Intrinsic value of Carrizo Oil&Gas - CRZO

Previous Close

$14.94

  Intrinsic Value

$0.09

stock screener

  Rating & Target

str. sell

-99%

  Value-price divergence*

-61%

Previous close

$14.94

 
Intrinsic value

$0.09

 
Up/down potential

-99%

 
Rating

str. sell

 
Value-price divergence*

-61%

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

We calculate the intrinsic value of CRZO 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 1.0

 

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, %
  3.50
  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
  444
  710
  1,098
  1,641
  2,382
  3,360
  4,619
  6,201
  8,142
  10,476
  13,233
  16,432
  20,089
  24,215
  28,811
  33,876
  39,406
  45,392
  51,826
  58,695
  65,991
  73,703
  81,824
  90,347
  99,268
  108,586
  118,303
  128,422
  138,951
  149,898
  161,276
Variable operating expenses, $m
 
  2,893
  4,469
  6,684
  9,698
  13,682
  18,810
  25,249
  33,153
  42,660
  53,883
  66,910
  81,804
  98,602
  117,317
  137,943
  160,461
  184,838
  211,034
  239,007
  268,715
  300,119
  333,186
  367,892
  404,219
  442,164
  481,731
  522,936
  565,808
  610,384
  656,716
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
  989
  2,893
  4,469
  6,684
  9,698
  13,682
  18,810
  25,249
  33,153
  42,660
  53,883
  66,910
  81,804
  98,602
  117,317
  137,943
  160,461
  184,838
  211,034
  239,007
  268,715
  300,119
  333,186
  367,892
  404,219
  442,164
  481,731
  522,936
  565,808
  610,384
  656,716
Operating income, $m
  -545
  -2,182
  -3,372
  -5,042
  -7,316
  -10,322
  -14,191
  -19,048
  -25,011
  -32,183
  -40,650
  -50,479
  -61,715
  -74,387
  -88,506
  -104,067
  -121,055
  -139,446
  -159,208
  -180,312
  -202,724
  -226,416
  -251,362
  -277,545
  -304,951
  -333,578
  -363,428
  -394,514
  -426,857
  -460,486
  -495,440
EBITDA, $m
  -331
  -1,967
  -3,040
  -4,546
  -6,596
  -9,306
  -12,793
  -17,172
  -22,548
  -29,014
  -36,648
  -45,508
  -55,638
  -67,062
  -79,791
  -93,820
  -109,135
  -125,714
  -143,531
  -162,557
  -182,762
  -204,121
  -226,611
  -250,215
  -274,923
  -300,730
  -327,641
  -355,666
  -384,824
  -415,142
  -446,654
Interest expense (income), $m
  75
  78
  122
  197
  303
  447
  637
  882
  1,190
  1,567
  2,021
  2,557
  3,180
  3,891
  4,693
  5,587
  6,573
  7,648
  8,813
  10,064
  11,400
  12,819
  14,319
  15,899
  17,557
  19,292
  21,104
  22,994
  24,962
  27,010
  29,140
Earnings before tax, $m
  -675
  -2,261
  -3,494
  -5,240
  -7,619
  -10,769
  -14,828
  -19,930
  -26,201
  -33,751
  -42,672
  -53,036
  -64,895
  -78,278
  -93,199
  -109,655
  -127,628
  -147,094
  -168,021
  -190,376
  -214,124
  -239,235
  -265,682
  -293,444
  -322,508
  -352,869
  -384,532
  -417,508
  -451,819
  -487,497
  -524,580
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -675
  -2,261
  -3,494
  -5,240
  -7,619
  -10,769
  -14,828
  -19,930
  -26,201
  -33,751
  -42,672
  -53,036
  -64,895
  -78,278
  -93,199
  -109,655
  -127,628
  -147,094
  -168,021
  -190,376
  -214,124
  -239,235
  -265,682
  -293,444
  -322,508
  -352,869
  -384,532
  -417,508
  -451,819
  -487,497
  -524,580

