Intrinsic value of Parex Resources Inc. - PXT

Previous Close

$15.31

  Intrinsic Value

$1.44

stock screener

  Rating & Target

str. sell

-91%

  Value-price divergence*

-150%

Previous close

$15.31

 
Intrinsic value

$1.44

 
Up/down potential

-91%

 
Rating

str. sell

 
Value-price divergence*

-150%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of PXT 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 2.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   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, %
  -14.72
  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
  556
  890
  1,374
  2,055
  2,982
  4,208
  5,785
  7,765
  10,195
  13,119
  16,570
  20,577
  25,157
  30,323
  36,078
  42,421
  49,346
  56,843
  64,899
  73,501
  82,637
  92,295
  102,464
  113,137
  124,309
  135,978
  148,146
  160,817
  174,001
  187,710
  201,958
Variable operating expenses, $m
 
  625
  960
  1,431
  2,071
  2,918
  4,008
  5,377
  7,057
  9,078
  11,463
  14,223
  17,388
  20,959
  24,937
  29,321
  34,108
  39,289
  44,858
  50,804
  57,118
  63,794
  70,822
  78,199
  85,921
  93,987
  102,397
  111,156
  120,269
  129,744
  139,592
Fixed operating expenses, $m
 
  257
  264
  270
  277
  284
  291
  298
  306
  313
  321
  329
  338
  346
  355
  364
  373
  382
  391
  401
  411
  422
  432
  443
  454
  465
  477
  489
  501
  514
  526
Total operating expenses, $m
  639
  882
  1,224
  1,701
  2,348
  3,202
  4,299
  5,675
  7,363
  9,391
  11,784
  14,552
  17,726
  21,305
  25,292
  29,685
  34,481
  39,671
  45,249
  51,205
  57,529
  64,216
  71,254
  78,642
  86,375
  94,452
  102,874
  111,645
  120,770
  130,258
  140,118
Operating income, $m
  -84
  8
  151
  355
  634
  1,005
  1,485
  2,090
  2,833
  3,728
  4,786
  6,025
  7,431
  9,018
  10,786
  12,736
  14,866
  17,171
  19,650
  22,296
  25,108
  28,080
  31,209
  34,494
  37,933
  41,525
  45,271
  49,172
  53,232
  57,452
  61,839
EBITDA, $m
  72
  238
  501
  873
  1,382
  2,057
  2,927
  4,022
  5,367
  6,986
  8,898
  11,120
  13,660
  16,526
  19,719
  23,240
  27,084
  31,245
  35,718
  40,495
  45,568
  50,931
  56,579
  62,506
  68,711
  75,192
  81,951
  88,990
  96,313
  103,928
  111,843
Interest expense (income), $m
  1
  0
  6
  14
  26
  42
  64
  91
  126
  168
  219
  280
  350
  430
  520
  620
  731
  852
  983
  1,124
  1,274
  1,434
  1,602
  1,780
  1,966
  2,162
  2,365
  2,578
  2,799
  3,030
  3,269
Earnings before tax, $m
  -96
  8
  145
  340
  608
  963
  1,422
  1,998
  2,707
  3,559
  4,566
  5,745
  7,081
  8,588
  10,266
  12,116
  14,135
  16,319
  18,666
  21,172
  23,833
  26,646
  29,607
  32,714
  35,967
  39,364
  42,906
  46,594
  50,432
  54,423
  58,570
Tax expense, $m
  -33
  2
  39
  92
  164
  260
  384
  540
  731
  961
  1,233
  1,551
  1,912
  2,319
  2,772
  3,271
  3,816
  4,406
  5,040
  5,717
  6,435
  7,194
  7,994
  8,833
  9,711
  10,628
  11,585
  12,580
  13,617
  14,694
  15,814
Net income, $m
  -63
  6
  106
  248
  444
  703
  1,038
  1,459
  1,976
  2,598
  3,333
  4,194
  5,169
  6,269
  7,495
  8,845
  10,318
  11,913
  13,627
  15,456
  17,398
  19,451
  21,613
  23,881
  26,256
  28,736
  31,321
  34,014
  36,815
  39,729
  42,756

