Intrinsic value of California Resources - CRC

Previous Close

$10.50

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

  Value-price divergence*

0%

Previous close

$10.50

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

 
Value-price divergence*

0%

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

We calculate the intrinsic value of CRC 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 0.5

 

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, %
  -35.62
  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
  1,547
  2,475
  3,824
  5,719
  8,298
  11,707
  16,095
  21,604
  28,368
  36,502
  46,105
  57,252
  69,996
  84,369
  100,383
  118,032
  137,300
  158,158
  180,573
  204,508
  229,928
  256,799
  285,093
  314,789
  345,873
  378,341
  412,196
  447,454
  484,137
  522,280
  561,924
Variable operating expenses, $m
 
  7,577
  11,706
  17,506
  25,400
  35,836
  49,267
  66,130
  86,833
  111,733
  141,128
  175,249
  214,259
  258,254
  307,271
  361,297
  420,275
  484,121
  552,733
  625,999
  703,809
  786,061
  872,669
  963,569
  1,058,717
  1,158,101
  1,261,733
  1,369,656
  1,481,944
  1,598,698
  1,720,048
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
  969
  7,577
  11,706
  17,506
  25,400
  35,836
  49,267
  66,130
  86,833
  111,733
  141,128
  175,249
  214,259
  258,254
  307,271
  361,297
  420,275
  484,121
  552,733
  625,999
  703,809
  786,061
  872,669
  963,569
  1,058,717
  1,158,101
  1,261,733
  1,369,656
  1,481,944
  1,598,698
  1,720,048
Operating income, $m
  578
  -5,101
  -7,882
  -11,787
  -17,102
  -24,129
  -33,172
  -44,526
  -58,466
  -75,231
  -95,023
  -117,997
  -144,263
  -173,885
  -206,889
  -243,264
  -282,975
  -325,963
  -372,160
  -421,491
  -473,881
  -529,262
  -587,576
  -648,780
  -712,844
  -779,760
  -849,537
  -922,202
  -997,807
  -1,076,418
  -1,158,124
EBITDA, $m
  1,137
  -4,206
  -6,499
  -9,719
  -14,101
  -19,895
  -27,351
  -36,713
  -48,206
  -62,030
  -78,349
  -97,292
  -118,948
  -143,373
  -170,585
  -200,578
  -233,320
  -268,765
  -306,856
  -347,530
  -390,727
  -436,391
  -484,472
  -534,936
  -587,759
  -642,933
  -700,465
  -760,380
  -822,718
  -887,535
  -954,904
Interest expense (income), $m
  0
  184
  262
  436
  681
  1,014
  1,454
  2,020
  2,732
  3,605
  4,655
  5,895
  7,334
  8,979
  10,834
  12,902
  15,180
  17,668
  20,360
  23,254
  26,344
  29,626
  33,095
  36,748
  40,581
  44,594
  48,786
  53,156
  57,708
  62,444
  67,368
Earnings before tax, $m
  201
  -5,285
  -8,144
  -12,223
  -17,783
  -25,143
  -34,626
  -46,546
  -61,197
  -78,836
  -99,678
  -123,892
  -151,596
  -182,864
  -217,723
  -256,166
  -298,155
  -343,631
  -392,521
  -444,745
  -500,225
  -558,888
  -620,671
  -685,527
  -753,426
  -824,354
  -898,322
  -975,359
  -1,055,515
  -1,138,862
  -1,225,492
Tax expense, $m
  -78
  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
  279
  -5,285
  -8,144
  -12,223
  -17,783
  -25,143
  -34,626
  -46,546
  -61,197
  -78,836
  -99,678
  -123,892
  -151,596
  -182,864
  -217,723
  -256,166
  -298,155
  -343,631
  -392,521
  -444,745
  -500,225
  -558,888
  -620,671
  -685,527
  -753,426
  -824,354
  -898,322
  -975,359
  -1,055,515
  -1,138,862
  -1,225,492

