Intrinsic value of California Resources - CRC

Previous Close

$6.81

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

  Value-price divergence*

-78%

Previous close

$6.81

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

 
Value-price divergence*

-78%

*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 0.3

 

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, %
  -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
  263
  438
  684
  1,018
  1,460
  2,029
  2,743
  3,620
  4,674
  5,919
  7,364
  9,016
  10,879
  12,955
  15,243
  17,741
  20,444
  23,350
  26,453
  29,748
  33,231
  36,899
  40,748
  44,778
  48,987
  53,375
  57,946
  62,701
  67,645
Earnings before tax, $m
  201
  -5,286
  -8,145
  -12,225
  -17,786
  -25,147
  -34,632
  -46,555
  -61,209
  -78,851
  -99,697
  -123,916
  -151,627
  -182,901
  -217,768
  -256,219
  -298,218
  -343,704
  -392,605
  -444,841
  -500,334
  -559,010
  -620,808
  -685,679
  -753,593
  -824,538
  -898,523
  -975,578
  -1,055,753
  -1,139,119
  -1,225,770
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
  -5,286
  -8,145
  -12,225
  -17,786
  -25,147
  -34,632
  -46,555
  -61,209
  -78,851
  -99,697
  -123,916
  -151,627
  -182,901
  -217,768
  -256,219
  -298,218
  -343,704
  -392,605
  -444,841
  -500,334
  -559,010
  -620,808
  -685,679
  -753,593
  -824,538
  -898,523
  -975,578
  -1,055,753
  -1,139,119
  -1,225,770

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
  10,186
  15,737
  23,535
  34,148
  48,179
  66,234
  88,906
  116,739
  150,215
  189,734
  235,606
  288,051
  347,198
  413,098
  485,729
  565,020
  650,855
  743,098
  841,597
  946,205
  1,056,785
  1,173,222
  1,295,427
  1,423,346
  1,556,958
  1,696,281
  1,841,374
  1,992,334
  2,149,298
  2,312,442
Adjusted assets (=assets-cash), $m
  6,342
  10,186
  15,737
  23,535
  34,148
  48,179
  66,234
  88,906
  116,739
  150,215
  189,734
  235,606
  288,051
  347,198
  413,098
  485,729
  565,020
  650,855
  743,098
  841,597
  946,205
  1,056,785
  1,173,222
  1,295,427
  1,423,346
  1,556,958
  1,696,281
  1,841,374
  1,992,334
  2,149,298
  2,312,442
Revenue / Adjusted assets
  0.244
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
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
  -248
  -382
  -572
  -830
  -1,171
  -1,609
  -2,160
  -2,837
  -3,650
  -4,611
  -5,725
  -7,000
  -8,437
  -10,038
  -11,803
  -13,730
  -15,816
  -18,057
  -20,451
  -22,993
  -25,680
  -28,509
  -31,479
  -34,587
  -37,834
  -41,220
  -44,745
  -48,414
  -52,228
  -56,192
Total debt, $m
  5,268
  7,524
  12,521
  19,539
  29,091
  41,718
  57,968
  78,372
  103,422
  133,550
  169,117
  210,403
  257,603
  310,836
  370,145
  435,513
  506,875
  584,127
  667,145
  755,794
  849,941
  949,463
  1,054,257
  1,164,242
  1,279,368
  1,399,619
  1,525,010
  1,655,594
  1,791,458
  1,932,726
  2,079,555
Total liabilities, $m
  6,911
  9,167
  14,164
  21,182
  30,734
  43,361
  59,611
  80,015
  105,065
  135,193
  170,760
  212,046
  259,246
  312,479
  371,788
  437,156
  508,518
  585,770
  668,788
  757,437
  851,584
  951,106
  1,055,900
  1,165,885
  1,281,011
  1,401,262
  1,526,653
  1,657,237
  1,793,101
  1,934,369
  2,081,198
Total equity, $m
  -557
  1,019
  1,574
  2,354
  3,415
  4,818
  6,623
  8,891
  11,674
  15,021
  18,973
  23,561
  28,805
  34,720
  41,310
  48,573
  56,502
  65,086
  74,310
  84,160
  94,620
  105,678
  117,322
  129,543
  142,335
  155,696
  169,628
  184,137
  199,233
  214,930
  231,244
Total liabilities and equity, $m
  6,354
  10,186
  15,738
  23,536
  34,149
  48,179
  66,234
  88,906
  116,739
  150,214
  189,733
  235,607
  288,051
  347,199
  413,098
  485,729
  565,020
  650,856
  743,098
  841,597
  946,204
  1,056,784
  1,173,222
  1,295,428
  1,423,346
  1,556,958
  1,696,281
  1,841,374
  1,992,334
  2,149,299
  2,312,442
Debt-to-equity ratio
  -9.458
  7.390
  7.960
  8.300
  8.520
  8.660
  8.750
  8.820
  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
  -5,286
  -8,145
  -12,225
  -17,786
  -25,147
  -34,632
  -46,555
  -61,209
  -78,851
  -99,697
  -123,916
  -151,627
  -182,901
  -217,768
  -256,219
  -298,218
  -343,704
  -392,605
  -444,841
  -500,334
  -559,010
  -620,808
  -685,679
  -753,593
  -824,538
  -898,523
  -975,578
  -1,055,753
  -1,139,119
  -1,225,770
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
  -4,391
  -6,762
  -10,157
  -14,785
  -20,913
  -28,811
  -38,742
  -50,949
  -65,650
  -83,023
  -103,211
  -126,312
  -152,389
  -181,464
  -213,533
  -248,563
  -286,506
  -327,300
  -370,880
  -417,180
  -466,138
  -517,703
  -571,835
  -628,507
  -687,711
  -749,452
  -813,755
  -880,664
  -950,236
  -1,022,549
Change in working capital, $m
  -111
  -93
  -135
  -189
  -258
  -341
  -439
  -551
  -676
  -813
  -960
  -1,115
  -1,274
  -1,437
  -1,601
  -1,765
  -1,927
  -2,086
  -2,241
  -2,394
  -2,542
  -2,687
  -2,829
  -2,970
  -3,108
  -3,247
  -3,386
  -3,526
  -3,668
  -3,814
  -3,964
Cash from operations, $m
  130
  -4,298
  -6,627
  -9,967
  -14,527
  -20,572
  -28,372
  -38,191
  -50,273
  -64,836
  -82,063
  -102,096
  -125,038
  -150,952
  -179,863
  -211,768
  -246,636
  -284,420
  -325,059
  -368,487
  -414,638
  -463,451
  -514,874
  -568,865
  -625,399
  -684,464
  -746,066
  -810,230
  -876,995
  -946,422
  -1,018,585
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
  -8,516
  -12,840
  -18,820
  -26,762
  -37,013
  -49,902
  -65,729
  -84,748
  -107,162
  -133,119
  -162,712
  -195,981
  -232,923
  -273,501
  -317,646
  -365,276
  -416,297
  -470,616
  -528,144
  -588,803
  -652,531
  -719,281
  -789,031
  -861,777
  -937,537
  -1,016,352
  -1,098,287
  -1,183,423
  -1,271,868
  -1,363,745
Issuance/(repayment) of debt, $m
  -22
  2,256
  4,996
  7,018
  9,552
  12,627
  16,250
  20,404
  25,050
  30,128
  35,567
  41,285
  47,200
  53,233
  59,309
  65,369
  71,361
  77,252
  83,018
  88,649
  94,147
  99,522
  104,793
  109,985
  115,127
  120,251
  125,391
  130,584
  135,864
  141,268
  146,830
Issuance/(repurchase) of shares, $m
  4
  6,861
  8,700
  13,005
  18,848
  26,550
  36,437
  48,822
  63,992
  82,198
  103,649
  128,503
  156,871
  188,816
  224,358
  263,483
  306,147
  352,288
  401,829
  454,691
  510,795
  570,068
  632,451
  697,899
  766,385
  837,899
  912,456
  990,087
  1,070,849
  1,154,816
  1,242,084
Cash from financing (excl. dividends), $m  
  -69
  9,117
  13,696
  20,023
  28,400
  39,177
  52,687
  69,226
  89,042
  112,326
  139,216
  169,788
  204,071
  242,049
  283,667
  328,852
  377,508
  429,540
  484,847
  543,340
  604,942
  669,590
  737,244
  807,884
  881,512
  958,150
  1,037,847
  1,120,671
  1,206,713
  1,296,084
  1,388,914
Total cash flow (excl. dividends), $m
  0
  602
  856
  1,203
  1,637
  2,164
  2,786
  3,498
  4,294
  5,164
  6,097
  7,077
  8,091
  9,125
  10,167
  11,205
  12,233
  13,242
  14,231
  15,196
  16,138
  17,060
  17,963
  18,853
  19,735
  20,613
  21,494
  22,384
  23,289
  24,216
  25,169
Retained Cash Flow (-), $m
  -359
  -6,861
  -8,700
  -13,005
  -18,848
  -26,550
  -36,437
  -48,822
  -63,992
  -82,198
  -103,649
  -128,503
  -156,871
  -188,816
  -224,358
  -263,483
  -306,147
  -352,288
  -401,829
  -454,691
  -510,795
  -570,068
  -632,451
  -697,899
  -766,385
  -837,899
  -912,456
  -990,087
  -1,070,849
  -1,154,816
  -1,242,084
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
 