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  202
  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
  1,241
  1,663
  2,569
  3,842
  5,575
  7,865
  10,812
  14,513
  19,057
  24,522
  30,973
  38,461
  47,023
  56,678
  67,436
  79,292
  92,236
  106,248
  121,306
  137,386
  154,462
  172,514
  191,521
  211,471
  232,353
  254,164
  276,908
  300,593
  325,236
  350,860
  377,492
Adjusted assets (=assets-cash), $m
  1,039
  1,663
  2,569
  3,842
  5,575
  7,865
  10,812
  14,513
  19,057
  24,522
  30,973
  38,461
  47,023
  56,678
  67,436
  79,292
  92,236
  106,248
  121,306
  137,386
  154,462
  172,514
  191,521
  211,471
  232,353
  254,164
  276,908
  300,593
  325,236
  350,860
  377,492
Revenue / Adjusted assets
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
Average production assets, $m
  744
  1,189
  1,838
  2,748
  3,987
  5,626
  7,734
  10,381
  13,631
  17,540
  22,155
  27,511
  33,635
  40,542
  48,236
  56,717
  65,976
  75,999
  86,770
  98,271
  110,486
  123,398
  136,994
  151,264
  166,201
  181,802
  198,071
  215,013
  232,640
  250,968
  270,018
Working capital, $m
  126
  -122
  -188
  -282
  -409
  -576
  -792
  -1,064
  -1,397
  -1,797
  -2,270
  -2,819
  -3,447
  -4,154
  -4,943
  -5,812
  -6,760
  -7,787
  -8,891
  -10,070
  -11,321
  -12,644
  -14,038
  -15,500
  -17,030
  -18,629
  -20,296
  -22,032
  -23,838
  -25,716
  -27,668
Total debt, $m
  0
  167
  409
  749
  1,211
  1,823
  2,610
  3,598
  4,811
  6,270
  7,993
  9,992
  12,278
  14,856
  17,728
  20,894
  24,350
  28,091
  32,112
  36,405
  40,964
  45,784
  50,859
  56,186
  61,761
  67,585
  73,657
  79,981
  86,561
  93,403
  100,513
Total liabilities, $m
  277
  444
  686
  1,026
  1,488
  2,100
  2,887
  3,875
  5,088
  6,547
  8,270
  10,269
  12,555
  15,133
  18,005
  21,171
  24,627
  28,368
  32,389
  36,682
  41,241
  46,061
  51,136
  56,463
  62,038
  67,862
  73,934
  80,258
  86,838
  93,680
  100,790
Total equity, $m
  964
  1,219
  1,883
  2,816
  4,086
  5,765
  7,925
  10,638
  13,969
  17,974
  22,703
  28,192
  34,468
  41,545
  49,430
  58,121
  67,609
  77,880
  88,917
  100,704
  113,221
  126,453
  140,385
  155,008
  170,314
  186,302
  202,973
  220,335
  238,398
  257,180
  276,702
Total liabilities and equity, $m
  1,241
  1,663
  2,569
  3,842
  5,574
  7,865
  10,812
  14,513
  19,057
  24,521
  30,973
  38,461
  47,023
  56,678
  67,435
  79,292
  92,236
  106,248
  121,306
  137,386
  154,462
  172,514
  191,521
  211,471
  232,352
  254,164
  276,907
  300,593
  325,236
  350,860
  377,492
Debt-to-equity ratio
  0.000
  0.140
  0.220
  0.270
  0.300
  0.320
  0.330
  0.340
  0.340
  0.350
  0.350
  0.350
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
Adjusted equity ratio
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733
  0.733