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  12
  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
  6,354
  10,144
  15,673
  23,439
  34,009
  47,981
  65,963
  88,542
  116,261
  149,599
  188,956
  234,641
  286,871
  345,775
  411,405
  483,739
  562,704
  648,188
  740,052
  838,148
  942,327
  1,052,454
  1,168,414
  1,290,118
  1,417,513
  1,550,577
  1,689,329
  1,833,827
  1,984,169
  2,140,490
  2,302,965
Adjusted assets (=assets-cash), $m
  6,342
  10,144
  15,673
  23,439
  34,009
  47,981
  65,963
  88,542
  116,261
  149,599
  188,956
  234,641
  286,871
  345,775
  411,405
  483,739
  562,704
  648,188
  740,052
  838,148
  942,327
  1,052,454
  1,168,414
  1,290,118
  1,417,513
  1,550,577
  1,689,329
  1,833,827
  1,984,169
  2,140,490
  2,302,965
Revenue / Adjusted assets
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
Average production assets, $m
  6,099
  9,757
  15,075
  22,545
  32,711
  46,151
  63,446
  85,164
  111,825
  143,892
  181,747
  225,689
  275,926
  332,583
  395,709
  465,283
  541,236
  623,458
  711,818
  806,171
  906,375
  1,012,300
  1,123,836
  1,240,898
  1,363,432
  1,491,419
  1,624,878
  1,763,863
  1,908,469
  2,058,826
  2,215,103
Working capital, $m
  -301
  -342
  -528
  -789
  -1,145
  -1,616
  -2,221
  -2,981
  -3,915
  -5,037
  -6,363
  -7,901
  -9,660
  -11,643
  -13,853
  -16,288
  -18,947
  -21,826
  -24,919
  -28,222
  -31,730
  -35,438
  -39,343
  -43,441
  -47,730
  -52,211
  -56,883
  -61,749
  -66,811
  -72,075
  -77,545
Total debt, $m
  5,268
  7,487
  12,463
  19,452
  28,965
  41,540
  57,724
  78,044
  102,992
  132,996
  168,417
  209,533
  256,540
  309,555
  368,621
  433,722
  504,791
  581,726
  664,404
  752,690
  846,451
  945,565
  1,049,929
  1,159,463
  1,274,118
  1,393,876
  1,518,753
  1,648,802
  1,784,109
  1,924,798
  2,071,026
Total liabilities, $m
  6,911
  9,130
  14,106
  21,095
  30,608
  43,183
  59,367
  79,687
  104,635
  134,639
  170,060
  211,176
  258,183
  311,198
  370,264
  435,365
  506,434
  583,369
  666,047
  754,333
  848,094
  947,208
  1,051,572
  1,161,106
  1,275,761
  1,395,519
  1,520,396
  1,650,445
  1,785,752
  1,926,441
  2,072,669
Total equity, $m
  -557
  1,014
  1,567
  2,344
  3,401
  4,798
  6,596
  8,854
  11,626
  14,960
  18,896
  23,464
  28,687
  34,578
  41,140
  48,374
  56,270
  64,819
  74,005
  83,815
  94,233
  105,245
  116,841
  129,012
  141,751
  155,058
  168,933
  183,383
  198,417
  214,049
  230,297
Total liabilities and equity, $m
  6,354
  10,144
  15,673
  23,439
  34,009
  47,981
  65,963
  88,541
  116,261
  149,599
  188,956
  234,640
  286,870
  345,776