  -6,260
  -7,844
  -11,802
  -17,210
  -24,386
  -33,652
  -45,325
  -59,698
  -77,034
  -97,552
  -121,426
  -148,780
  -179,691
  -214,191
  -252,277
  -293,914
  -339,045
  -387,598
  -439,495
  -494,656
  -553,008
  -614,488
  -679,046
  -746,650
  -817,286
  -890,961
  -967,703
  -1,047,559
  -1,130,600
  -1,216,915
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
 
  -5,424
  -5,812
  -7,373
  -8,929
  -10,340
  -11,466
  -12,189
  -12,431
  -12,173
  -11,451
  -10,353
  -8,997
  -7,516
  -6,035
  -4,658
  -3,453
  -2,458
  -1,680
  -1,100
  -691
  -415
  -239
  -131
  -69
  -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 operates as an oil and natural gas exploration and production company in the State of California. It produces oil, natural gas, and natural gas liquids. The company holds interests in approximately 2.4 million net acres. As of December 31, 2015, it had net proved reserves of 644 million barrels of oil equivalent. It also gathers, processes, and markets oil and gas products to marketers, California refineries, and other purchasers that have access to transportation and storage facilities. In addition, the company generates and sells electricity to the grid and to others through contractual agreements. California Resources Corporation is headquartered in Los Angeles, California.

FINANCIAL RATIOS  of  California Resources (CRC)

Valuation Ratios
P/E Ratio 1
Price to Sales 0.2
Price to Book -0.5
Price to Tangible Book
Price to Cash Flow 2.2
Price to Free Cash Flow 5.3
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 -10%. 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 41.771 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 $0.3 billion.

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Stock chart of CRC 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.

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