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  4
  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
  1,626
  2,602
  4,020
  6,013
  8,724
  12,308
  16,921
  22,713
  29,823
  38,375
  48,471
  60,190
  73,588
  88,698
  105,533
  124,088
  144,344
  166,273
  189,838
  215,001
  241,725
  269,975
  299,720
  330,940
  363,619
  397,753
  433,345
  470,412
  508,977
  549,077
  590,755
Adjusted assets (=assets-cash), $m
  1,622
  2,602
  4,020
  6,013
  8,724
  12,308
  16,921
  22,713
  29,823
  38,375
  48,471
  60,190
  73,588
  88,698
  105,533
  124,088
  144,344
  166,273
  189,838
  215,001
  241,725
  269,975
  299,720
  330,940
  363,619
  397,753
  433,345
  470,412
  508,977
  549,077
  590,755
Revenue / Adjusted assets
  0.274
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
Average production assets, $m
  1,343
  2,149
  3,320
  4,965
  7,204
  10,164
  13,974
  18,757
  24,629
  31,691
  40,028
  49,706
  60,771
  73,249
  87,152
  102,475
  119,203
  137,312
  156,773
  177,553
  199,622
  222,952
  247,517
  273,299
  300,286
  328,474
  357,867
  388,478
  420,326
  453,441
  487,860
Working capital, $m
  -139
  -71
  -110
  -164
  -238
  -336
  -462
  -620
  -814
  -1,048
  -1,323
  -1,643
  -2,009
  -2,421
  -2,881
  -3,388
  -3,941
  -4,539
  -5,183
  -5,870
  -6,599
  -7,370
  -8,182
  -9,035
  -9,927
  -10,859
  -11,830
  -12,842
  -13,895
  -14,990
  -16,128
Total debt, $m
  1,325
  2,064
  3,340
  5,133
  7,573
  10,799
  14,951
  20,163
  26,563
  34,260
  43,346
  53,893
  65,951
  79,550
  94,702
  111,401
  129,632
  149,367
  170,576
  193,223
  217,274
  242,699
  269,470
  297,568
  326,979
  357,699
  389,733
  423,093
  457,802
  493,891
  531,401
Total liabilities, $m
  1,603
  2,342
  3,618
  5,411
  7,851
  11,077
  15,229
  20,441
  26,841
  34,538
  43,624
  54,171
  66,229
  79,828
  94,980
  111,679
  129,910
  149,645
  170,854
  193,501
  217,552
  242,977
  269,748
  297,846
  327,257
  357,977
  390,011
  423,371
  458,080
  494,169
  531,679
Total equity, $m
  23
  260
  402
  601
  872
  1,231
  1,692
  2,271
  2,982
  3,838
  4,847
  6,019
  7,359
  8,870
  10,553
  12,409
  14,434
  16,627
  18,984
  21,500
  24,172
  26,997
  29,972
  33,094
  36,362
  39,775
  43,335
  47,041
  50,898
  54,908
  59,075
Total liabilities and equity, $m
  1,626
  2,602
  4,020
  6,012
  8,723
  12,308
  16,921
  22,712
  29,823
  38,376
  48,471
  60,190
  73,588
  88,698
  105,533
  124,088
  144,344
  166,272
  189,838
  215,001
  241,724
  269,974
  299,720
  330,940
  363,619
  397,752
  433,346
  470,412
  508,978
  549,077
  590,754
Debt-to-equity ratio
  57.609
  7.930
  8.310
  8.540
  8.680
  8.770
  8.840
  8.880
  8.910
  8.930
  8.940
  8.950
  8.960
  8.970
  8.970
  8.980
  8.980
  8.980
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  9.000
Adjusted equity ratio
  0.012
  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
  -675
  -2,261
  -3,494
  -5,240
  -7,619
  -10,769
  -14,828
  -19,930
  -26,201
  -33,751
  -42,672
  -53,036
  -64,895
  -78,278
  -93,199
  -109,655
  -127,628
  -147,094
  -168,021
  -190,376
  -214,124
  -239,235
  -265,682
  -293,444
  -322,508
  -352,869
  -384,532
  -417,508
  -451,819
  -487,497
  -524,580
Depreciation, amort., depletion, $m
  214
  215
  332
  497
  720
  1,016
  1,397
  1,876
  2,463
  3,169
  4,003
  4,971
  6,077
  7,325
  8,715
  10,248
  11,920
  13,731
  15,677
  17,755
  19,962
  22,295
  24,752
  27,330
  30,029
  32,847
  35,787
  38,848
  42,033
  45,344
  48,786
Funds from operations, $m
  218
  -2,046
  -3,161
  -4,743
  -6,899
  -9,753
  -13,430
  -18,054
  -23,738
  -30,582
  -38,669
  -48,065
  -58,817