  411,404
  483,739
  562,704
  648,188
  740,052
  838,148
  942,327
  1,052,453
  1,168,413
  1,290,118
  1,417,512
  1,550,577
  1,689,329
  1,833,828
  1,984,169
  2,140,490
  2,302,966
Debt-to-equity ratio
  -9.458
  7.380
  7.950
  8.300
  8.520
  8.660
  8.750
  8.810
  8.860
  8.890
  8.910
  8.930
  8.940
  8.950
  8.960
  8.970
  8.970
  8.970
  8.980
  8.980
  8.980
  8.980
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
Adjusted equity ratio
  -0.090
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  279
  -5,285
  -8,144
  -12,223
  -17,783
  -25,143
  -34,626
  -46,546
  -61,197
  -78,836
  -99,678
  -123,892
  -151,596
  -182,864
  -217,723
  -256,166
  -298,155
  -343,631
  -392,521
  -444,745
  -500,225
  -558,888
  -620,671
  -685,527
  -753,426
  -824,354
  -898,322
  -975,359
  -1,055,515
  -1,138,862
  -1,225,492
Depreciation, amort., depletion, $m
  559
  895
  1,383
  2,068
  3,001
  4,234
  5,821
  7,813
  10,259
  13,201
  16,674
  20,705
  25,314
  30,512
  36,304
  42,687
  49,655
  57,198
  65,304
  73,961
  83,154
  92,872
  103,104
  113,844
  125,085
  136,827
  149,071
  161,822
  175,089
  188,883
  203,220
Funds from operations, $m
  19
  -4,390
  -6,761
  -10,155
  -14,782
  -20,909
  -28,805
  -38,733
  -50,938
  -65,635
  -83,004
  -103,186
  -126,282
  -152,352
  -181,420
  -213,480
  -248,501
  -286,433
  -327,216
  -370,785
  -417,071
  -466,016
  -517,567
  -571,684
  -628,340
  -687,527
  -749,251
  -813,536
  -880,426
  -949,979
  -1,022,272
Change in working capital, $m
  -111
  -128
  -186
  -261
  -356
  -470
  -605
  -760
  -933
  -1,123
  -1,325
  -1,538
  -1,759
  -1,983
  -2,210
  -2,436
  -2,659
  -2,878
  -3,093
  -3,303
  -3,508
  -3,708
  -3,905
  -4,098
  -4,290
  -4,481
  -4,672
  -4,866
  -5,062
  -5,264
  -5,471
Cash from operations, $m
  130
  -4,262
  -6,575
  -9,893
  -14,426
  -20,438
  -28,199
  -37,973
  -50,005
  -64,512
  -81,679
  -101,648
  -124,523
  -150,368
  -179,210
  -211,044
  -245,842
  -283,555
  -324,123
  -367,481
  -413,564
  -462,308
  -513,662
  -567,585
  -624,050
  -683,046
  -744,579
  -808,671
  -875,364
  -944,715
  -1,016,801
Maintenance CAPEX, $m
  0
  -559
  -895
  -1,383
  -2,068
  -3,001
  -4,234
  -5,821
  -7,813
  -10,259
  -13,201
  -16,674
  -20,705
  -25,314
  -30,512
  -36,304
  -42,687
  -49,655
  -57,198
  -65,304
  -73,961
  -83,154
  -92,872
  -103,104
  -113,844
  -125,085
  -136,827
  -149,071
  -161,822
  -175,089
  -188,883
New CAPEX, $m
  -75
  -3,659
  -5,318
  -7,470
  -10,166
  -13,439
  -17,296
  -21,717
  -26,662
  -32,067
  -37,855
  -43,942
  -50,237
  -56,658
  -63,125
  -69,574
  -75,953
