
  122,594
  132,679
  143,166
  154,065
Total liabilities, $m
  681
  1,051
  1,572
  2,281
  3,219
  4,425
  5,940
  7,799
  10,036
  12,676
  15,740
  19,244
  23,196
  27,598
  32,451
  37,748
  43,482
  49,645
  56,225
  63,214
  70,601
  78,380
  86,545
  95,091
  104,017
  113,325
  123,018
  133,103
  143,590
  154,489
Total equity, $m
  1,433
  2,214
  3,311
  4,804
  6,777
  9,317
  12,506
  16,422
  21,131
  26,690
  33,143
  40,520
  48,840
  58,110
  68,327
  79,481
  91,556
  104,531
  118,387
  133,102
  148,658
  165,037
  182,228
  200,222
  219,017
  238,616
  259,026
  280,261
  302,341
  325,291
Total liabilities and equity, $m
  2,114
  3,265
  4,883
  7,085
  9,996
  13,742
  18,446
  24,221
  31,167
  39,366
  48,883
  59,764
  72,036
  85,708
  100,778
  117,229
  135,038
  154,176
  174,612
  196,316
  219,259
  243,417
  268,773
  295,313
  323,034
  351,941
  382,044
  413,364
  445,931
  479,780
Debt-to-equity ratio
  0.180
  0.280
  0.350
  0.390
  0.410
  0.430
  0.440
  0.450
  0.450
  0.460
  0.460
  0.460
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
Adjusted equity ratio
  0.678
  0.678
  0.678
  0.678
  0.678
  0.678
  0.678
  0.678
  0.678
  0.678
  0.678
  0.678
  0.678
  0.678
  0.678
  0.678
  0.678
  0.678
  0.678
  0.678
  0.678
  0.678
  0.678
  0.678
  0.678
  0.678
  0.678
  0.678
  0.678
  0.678

