Intrinsic value of Cabot Oil&Gas - COG

Previous Close

$27.51

  Intrinsic Value

$1.39

stock screener

  Rating & Target

str. sell

-95%

Previous close

$27.51

 
Intrinsic value

$1.39

 
Up/down potential

-95%

 
Rating

str. sell

We calculate the intrinsic value of COG 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  -14.81
  24.20
  22.28
  20.55
  19.00
  17.60
  16.34
  15.20
  14.18
  13.26
  12.44
  11.69
  11.03
  10.42
  9.88
  9.39
  8.95
  8.56
  8.20
  7.88
  7.59
  7.33
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.00
  5.90
Revenue, $m
  1,156
  1,436
  1,756
  2,116
  2,519
  2,962
  3,446
  3,969
  4,532
  5,134
  5,772
  6,447
  7,158
  7,904
  8,685
  9,501
  10,351
  11,237
  12,159
  13,117
  14,113
  15,148
  16,224
  17,342
  18,504
  19,713
  20,970
  22,279
  23,642
  25,061
  26,541
Variable operating expenses, $m
 
  1,532
  1,873
  2,258
  2,687
  3,160
  3,676
  4,235
  4,836
  5,478
  6,159
  6,879
  7,638
  8,434
  9,267
  10,137
  11,045
  11,990
  12,974
  13,996
  15,059
  16,163
  17,311
  18,504
  19,744
  21,034
  22,375
  23,772
  25,226
  26,740
  28,319
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
  1,727
  1,532
  1,873
  2,258
  2,687
  3,160
  3,676
  4,235
  4,836
  5,478
  6,159
  6,879
  7,638
  8,434
  9,267
  10,137
  11,045
  11,990
  12,974
  13,996
  15,059
  16,163
  17,311
  18,504
  19,744
  21,034
  22,375
  23,772
  25,226
  26,740
  28,319
Operating income, $m
  -571
  -96
  -118
  -142
  -169
  -198
  -231
  -266
  -304
  -344
  -387
  -432
  -480
  -530
  -582
  -637
  -694
  -753
  -815
  -879
  -946
  -1,015
  -1,087
  -1,162
  -1,240
  -1,321
  -1,405
  -1,493
  -1,584
  -1,679
  -1,778
EBITDA, $m
  19
  638
  781
  941
  1,120
  1,317
  1,532
  1,765
  2,015
  2,283
  2,567
  2,867
  3,183
  3,515
  3,862
  4,225
  4,603
  4,997
  5,407
  5,833
  6,276
  6,736
  7,214
  7,711
  8,228
  8,766
  9,325
  9,907
  10,513
  11,144
  11,802
Interest expense (income), $m
  87
  75
  105
  140
  179
  222
  270
  323
  380
  441
  506
  575
  648
  725
  806
  891
  979
  1,071
  1,167
  1,267
  1,371
  1,479
  1,591
  1,708
  1,829
  1,955
  2,086
  2,222
  2,364
  2,512
  2,666
Earnings before tax, $m
  -660
  -171
  -223
  -281
  -347
  -421
  -501
  -589
  -683
  -785
  -892
  -1,007
  -1,128
  -1,255
  -1,388
  -1,527
  -1,673
  -1,824
  -1,982
  -2,146
  -2,317
  -2,494
  -2,678
  -2,870
  -3,069
  -3,276
  -3,491
  -3,715
  -3,948
  -4,191
  -4,444
Tax expense, $m
  -243
  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
  -417
  -171
  -223
  -281
  -347
  -421
  -501
  -589
  -683
  -785
  -892
  -1,007
  -1,128
  -1,255
  -1,388
  -1,527
  -1,673
  -1,824
  -1,982
  -2,146
  -2,317
  -2,494
  -2,678
  -2,870
  -3,069
  -3,276
  -3,491
  -3,715
  -3,948
  -4,191
  -4,444