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -63
  6
  106
  248
  444
  703
  1,038
  1,459
  1,976
  2,598
  3,333
  4,194
  5,169
  6,269
  7,495
  8,845
  10,318
  11,913
  13,627
  15,456
  17,398
  19,451
  21,613
  23,881
  26,256
  28,736
  31,321
  34,014
  36,815
  39,729
  42,756
Depreciation, amort., depletion, $m
  156
  230
  350
  519
  748
  1,052
  1,442
  1,932
  2,534
  3,258
  4,113
  5,095
  6,229
  7,508
  8,933
  10,503
  12,218
  14,074
  16,068
  18,198
  20,460
  22,852
  25,369
  28,012
  30,778
  33,667
  36,680
  39,817
  43,081
  46,476
  50,003
Funds from operations, $m
  221
  236
  456
  767
  1,192
  1,755
  2,480
  3,391
  4,510
  5,857
  7,446
  9,289
  11,398
  13,777
  16,427
  19,348
  22,536
  25,987
  29,695
  33,654
  37,859
  42,303
  46,982
  51,893
  57,034
  62,403
  68,001
  73,831
  79,897
  86,204
  92,760
Change in working capital, $m
  13
  -46
  -66
  -93
  -127
  -168
  -216
  -271
  -333
  -401
  -473
  -549
  -628
  -708
  -788
  -869
  -949
  -1,027
  -1,104
  -1,179
  -1,252
  -1,323
  -1,393
  -1,462
  -1,531
  -1,599
  -1,667
  -1,736
  -1,806
  -1,878
  -1,952
Cash from operations, $m
  208
  281
  522
  860
  1,319
  1,923
  2,696
  3,662
  4,843
  6,257
  7,919
  9,837
  12,026
  14,485
  17,216
  20,217
  23,485
  27,014
  30,799
  34,833
  39,110
  43,626
  48,375
  53,355
  58,564
  64,001
  69,668
  75,567
  81,703
  88,082
  94,712
Maintenance CAPEX, $m
  0
  -138
  -220
  -340
  -509
  -738
  -1,042
  -1,432
  -1,922
  -2,524
  -3,248
  -4,103
  -5,095
  -6,229
  -7,508
  -8,933
  -10,503
  -12,218
  -14,074
  -16,068
  -18,198
  -20,460
  -22,852
  -25,369
  -28,012
  -30,778
  -33,667
  -36,680
  -39,817
  -43,081
  -46,476
New CAPEX, $m
  -151
  -446
  -648
  -911
  -1,239
  -1,638
  -2,108
  -2,647
  -3,250
  -3,909
  -4,615
  -5,356
  -6,124
  -6,906
  -7,695
  -8,481
  -9,259
  -10,023
  -10,771
  -11,501
  -12,215
  -12,912
  -13,596
  -14,270
  -14,937
  -15,602
  -16,268
  -16,942
  -17,627
  -18,328
  -19,050
Cash from investing activities, $m
  -143
  -584
  -868
  -1,251
  -1,748
  -2,376
  -3,150
  -4,079
  -5,172
  -6,433
  -7,863
  -9,459
  -11,219
  -13,135
  -15,203
  -17,414
  -19,762
  -22,241
  -24,845
  -27,569
  -30,413
  -33,372
  -36,448
  -39,639
  -42,949
  -46,380
  -49,935
  -53,622
  -57,444
  -61,409
  -65,526
Free cash flow, $m
  65
  -302
  -346
  -390
  -429
  -454
  -454
  -417
  -329
  -176
  56
  378
  807
  1,349
  2,013
  2,803
  3,723
  4,773
  5,954
  7,263
  8,697
  10,254
  11,928
  13,717
  15,616
  17,622
  19,732
  21,945
  24,259
  26,672
  29,186
Issuance/(repayment) of debt, $m
  0
  167
  242
  340
  463
  612
  787
  988
  1,213
  1,459
  1,722
  1,999
  2,286
  2,578
  2,872
  3,166
  3,456
  3,741
  4,020
  4,293
  4,559
  4,820
  5,075
  5,326
  5,575
  5,824
  6,073
  6,324
  6,580
  6,841
  7,111
Issuance/(repurchase) of shares, $m
  7
  451
  558
  685
  826
  976
  1,123
  1,254
  1,355
  1,407
  1,395
  1,295
  1,106
  808
  391
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  7
  618
  800
  1,025
  1,289
  1,588
  1,910
  2,242
  2,568
  2,866
  3,117
  3,294
  3,392
  3,386
  3,263
  3,166
  3,456
  3,741
  4,020
  4,293
  4,559
  4,820
  5,075
  5,326
  5,575
  5,824
  6,073
  6,324
  6,580
  6,841
  7,111
Total cash flow (excl. dividends), $m
  74
  316
  454
  634
  860
  1,133
  1,456
  1,825
  2,238
  2,690
  3,174
  3,673
  4,199
  4,736
  5,276
  5,969
  7,179
  8,515
  9,974
  11,556
  13,257
  15,073
  17,003
  19,043
  21,191
  23,445
  25,805
  28,269
  30,839
  33,514
  36,297
Retained Cash Flow (-), $m
  38
  -457
  -664
  -933
  -1,270
  -1,679
  -2,161
  -2,713
  -3,330
  -4,006
  -4,729
  -5,489
  -6,275
  -7,077
  -7,885
  -8,691
  -9,488
  -10,271
  -11,037
  -11,786
  -12,517
  -13,232
  -13,933
  -14,623
  -15,306
  -15,988
  -16,671
  -17,362
  -18,064
  -18,782
  -19,521
Prev. year cash balance distribution, $m
 