  -70,953
  -84,484
  -99,407
  -115,708
  -133,363
  -152,344
  -172,620
  -194,162
  -216,940
  -240,930
  -266,114
  -292,479
  -320,022
  -348,745
  -378,660
  -409,787
  -442,153
  -475,794
Change in working capital, $m
  -55
  -27
  -39
  -54
  -74
  -98
  -126
  -158
  -194
  -233
  -276
  -320
  -366
  -413
  -460
  -507
  -553
  -599
  -643
  -687
  -730
  -771
  -812
  -852
  -892
  -932
  -972
  -1,012
  -1,053
  -1,095
  -1,138
Cash from operations, $m
  273
  -2,019
  -3,123
  -4,689
  -6,825
  -9,655
  -13,305
  -17,896
  -23,544
  -30,348
  -38,393
  -47,745
  -58,452
  -70,541
  -84,025
  -98,901
  -115,155
  -132,764
  -151,701
  -171,934
  -193,432
  -216,169
  -240,118
  -265,261
  -291,587
  -319,090
  -347,773
  -377,648
  -408,734
  -441,058
  -474,656
Maintenance CAPEX, $m
  0
  -134
  -215
  -332
  -497
  -720
  -1,016
  -1,397
  -1,876
  -2,463
  -3,169
  -4,003
  -4,971
  -6,077
  -7,325
  -8,715
  -10,248
  -11,920
  -13,731
  -15,677
  -17,755
  -19,962
  -22,295
  -24,752
  -27,330
  -30,029
  -32,847
  -35,787
  -38,848
  -42,033
  -45,344
New CAPEX, $m
  -481
  -806
  -1,171
  -1,645
  -2,239
  -2,960
  -3,809
  -4,783
  -5,872
  -7,062
  -8,337
  -9,678
  -11,064
  -12,478
  -13,903
  -15,323
  -16,728
  -18,109
  -19,460
  -20,781
  -22,069
  -23,329
  -24,565
  -25,782
  -26,987
  -28,188
  -29,393
  -30,611
  -31,848
  -33,115
  -34,419
Cash from investing activities, $m
  -620
  -940
  -1,386
  -1,977
  -2,736
  -3,680
  -4,825
  -6,180
  -7,748
  -9,525
  -11,506
  -13,681
  -16,035
  -18,555
  -21,228
  -24,038
  -26,976
  -30,029
  -33,191
  -36,458
  -39,824
  -43,291
  -46,860
  -50,534
  -54,317
  -58,217
  -62,240
  -66,398
  -70,696
  -75,148
  -79,763
Free cash flow, $m
  -347
  -2,959
  -4,509
  -6,666
  -9,560
  -13,335
  -18,130
  -24,077
  -31,292
  -39,873
  -49,900
  -61,426
  -74,487
  -89,096
  -105,252
  -122,939
  -142,130
  -162,793
  -184,892
  -208,391
  -233,257
  -259,460
  -286,978
  -315,795
  -345,904
  -377,307
  -410,014
  -444,046
  -479,430
  -516,206
  -554,419
Issuance/(repayment) of debt, $m
  87
  739
  1,276
  1,793
  2,440
  3,226
  4,151
  5,213
  6,399
  7,697
  9,086
  10,547
  12,058
  13,599
  15,152
  16,700
  18,231
  19,735
  21,208
  22,647
  24,052
  25,425
  26,771
  28,098
  29,411
  30,720
  32,033
  33,360
  34,709
  36,089
  37,510
Issuance/(repurchase) of shares, $m
  224
  2,498
  3,635
  5,439
  7,890
  11,127
  15,289
  20,509
  26,912
  34,606
  43,681
  54,208
  66,234
  79,789
  94,883
  111,510
  129,654
  149,287
  170,378
  192,892
  216,797
  242,060
  268,656
  296,566
  325,776
  356,283
  388,091
  421,215
  455,676
  491,507
  528,747
Cash from financing (excl. dividends), $m  
  308
  3,237
  4,911
  7,232
  10,330
  14,353
  19,440
  25,722
  33,311
  42,303
  52,767
  64,755
  78,292
  93,388
  110,035
  128,210
  147,885
  169,022
  191,586
  215,539
  240,849
  267,485
  295,427
  324,664
  355,187
  387,003
  420,124
  454,575
  490,385
  527,596
  566,257
Total cash flow (excl. dividends), $m
  -39
  277
  403
  566
  770
  1,018
  1,310
  1,645
  2,020
  2,429
  2,868
  3,329
  3,806
  4,292
  4,782
  5,271
  5,754
  6,229
  6,694
  7,148
  7,591
  8,025
  8,450
  8,868
  9,283
  9,696
  10,110
  10,529
  10,955
  11,391
  11,839
Retained Cash Flow (-), $m
  421
  -2,498
  -3,635
  -5,439
  -7,890
  -11,127
  -15,289
  -20,509
  -26,912
  -34,606
  -43,681
  -54,208
  -66,234
  -79,789
  -94,883
  -111,510
  -129,654
  -149,287
  -170,378
  -192,892
  -216,797
  -242,060
  -268,656
  -296,566
  -325,776
  -356,283
  -388,091
  -421,215
  -455,676
  -491,507
  -528,747
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
 