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -843
  -1,323
  -1,997
  -2,916
  -4,132
  -5,699
  -7,669
  -10,090
  -13,005
  -16,449
  -20,451
  -25,029
  -30,196
  -35,956
  -42,309
  -49,247
  -56,762
  -64,841
  -73,471
  -82,638
  -92,332
  -102,541
  -113,258
  -124,478
  -136,199
  -148,421
  -161,151
  -174,396
  -188,169
  -202,484
Depreciation, amort., depletion, $m
  122
  188
  281
  407
  575
  790
  1,061
  1,393
  1,792
  2,263
  2,810
  3,436
  4,142
  4,928
  5,794
  6,740
  7,764
  8,864
  10,039
  11,287
  12,606
  13,995
  15,452
  16,978
  18,572
  20,234
  21,965
  23,765
  25,638
  27,584
Funds from operations, $m
  -722
  -1,135
  -1,716
  -2,508
  -3,557
  -4,909
  -6,609
  -8,698
  -11,213
  -14,186
  -17,640
  -21,593
  -26,054
  -31,028
  -36,515
  -42,507
  -48,998
  -55,977
  -63,432
  -71,352
  -79,726
  -88,547
  -97,806
  -107,500
  -117,626
  -128,187
  -139,186
  -150,631
  -162,531
  -174,900
Change in working capital, $m
  -109
  -158
  -222
  -302
  -399
  -513
  -645
  -792
  -952
  -1,124
  -1,305
  -1,491
  -1,682
  -1,874
  -2,066
  -2,255
  -2,441
  -2,623
  -2,801
  -2,975
  -3,145
  -3,311
  -3,475
  -3,638
  -3,800
  -3,962
  -4,126
  -4,293
  -4,464
  -4,640
Cash from operations, $m
  -613
  -977
  -1,494
  -2,207
  -3,158
  -4,396
  -5,964
  -7,906
  -10,261
  -13,062
  -16,336
  -20,101
  -24,372
  -29,154
  -34,449
  -40,252
  -46,557
  -53,353
  -60,630
  -68,377
  -76,581
  -85,235
  -94,330
  -103,862
  -113,827
  -124,225
  -135,060
  -146,338
  -158,067
  -170,260
Maintenance CAPEX, $m
  -76
  -122
  -188
  -281
  -407
  -575
  -790
  -1,061
  -1,393
  -1,792
  -2,263
  -2,810
  -3,436
  -4,142
  -4,928
  -5,794
  -6,740
  -7,764
  -8,864
  -10,039
  -11,287
  -12,606
  -13,995
  -15,452
  -16,978
  -18,572
  -20,234
  -21,965
  -23,765
  -25,638
New CAPEX, $m
  -875
  -1,271
  -1,786
  -2,431
  -3,213
  -4,135
  -5,192
  -6,375
  -7,667
  -9,051
  -10,506
  -12,011
  -13,546
  -15,093
  -16,635
  -18,160
  -19,659
  -21,126
  -22,559
  -23,958
  -25,326
  -26,667
  -27,988
  -29,297
  -30,601
  -31,909
  -33,230
  -34,574
  -35,949
  -37,364
Cash from investing activities, $m
  -951
  -1,393
  -1,974
  -2,712
  -3,620
  -4,710
  -5,982
  -7,436
  -9,060
  -10,843
  -12,769
  -14,821
  -16,982
  -19,235
  -21,563
  -23,954
  -26,399
  -28,890
  -31,423
  -33,997
  -36,613
  -39,273
  -41,983
  -44,749
  -47,579
  -50,481
  -53,464
  -56,539
  -59,714
  -63,002
Free cash flow, $m
  -1,564
  -2,370
  -3,468
  -4,918
  -6,779
  -9,106
  -11,946
  -15,341
  -19,321
  -23,905
  -29,105
  -34,923
  -41,354
  -48,389
  -56,011
  -64,206
  -72,956
  -82,243
  -92,053
  -102,373
  -113,194
  -124,508
  -136,314
  -148,611
  -161,406
  -174,706
  -188,524
  -202,876
  -217,782
  -233,262
Issuance/(repayment) of debt, $m
  257
  371
  521
  709
  937
  1,206
  1,515
  1,859
  2,236
  2,640
  3,065
  3,504
  3,952
  4,403
  4,852
  5,297
  5,734
  6,162
  6,581
  6,989
  7,388
  7,779
  8,164
  8,546
  8,926
  9,308
  9,693
  10,085
  10,486
  10,899
Issuance/(repurchase) of shares, $m
  1,382
  2,104
  3,094
  4,409
  6,106
  8,239
  10,858
  14,005
  17,714
  22,008
  26,903
  32,406
  38,516
  45,226
  52,526
  60,401
  68,836
  77,816
  87,326
  97,353
  107,887
  118,920
  130,449
  142,472
  154,994
  168,020
  181,561
  195,632
  210,249
  225,433
Cash from financing (excl. dividends), $m  
  1,639
  2,475
  3,615
  5,118
  7,043
  9,445
  12,373
  15,864
  19,950
  24,648
  29,968
  35,910
  42,468
  49,629
  57,378
  65,698
  74,570
  83,978
  93,907
  104,342
  115,275
  126,699
  138,613
  151,018
  163,920
  177,328
  191,254
  205,717
  220,735
  236,332
Total cash flow (excl. dividends), $m
  75
  104
  147
  200
  264
  340
  427
  524
  630
  744
  863
  987
  1,113
  1,240
  1,367
  1,492
  1,615
  1,736
  1,854
  1,969
  2,081
  2,191
  2,300
  2,407
  2,514
  2,622
  2,730
  2,841
  2,954
  3,070
Retained Cash Flow (-), $m
  -1,382
  -2,104
  -3,094
  -4,409
  -6,106
  -8,239
  -10,858
  -14,005
  -17,714
  -22,008
  -26,903
  -32,406
  -38,516
  -45,226
  -52,526
  -60,401
  -68,836
  -77,816
  -87,326
  -97,353
  -107,887
  -118,920
  -130,449
  -142,472
  -154,994
  -168,020
  -181,561
  -195,632
  -210,249
  -225,433
Prev. year cash balance distribution, $m
  741
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  -567
  -1,999
  -2,947
  -4,209
  -5,842
  -7,899
  -10,432
  -13,482
  -17,084
  -21,265
  -26,040
  -31,419
  -37,403
  -43,986
  -51,159
  -58,909
  -67,221
  -76,081
  -85,473
  -95,385
  -105,806
  -116,729
  -128,149
  -140,065
  -152,479
  -165,398
  -178,831
  -192,791
  -207,295
  -222,363
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  -543
  -1,830
  -2,565
  -3,466
  -4,528
  -5,733
  -7,047
  -8,426
  -9,814
  -11,148
  -12,366
  -13,408
  -14,221
  -14,767
  -15,019
  -14,970
  -14,626
  -14,011
  -13,160
  -12,121
  -10,944
  -9,685
  -8,399
  -7,134
  -5,932
  -4,825
  -3,838
  -2,983
  -2,263
  -1,674
Current shareholders' claim on cash, %
  43.6
  19.6
  9.0
  4.3
  2.1
  1.0
  0.5
  0.3
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Paramount Resources Ltd. is an energy company. The Company explores and develops unconventional and conventional petroleum and natural gas prospects, including long-term unconventional exploration and pre-development projects, and holds a portfolio of investments in other entities. The Company's segments include Principal Properties, Strategic Investments and Corporate. The Principal Properties segment includes the Company's Corporate Operating Units (COUs), which are involved in the exploration, development, production and marketing of natural gas, natural gas liquids and crude oil. The Strategic investments include investments in other entities; investments in exploration and development stage assets, including oil sands and carbonate bitumen interests, and prospective shale gas acreage in the Liard and Horn River Basin, and drilling rigs owned by its subsidiary, Fox Drilling Limited Partnership (Fox Drilling). Fox Drilling owns seven triple-sized rigs.