  202
  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
 
  61
  -210
  -299
  -410
  -546
  -705
  -888
  -1,092
  -1,316
  -1,555
  -1,816
  -2,076
  -2,342
  -2,609
  -2,722
  -2,309
  -1,756
  -1,063
  -230
  740
  1,841
  3,070
  4,420
  5,885
  7,458
  9,134
  10,908
  12,775
  14,732
  16,776
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
 
  59
  -192
  -260
  -338
  -423
  -512
  -600
  -683
  -756
  -815
  -862
  -886
  -890
  -876
  -799
  -587
  -382
  -196
  -35
  94
  190
  255
  290
  300
  290
  266
  234
  198
  161
  126
Current shareholders' claim on cash, %
  100
  80.1
  67.2
  58.3
  51.9
  47.2
  43.6
  40.9
  38.8
  37.2
  36.1
  35.2
  34.7
  34.3
  34.2
  34.2
  34.2
  34.2
  34.2
  34.2
  34.2
  34.2
  34.2
  34.2
  34.2
  34.2
  34.2
  34.2
  34.2
  34.2
  34.2

Parex Resources Inc. engages in the exploration, development, production, and marketing of oil and natural gas in Canada. It holds interests in onshore exploration and production blocks totaling approximately 1,870,122 gross acres in Colombia. As of December 31, 2015, the company had proved plus probable reserves of 81.7 million barrels of oil equivalent. Parex Resources Inc. was incorporated in 2009 and is headquartered in Calgary, Canada.

FINANCIAL RATIOS  of  Parex Resources Inc. (PXT)

Valuation Ratios
P/E Ratio -37.2
Price to Sales 4.2
Price to Book 2.4
Price to Tangible Book
Price to Cash Flow 11.3
Price to Free Cash Flow 41.1
Growth Rates
Sales Growth Rate -14.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -11.2%
Cap. Spend. - 3 Yr. Gr. Rate -13.7%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage -95
Management Effectiveness
Return On Assets -4.9%
Ret/ On Assets - 3 Yr. Avg. -6.7%
Return On Total Capital -6.4%
Ret/ On T. Cap. - 3 Yr. Avg. -10%
Return On Equity -6.4%
Return On Equity - 3 Yr. Avg. -10.6%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 52.7%
Gross Margin - 3 Yr. Avg. 49%
EBITDA Margin 11%
EBITDA Margin - 3 Yr. Avg. 19.3%
Operating Margin -14.9%
Oper. Margin - 3 Yr. Avg. -8.6%
Pre-Tax Margin -17.3%
Pre-Tax Margin - 3 Yr. Avg. -11.9%
Net Profit Margin -11.3%
Net Profit Margin - 3 Yr. Avg. -12.3%
Effective Tax Rate 34.4%
Eff/ Tax Rate - 3 Yr. Avg. -4.7%
Payout Ratio 0%

PXT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PXT stock intrinsic value calculation we used $556 million for the last fiscal year's total revenue generated by Parex Resources Inc.. The default revenue input number comes from 2016 income statement of Parex Resources Inc.. 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 PXT 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 PXT is calculated based on our internal credit rating of Parex Resources Inc., 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 Parex Resources Inc..
    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 PXT stock the variable cost ratio is equal to 70.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $251 million in the base year in the intrinsic value calculation for PXT 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 3.5% for Parex Resources Inc..

Corporate tax rate of 27% is the nominal tax rate for Parex Resources Inc.. 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 PXT 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 PXT are equal to 133.7%.

Life of production assets of 5.4 years is the average useful life of capital assets used in Parex Resources Inc. 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 PXT is equal to -13.7%. 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 - $964 million for Parex Resources Inc. - 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 150.061 million for Parex Resources Inc. 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 Parex Resources Inc. at the current share price and the inputted number of shares is $2.3 billion.

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Stock chart of PXT Financial statements of PXT
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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