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  499
  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
  5,123
  5,743
  7,023
  8,466
  10,074
  11,847
  13,782
  15,878
  18,130
  20,535
  23,089
  25,789
  28,632
  31,616
  34,740
  38,003
  41,406
  44,949
  48,636
  52,469
  56,453
  60,594
  64,896
  69,368
  74,017
  78,852
  83,881
  89,116
  94,566
  100,245
  106,164
Adjusted assets (=assets-cash), $m
  4,624
  5,743
  7,023
  8,466
  10,074
  11,847
  13,782
  15,878
  18,130
  20,535
  23,089
  25,789
  28,632
  31,616
  34,740
  38,003
  41,406
  44,949
  48,636
  52,469
  56,453
  60,594
  64,896
  69,368
  74,017
  78,852
  83,881
  89,116
  94,566
  100,245
  106,164
Revenue / Adjusted assets
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
Average production assets, $m
  4,614
  5,730
  7,007
  8,447
  10,051
  11,820
  13,751
  15,842
  18,089
  20,488
  23,037
  25,731
  28,568
  31,545
  34,662
  37,918
  41,312
  44,848
  48,526
  52,351
  56,326
  60,457
  64,750
  69,212
  73,851
  78,674
  83,692
  88,915
  94,354
  100,019
  105,925
Working capital, $m
  458
  -50
  -61
  -74
  -88
  -104
  -121
  -139
  -159
  -180
  -202
  -226
  -251
  -277
  -304
  -333
  -362
  -393
  -426
  -459
  -494
  -530
  -568
  -607
  -648
  -690
  -734
  -780
  -827
  -877
  -929
Total debt, $m
  1,521
  2,142
  2,849
  3,648
  4,537
  5,517
  6,588
  7,746
  8,992
  10,322
  11,734
  13,227
  14,800
  16,450
  18,177
  19,982
  21,863
  23,823
  25,862
  27,981
  30,185
  32,474
  34,854
  37,327
  39,898
  42,571
  45,352
  48,247
  51,261
  54,401
  57,675
Total liabilities, $m
  2,555
  3,176
  3,883
  4,682
  5,571
  6,551
  7,622
  8,780
  10,026
  11,356
  12,768
  14,261
  15,834
  17,484
  19,211
  21,016
  22,897
  24,857
  26,896
  29,015
  31,219
  33,508
  35,888
  38,361
  40,932
  43,605
  46,386
  49,281
  52,295
  55,435
  58,709
Total equity, $m
  2,568
  2,567
  3,139
  3,784
  4,503
  5,296
  6,161
  7,097
  8,104
  9,179
  10,321
  11,528
  12,799
  14,133
  15,529
  16,987
  18,508
  20,092
  21,740
  23,454
  25,235
  27,085
  29,009
  31,008
  33,086
  35,247
  37,495
  39,835
  42,271
  44,810
  47,455
Total liabilities and equity, $m
  5,123
  5,743
  7,022
  8,466
  10,074
  11,847
  13,783
  15,877
  18,130
  20,535
  23,089
  25,789
  28,633
  31,617
  34,740
  38,003
  41,405
  44,949
  48,636
  52,469
  56,454
  60,593
  64,897
  69,369
  74,018
  78,852
  83,881
  89,116
  94,566
  100,245
  106,164
Debt-to-equity ratio
  0.592
  0.830
  0.910
  0.960
  1.010
  1.040
  1.070
  1.090
  1.110
  1.120
  1.140
  1.150
  1.160
  1.160
  1.170
  1.180
  1.180
  1.190
  1.190
  1.190
  1.200
  1.200
  1.200
  1.200
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.220
Adjusted equity ratio
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447
  0.447