  -82,222
  -88,359
  -94,353
  -100,204
  -105,925
  -111,536
  -117,061
  -122,534
  -127,987
  -133,459
  -138,985
  -144,606
  -150,357
  -156,277
Cash from investing activities, $m
  -61
  -4,218
  -6,213
  -8,853
  -12,234
  -16,440
  -21,530
  -27,538
  -34,475
  -42,326
  -51,056
  -60,616
  -70,942
  -81,972
  -93,637
  -105,878
  -118,640
  -131,877
  -145,557
  -159,657
  -174,165
  -189,079
  -204,408
  -220,165
  -236,378
  -253,072
  -270,286
  -288,056
  -306,428
  -325,446
  -345,160
Free cash flow, $m
  69
  -8,480
  -12,787
  -18,746
  -26,661
  -36,879
  -49,729
  -65,511
  -84,479
  -106,838
  -132,735
  -162,263
  -195,466
  -232,340
  -272,847
  -316,922
  -364,481
  -415,432
  -469,681
  -527,139
  -587,729
  -651,387
  -718,070
  -787,751
  -860,428
  -936,119
  -1,014,865
  -1,096,728
  -1,181,792
  -1,270,161
  -1,361,961
Issuance/(repayment) of debt, $m
  -22
  2,231
  4,976
  6,989
  9,513
  12,575
  16,184
  20,321
  24,947
  30,005
  35,421
  41,116
  47,007
  53,014
  59,066
  65,101
  71,069
  76,935
  82,678
  88,286
  93,761
  99,114
  104,364
  109,534
  114,655
  119,758
  124,877
  130,049
  135,307
  140,689
  146,228
Issuance/(repurchase) of shares, $m
  4
  6,857
  8,697
  13,000
  18,840
  26,540
  36,424
  48,804
  63,969
  82,170
  103,614
  128,460
  156,819
  188,754
  224,286
  263,400
  306,052
  352,179
  401,707
  454,555
  510,643
  569,901
  632,267
  697,698
  766,165
  837,661
  912,197
  989,809
  1,070,549
  1,154,494
  1,241,740
Cash from financing (excl. dividends), $m  
  -69
  9,088
  13,673
  19,989
  28,353
  39,115
  52,608
  69,125
  88,916
  112,175
  139,035
  169,576
  203,826
  241,768
  283,352
  328,501
  377,121
  429,114
  484,385
  542,841
  604,404
  669,015
  736,631
  807,232
  880,820
  957,419
  1,037,074
  1,119,858
  1,205,856
  1,295,183
  1,387,968
Total cash flow (excl. dividends), $m
  0
  607
  885
  1,243
  1,692
  2,237
  2,878
  3,614
  4,437
  5,336
  6,300
  7,313
  8,360
  9,429
  10,505
  11,578
  12,640
  13,683
  14,704
  15,702
  16,676
  17,628
  18,561
  19,481
  20,392
  21,299
  22,210
  23,129
  24,065
  25,022
  26,007
Retained Cash Flow (-), $m
  -359
  -6,857
  -8,697
  -13,000
  -18,840
  -26,540
  -36,424
  -48,804
  -63,969
  -82,170
  -103,614
  -128,460
  -156,819
  -188,754
  -224,286
  -263,400
  -306,052
  -352,179
  -401,707
  -454,555
  -510,643
  -569,901
  -632,267
  -697,698
  -766,165
  -837,661
  -912,197
  -989,809
  -1,070,549
  -1,154,494
  -1,241,740
Prev. year cash balance distribution, $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 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
 