FINANCIAL RATIOS  of  Paramount Resources Ltd. Class A Common (POU)

Valuation Ratios
P/E Ratio 1.3
Price to Sales 6.2
Price to Book 0.9
Price to Tangible Book
Price to Cash Flow 33.3
Price to Free Cash Flow -9.9
Growth Rates
Sales Growth Rate -41.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -59.3%
Cap. Spend. - 3 Yr. Gr. Rate -22.9%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 20
Management Effectiveness
Return On Assets 50.7%
Ret/ On Assets - 3 Yr. Avg. 8.1%
Return On Total Capital 57.7%
Ret/ On T. Cap. - 3 Yr. Avg. 6.3%
Return On Equity 106.7%
Return On Equity - 3 Yr. Avg. 2%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 37.7%
Gross Margin - 3 Yr. Avg. 56.2%
EBITDA Margin 594.3%
EBITDA Margin - 3 Yr. Avg. 206.9%
Operating Margin 540.5%
Oper. Margin - 3 Yr. Avg. 101.3%
Pre-Tax Margin 534.8%
Pre-Tax Margin - 3 Yr. Avg. 98.1%
Net Profit Margin 471.7%
Net Profit Margin - 3 Yr. Avg. 78.4%
Effective Tax Rate 11.8%
Eff/ Tax Rate - 3 Yr. Avg. 5.7%
Payout Ratio 0%

POU stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the POU stock intrinsic value calculation we used $247 million for the last fiscal year's total revenue generated by Paramount Resources Ltd. Class A Common . The default revenue input number comes from 2016 income statement of Paramount Resources Ltd. Class A Common . You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our POU stock valuation model: a) initial revenue growth rate of 60% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for POU is calculated based on our internal credit rating of Paramount Resources Ltd. Class A Common , is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Paramount Resources Ltd. Class A Common .
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of POU stock the variable cost ratio is equal to 313.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for POU stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 7.7% for Paramount Resources Ltd. Class A Common .

Corporate tax rate of 27% is the nominal tax rate for Paramount Resources Ltd. Class A Common . In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the POU stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for POU are equal to 590.3%.

Life of production assets of 19.2 years is the average useful life of capital assets used in Paramount Resources Ltd. Class A Common operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for POU is equal to -73.3%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1635 million for Paramount Resources Ltd. Class A Common - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 134.912 million for Paramount Resources Ltd. Class A Common is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Paramount Resources Ltd. Class A Common at the current share price and the inputted number of shares is $2.0 billion.

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