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -417
  -171
  -223
  -281
  -347
  -421
  -501
  -589
  -683
  -785
  -892
  -1,007
  -1,128
  -1,255
  -1,388
  -1,527
  -1,673
  -1,824
  -1,982
  -2,146
  -2,317
  -2,494
  -2,678
  -2,870
  -3,069
  -3,276
  -3,491
  -3,715
  -3,948
  -4,191
  -4,444
Depreciation, amort., depletion, $m
  590
  735
  898
  1,083
  1,289
  1,515
  1,763
  2,031
  2,319
  2,627
  2,953
  3,299
  3,663
  4,044
  4,444
  4,861
  5,296
  5,750
  6,221
  6,712
  7,221
  7,751
  8,301
  8,873
  9,468
  10,086
  10,730
  11,399
  12,097
  12,823
  13,580
Funds from operations, $m
  324
  564
  676
  801
  941
  1,095
  1,262
  1,442
  1,636
  1,842
  2,061
  2,292
  2,535
  2,790
  3,056
  3,334
  3,624
  3,926
  4,239
  4,566
  4,905
  5,257
  5,623
  6,004
  6,399
  6,811
  7,239
  7,684
  8,149
  8,632
  9,136
Change in working capital, $m
  -68
  -10
  -11
  -13
  -14
  -16
  -17
  -18
  -20
  -21
  -22
  -24
  -25
  -26
  -27
  -29
  -30
  -31
  -32
  -34
  -35
  -36
  -38
  -39
  -41
  -42
  -44
  -46
  -48
  -50
  -52
Cash from operations, $m
  392
  574
  687
  814
  955
  1,110
  1,279
  1,461
  1,656
  1,863
  2,083
  2,316
  2,560
  2,816
  3,083
  3,363
  3,654
  3,957
  4,272
  4,599
  4,940
  5,293
  5,661
  6,043
  6,440
  6,853
  7,283
  7,730
  8,196
  8,682
  9,188
Maintenance CAPEX, $m
  0
  -591
  -735
  -898
  -1,083
  -1,289
  -1,515
  -1,763
  -2,031
  -2,319
  -2,627
  -2,953
  -3,299
  -3,663
  -4,044
  -4,444
  -4,861
  -5,296
  -5,750
  -6,221
  -6,712
  -7,221
  -7,751
  -8,301
  -8,873
  -9,468
  -10,086
  -10,730
  -11,399
  -12,097
  -12,823
New CAPEX, $m
  -375
  -1,117
  -1,277
  -1,440
  -1,605
  -1,769
  -1,931
  -2,091
  -2,247
  -2,399
  -2,548
  -2,694
  -2,837
  -2,978
  -3,117
  -3,256
  -3,395
  -3,535
  -3,678
  -3,825
  -3,975
  -4,131
  -4,293
  -4,462
  -4,638
  -4,824
  -5,018
  -5,223
  -5,438
  -5,666
  -5,905
Cash from investing activities, $m
  -353
  -1,708
  -2,012
  -2,338
  -2,688
  -3,058
  -3,446
  -3,854
  -4,278
  -4,718
  -5,175
  -5,647
  -6,136
  -6,641
  -7,161
  -7,700
  -8,256
  -8,831
  -9,428
  -10,046
  -10,687
  -11,352
  -12,044
  -12,763
  -13,511
  -14,292
  -15,104
  -15,953
  -16,837
  -17,763
  -18,728
Free cash flow, $m
  39
  -1,134
  -1,324
  -1,524
  -1,732
  -1,947
  -2,168
  -2,393
  -2,622
  -2,855
  -3,092
  -3,332
  -3,576
  -3,824
  -4,078
  -4,337
  -4,602
  -4,875
  -5,157
  -5,447
  -5,748
  -6,059
  -6,383
  -6,720
  -7,072
  -7,439
  -7,822
  -8,222
  -8,642
  -9,081
  -9,541
Issuance/(repayment) of debt, $m
  -497
  621
  708
  798
  889
  980
  1,070
  1,159
  1,245
  1,330
  1,412
  1,493
  1,572
  1,650
  1,727
  1,804
  1,882
  1,960
  2,039
  2,120
  2,203
  2,290
  2,379
  2,473
  2,571
  2,673
  2,781
  2,895
  3,014
  3,140
  3,273
Issuance/(repurchase) of shares, $m
  995
  669
  795
  927
  1,066
  1,213
  1,366
  1,525
  1,690
  1,860
  2,034
  2,214
  2,399
  2,589
  2,784
  2,986
  3,194
  3,408
  3,630
  3,860
  4,098
  4,345
  4,602
  4,869
  5,147
  5,437
  5,739
  6,055
  6,385
  6,729
  7,090
Cash from financing (excl. dividends), $m  
  495
  1,290
  1,503
  1,725
  1,955
  2,193
  2,436
  2,684
  2,935
  3,190
  3,446
  3,707
  3,971
  4,239
  4,511
  4,790
  5,076
  5,368
  5,669
  5,980
  6,301
  6,635
  6,981
  7,342
  7,718
  8,110
  8,520
  8,950
  9,399
  9,869
  10,363
Total cash flow (excl. dividends), $m
  534
  155
  178
  200
  223
  246
  269
  291
  313
  334
  355
  375
  395
  415
  434
  453
  473
  492
  512
  533
  553
  575
  598
  621
  646
  672
  699
  727
  757
  789
  822
Retained Cash Flow (-), $m
  -559
  -669
  -795
  -927
  -1,066
  -1,213
  -1,366
  -1,525
  -1,690
  -1,860
  -2,034
  -2,214
  -2,399
  -2,589
  -2,784
  -2,986
  -3,194
  -3,408
  -3,630
  -3,860
  -4,098
  -4,345
  -4,602
  -4,869
  -5,147
  -5,437
  -5,739
  -6,055
  -6,385
  -6,729
  -7,090
Prev. year cash balance distribution, $m
 