  -6,249
  -7,812
  -11,757
  -17,148
  -24,303
  -33,545
  -45,190
  -59,532
  -76,833
  -97,314
  -121,147
  -148,459
  -179,326
  -213,781
  -251,821
  -293,412
  -338,496
  -387,003
  -438,853
  -493,967
  -552,273
  -613,706
  -678,217
  -745,773
  -816,362
  -889,988
  -966,679
  -1,046,484
  -1,129,472
  -1,215,733
Discount rate, %
 
  15.40
  16.17
  16.98
  17.83
  18.72
  19.65
  20.64
  21.67
  22.75
  23.89
  25.08
  26.34
  27.66
  29.04
  30.49
  32.02
  33.62
  35.30
  37.06
  38.92
  40.86
  42.90
  45.05
  47.30
  49.67
  52.15
  54.76
  57.50
  60.37
  63.39
PV of cash for distribution, $m
 
  -5,416
  -5,788
  -7,345
  -8,897
  -10,306
  -11,430
  -12,153
  -12,397
  -12,141
  -11,423
  -10,329
  -8,977
  -7,501
  -6,024
  -4,649
  -3,447
  -2,454
  -1,677
  -1,099
  -690
  -415
  -238
  -131
  -68
  -34
  -16
  -7
  -3
  -1
  0
Current shareholders' claim on cash, %
  100
  50.0
  5.2
  0.6
  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
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

California Resources Corporation is an independent oil and natural gas exploration and production company, with operating properties within the State of California. The Company produced approximately 140 thousand barrels of oil equivalent per day (MBoe/d), as of December 31, 2016. As of December 31, 2016, the Company had net proved reserves of 568 million barrels of oil equivalent (MMBoe). As of December 31, 2016, it drilled 42 development wells with 37 wells in the San Joaquin basin and five in the Los Angeles basin, which included over 30 steamflood and eight waterflood wells. As of December 31, 2016, the Company produced 36 billion barrels of oil equivalent (BBoe), including approximately 20 BBoe in the San Joaquin basin, 11 BBoe in the Los Angeles basin, three BBoe in the Ventura basin and 10 trillion cubic feet (Tcf) of natural gas in the Sacramento basin. Its operations included 135 fields with 8,837 gross active wellbores, as of December 31, 2016.

FINANCIAL RATIOS  of  California Resources (CRC)

Valuation Ratios
P/E Ratio 1.6
Price to Sales 0.3
Price to Book -0.8
Price to Tangible Book
Price to Cash Flow 3.4
Price to Free Cash Flow 8.1
Growth Rates
Sales Growth Rate -35.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -81.3%
Cap. Spend. - 3 Yr. Gr. Rate -46.2%
Financial Strength
Quick Ratio 0
Current Ratio 0.1
LT Debt to Equity -927.8%
Total Debt to Equity -945.8%
Interest Coverage 0
Management Effectiveness
Return On Assets 4.2%
Ret/ On Assets - 3 Yr. Avg. -14.4%
Return On Total Capital 5.6%
Ret/ On T. Cap. - 3 Yr. Avg. -19.9%
Return On Equity -37.9%
Return On Equity - 3 Yr. Avg. -160%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 48.3%
Gross Margin - 3 Yr. Avg. 61.1%
EBITDA Margin 49.1%
EBITDA Margin - 3 Yr. Avg. -55.4%
Operating Margin 37.4%
Oper. Margin - 3 Yr. Avg. -73.4%
Pre-Tax Margin 13%
Pre-Tax Margin - 3 Yr. Avg. -91%
Net Profit Margin 18%
Net Profit Margin - 3 Yr. Avg. -54.7%
Effective Tax Rate -38.8%
Eff/ Tax Rate - 3 Yr. Avg. 12.4%
Payout Ratio 0%

CRC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CRC stock intrinsic value calculation we used $1547 million for the last fiscal year's total revenue generated by California Resources. The default revenue input number comes from 2016 income statement of California Resources. 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 CRC 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 15.4%, whose default value for CRC is calculated based on our internal credit rating of California Resources, 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 California Resources.
    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 CRC stock the variable cost ratio is equal to 306.1%.

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 CRC 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 California Resources.

Corporate tax rate of 27% is the nominal tax rate for California Resources. 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 CRC 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 CRC are equal to 394.2%.

Life of production assets of 10.9 years is the average useful life of capital assets used in California Resources 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 CRC is equal to -13.8%. 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 - $-557 million for California Resources - 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 44.946 million for California Resources 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 California Resources at the current share price and the inputted number of shares is $0.5 billion.