  -2,220
  -3,232
  -4,873
  -7,120
  -10,109
  -13,979
  -18,864
  -24,892
  -32,177
  -40,813
  -50,879
  -62,429
  -75,497
  -90,101
  -106,240
  -123,900
  -143,058
  -163,684
  -185,744
  -209,205
  -234,035
  -260,207
  -287,697
  -316,493
  -346,587
  -377,981
  -410,686
  -444,721
  -480,116
  -516,908
Discount rate, %
 
  12.40
  13.02
  13.67
  14.35
  15.07
  15.83
  16.62
  17.45
  18.32
  19.24
  20.20
  21.21
  22.27
  23.38
  24.55
  25.78
  27.07
  28.42
  29.84
  31.33
  32.90
  34.55
  36.27
  38.09
  39.99
  41.99
  44.09
  46.29
  48.61
  51.04
PV of cash for distribution, $m
 
  -1,975
  -2,531
  -3,318
  -4,164
  -5,010
  -5,789
  -6,431
  -6,875
  -7,079
  -7,026
  -6,724
  -6,209
  -5,531
  -4,756
  -3,945
  -3,158
  -2,437
  -1,814
  -1,300
  -897
  -596
  -380
  -233
  -137
  -77
  -42
  -21
  -11
  -5
  -2
Current shareholders' claim on cash, %
  100
  8.4
  3.5
  1.5
  0.6
  0.3
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Carrizo Oil & Gas, Inc., together with its subsidiaries, engages in the exploration, development, and production of oil and gas primarily in the United States. The company holds interests in oil and gas plays, including Eagle Ford Shale in Texas; the Delaware Basin in West Texas; the Utica Shale in Ohio; the Niobrara Formation in Colorado; and the Marcellus Shale in Pennsylvania. As of December 31, 2015, it had proved oil and gas reserves of 170.6 million barrels of oil equivalent; and operated 474 gross productive oil and gas wells. The company was founded in 1993 and is based in Houston, Texas.

FINANCIAL RATIOS  of  Carrizo Oil&Gas (CRZO)

Valuation Ratios
P/E Ratio -1.4
Price to Sales 2.2
Price to Book 42.3
Price to Tangible Book
Price to Cash Flow 3.6
Price to Free Cash Flow -4.7
Growth Rates
Sales Growth Rate 3.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -28.8%
Cap. Spend. - 3 Yr. Gr. Rate -9.4%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 5760.9%
Total Debt to Equity 5760.9%
Interest Coverage -8
Management Effectiveness
Return On Assets -33%
Ret/ On Assets - 3 Yr. Avg. -22.3%
Return On Total Capital -44.6%
Ret/ On T. Cap. - 3 Yr. Avg. -29.9%
Return On Equity -289.1%
Return On Equity - 3 Yr. Avg. -138.4%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 72.1%
Gross Margin - 3 Yr. Avg. 76.3%
EBITDA Margin -86.9%
EBITDA Margin - 3 Yr. Avg. -67.9%
Operating Margin -122.7%
Oper. Margin - 3 Yr. Avg. -133.8%
Pre-Tax Margin -152%
Pre-Tax Margin - 3 Yr. Avg. -135.2%
Net Profit Margin -152%
Net Profit Margin - 3 Yr. Avg. -129.8%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 15.8%
Payout Ratio 0%

CRZO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CRZO stock intrinsic value calculation we used $444 million for the last fiscal year's total revenue generated by Carrizo Oil&Gas. The default revenue input number comes from 2016 income statement of Carrizo 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 CRZO 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 12.4%, whose default value for CRZO is calculated based on our internal credit rating of Carrizo 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 Carrizo 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 CRZO stock the variable cost ratio is equal to 407.2%.

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 CRZO 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 5.9% for Carrizo Oil&Gas.

Corporate tax rate of 27% is the nominal tax rate for Carrizo 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 CRZO 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 CRZO are equal to 302.5%.

Life of production assets of 10 years is the average useful life of capital assets used in Carrizo 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 CRZO 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 - $23 million for Carrizo 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 65.014 million for Carrizo 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 Carrizo Oil&Gas at the current share price and the inputted number of shares is $1.0 billion.

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Stock chart of CRZO Financial statements of CRZO Annual reports of CRZO
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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