  499
  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
 
  -14
  -617
  -726
  -843
  -967
  -1,097
  -1,234
  -1,377
  -1,525
  -1,679
  -1,839
  -2,004
  -2,174
  -2,350
  -2,532
  -2,721
  -2,916
  -3,118
  -3,327
  -3,544
  -3,770
  -4,004
  -4,247
  -4,501
  -4,765
  -5,040
  -5,328
  -5,627
  -5,940
  -6,267
Discount rate, %
 
  4.90
  5.15
  5.40
  5.67
  5.96
  6.25
  6.57
  6.89
  7.24
  7.60
  7.98
  8.38
  8.80
  9.24
  9.70
  10.19
  10.70
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
PV of cash for distribution, $m
 
  -14
  -558
  -620
  -676
  -724
  -763
  -791
  -808
  -813
  -807
  -790
  -763
  -726
  -682
  -631
  -576
  -518
  -459
  -400
  -343
  -289
  -240
  -195
  -156
  -122
  -93
  -70
  -51
  -36
  -25
Current shareholders' claim on cash, %
  100
  93.9
  88.3
  83.4
  78.9
  74.8
  71.1
  67.7
  64.6
  61.7
  59.1
  56.6
  54.3
  52.2
  50.2
  48.3
  46.5
  44.9
  43.3
  41.8
  40.4
  39.0
  37.7
  36.5
  35.3
  34.2
  33.1
  32.0
  31.0
  30.0
  29.1

Cabot Oil & Gas Corporation is an independent oil and gas company engaged in the development, exploitation and exploration of oil and gas properties. The Company operates in the segment of natural gas and oil development, exploitation, exploration and production, in the continental United States. Its assets are concentrated in areas with known hydrocarbon resources, which are conducive to multi-well, repeatable drilling programs. As of December 31, 2016, its exploration, development and production operations were primarily concentrated in two unconventional plays: the Marcellus Shale in northeast Pennsylvania and the Eagle Ford Shale in south Texas. The Company also has operations in various other unconventional and conventional plays throughout the continental United States. Its Marcellus Shale properties are principally located in Susquehanna County, Pennsylvania. Its properties in the Eagle Ford Shale are principally located in Atascosa, Frio and La Salle Counties, Texas.

FINANCIAL RATIOS  of  Cabot Oil&Gas (COG)

Valuation Ratios
P/E Ratio -30.7
Price to Sales 11.1
Price to Book 5
Price to Tangible Book
Price to Cash Flow 32.6
Price to Free Cash Flow 752.7
Growth Rates
Sales Growth Rate -14.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -60.8%
Cap. Spend. - 3 Yr. Gr. Rate -20.7%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 59.2%
Total Debt to Equity 59.2%
Interest Coverage -7
Management Effectiveness
Return On Assets -7%
Ret/ On Assets - 3 Yr. Avg. -1.2%
Return On Total Capital -10.3%
Ret/ On T. Cap. - 3 Yr. Avg. -3.4%
Return On Equity -18.2%
Return On Equity - 3 Yr. Avg. -6.3%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 1.6%
Gross Margin - 3 Yr. Avg. 19.9%
EBITDA Margin 1.5%
EBITDA Margin - 3 Yr. Avg. 22.3%
Operating Margin -49.4%
Oper. Margin - 3 Yr. Avg. -17.1%
Pre-Tax Margin -57.1%
Pre-Tax Margin - 3 Yr. Avg. -23.1%
Net Profit Margin -36.1%
Net Profit Margin - 3 Yr. Avg. -13.2%
Effective Tax Rate 36.8%
Eff/ Tax Rate - 3 Yr. Avg. -49.7%
Payout Ratio -8.6%

COG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the COG stock intrinsic value calculation we used $1156 million for the last fiscal year's total revenue generated by Cabot Oil&Gas. The default revenue input number comes from 2016 income statement of Cabot Oil&Gas. 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 COG stock valuation model: a) initial revenue growth rate of 24.2% 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 4.9%, whose default value for COG is calculated based on our internal credit rating of Cabot Oil&Gas, 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 Cabot Oil&Gas.
    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 COG stock the variable cost ratio is equal to 106.7%.

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 COG 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 4.9% for Cabot Oil&Gas.

Corporate tax rate of 27% is the nominal tax rate for Cabot Oil&Gas. 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 COG 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 COG are equal to 399.1%.

Life of production assets of 7.8 years is the average useful life of capital assets used in Cabot Oil&Gas 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 COG is equal to -3.5%. 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 - $2568 million for Cabot Oil&Gas - 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 461.538 million for Cabot Oil&Gas 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 Cabot Oil&Gas at the current share price and the inputted number of shares is $12.7 billion.

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Financial statements of COG
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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