RELATED COMPANIES Price Int.Val. Rating
OXY Occidental Pet 64.77 7.02  str.sell

COMPANY NEWS

▶ US Crude Oil: Oil-Weighted Stocks Could Rise   [Sep-26-17 01:21PM  Market Realist]
▶ Analyzing the Short Interest in Southwestern Energy Stock   [Aug-30-17 10:37AM  Market Realist]
▶ Oil-Weighted Stocks Outperformed US Crude Oil   [09:47AM  Market Realist]
▶ Short Sellers and Occidental Petroleum Stock   [Aug-23-17 11:53AM  Market Realist]
▶ Analyzing Short Interest in California Resources Stock   [Aug-22-17 09:06AM  Market Realist]
▶ California Resources Free Cash Flow in 2Q17   [09:06AM  Market Realist]
▶ Analyzing California Resources 2Q17 Revenues   [Aug-18-17 11:35AM  Market Realist]
▶ Analyzing the Short Interest in ConocoPhillips Stock   [Aug-15-17 07:37AM  Market Realist]
▶ ConocoPhillipss Stock Price Forecast for the Week   [Aug-14-17 05:06PM  Market Realist]
▶ These Energy Stocks Fell the Most Last Week   [Aug-08-17 11:36AM  Market Realist]
▶ Analyzing Marathon Oils Implied Volatility   [10:39AM  Market Realist]
▶ Climate deal swing votes among top oil money recipients   [Aug-07-17 07:21PM  Associated Press]
▶ California Resources reports 2Q loss   [Aug-04-17 02:36AM  Associated Press]
▶ The Best Energy Stocks from July 2428, 2017   [Aug-01-17 08:18AM  Market Realist]
▶ Analyzing Marathon Oils Implied Volatility   [Jul-27-17 07:38AM  Market Realist]
▶ Benzinga's Option Alert Recap From July 25   [Jul-25-17 04:00PM  Benzinga]
▶ 3 Stocks That Could Lose You a Lot of Money   [Jul-18-17 03:09PM  Motley Fool]
▶ Goldman Sachs' Eight E&P Picks For Low Oil Prices   [Jul-13-17 01:42PM  Barrons.com]
▶ Energy Stocks: Which Ones Underperformed July 37, 2017?   [Jul-11-17 08:04AM  Market Realist]
▶ Chart in Focus: Marathon Oils Lifting Costs   [10:37AM  Market Realist]
▶ What Analysts Recommended for Energy Stocks Last Week   [Jul-03-17 05:05PM  Market Realist]
▶ Which Energy Stocks Underperformed Last Week?   [03:17PM  Market Realist]
▶ Whats the Short Interest in California Resources Stock?   [Jun-27-17 11:06AM  Market Realist]
▶ Why California Resources Stock Fell Last Week   [07:37AM  Market Realist]
▶ Marathon Oils Stock Price Range Forecast for the Week   [Jun-21-17 09:09AM  Market Realist]
▶ These George Soros Stocks Are Losing Big So Far in 2017   [Jun-19-17 10:15AM  Motley Fool]
▶ Marathon Oil Stock Forecast for the Week   [Jun-13-17 03:05PM  Market Realist]
▶ Analyzing California Resources Cash Flows   [07:36AM  Market Realist]
▶ This Is California Resources Lowest-Ever Production   [Jun-12-17 10:37AM  Market Realist]
▶ Behind California Resources 1Q17 Revenues   [09:07AM  Market Realist]
▶ Inside California Resources Recent Stock Performance   [Jun-09-17 05:41PM  Market Realist]
▶ These Energy Stocks Underperformed between May 30 and June 2   [Jun-05-17 04:19PM  Market Realist]
▶ How Short Interest in Devon Energy Stock Is Evolving in 2017   [May-25-17 09:06AM  Market Realist]
▶ Chart in Focus: Devon Energys Lifting Costs   [May-24-17 09:06AM  Market Realist]
▶ ConocoPhillips Stock Price Range Forecast for the Week   [May-22-17 04:35PM  Market Realist]
▶ How Short Interest in ConocoPhillips Stock Is Evolving   [May-16-17 09:08AM  Market Realist]
▶ Energy Industry Updates for May 812, 2017   [May-15-17 04:41PM  Market Realist]
Financial statements of CRC
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.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.