Intrinsic value of Denbury Resources - DNR

Previous Close

$2.45

  Intrinsic Value

$0.30

stock screener

  Rating & Target

str. sell

-88%

Previous close

$2.45

 
Intrinsic value

$0.30

 
Up/down potential

-88%

 
Rating

str. sell

We calculate the intrinsic value of DNR 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, %
  -22.42
  5.10
  5.09
  5.08
  5.07
  5.07
  5.06
  5.05
  5.05
  5.04
  5.04
  5.03
  5.03
  5.03
  5.03
  5.02
  5.02
  5.02
  5.02
  5.02
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.00
Revenue, $m
  976
  1,026
  1,078
  1,133
  1,190
  1,251
  1,314
  1,380
  1,450
  1,523
  1,600
  1,680
  1,765
  1,854
  1,947
  2,044
  2,147
  2,255
  2,368
  2,487
  2,611
  2,742
  2,880
  3,024
  3,175
  3,334
  3,501
  3,677
  3,861
  4,054
  4,257
Variable operating expenses, $m
 
  6,174
  6,488
  6,818
  7,164
  7,527
  7,908
  8,307
  8,727
  9,167
  9,629
  10,113
  10,622
  11,156
  11,717
  12,305
  12,923
  13,572
  14,253
  14,967
  15,718
  16,506
  17,333
  18,201
  19,113
  20,070
  21,075
  22,130
  23,238
  24,401
  25,622
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
  2,243
  6,174
  6,488
  6,818
  7,164
  7,527
  7,908
  8,307
  8,727
  9,167
  9,629
  10,113
  10,622
  11,156
  11,717
  12,305
  12,923
  13,572
  14,253
  14,967
  15,718
  16,506
  17,333
  18,201
  19,113
  20,070
  21,075
  22,130
  23,238
  24,401
  25,622
Operating income, $m
  -1,267
  -5,148
  -5,410
  -5,685
  -5,974
  -6,276
  -6,594
  -6,927
  -7,277
  -7,644
  -8,029
  -8,433
  -8,857
  -9,303
  -9,770
  -10,261
  -10,776
  -11,317
  -11,885
  -12,481
  -13,106
  -13,763
  -14,453
  -15,177
  -15,937
  -16,735
  -17,573
  -18,453
  -19,377
  -20,347
  -21,365
EBITDA, $m
  -421
  -4,254
  -4,470
  -4,697
  -4,935
  -5,185
  -5,448
  -5,723
  -6,012
  -6,315
  -6,633
  -6,967
  -7,318
  -7,686
  -8,072
  -8,478
  -8,903
  -9,350
  -9,819
  -10,311
  -10,828
  -11,371
  -11,941
  -12,539
  -13,167
  -13,827
  -14,519
  -15,246
  -16,009
  -16,810
  -17,652
Interest expense (income), $m
  131
  126
  134
  143
  152
  161
  171
  181
  192
  204
  215
  228
  241
  255
  270
  285
  301
  318
  335
  354
  373
  394
  415
  438
  462
  486
  512
  540
  569
  599
  630
Earnings before tax, $m
  -1,520
  -5,274
  -5,544
  -5,828
  -6,125
  -6,437
  -6,765
  -7,108
  -7,469
  -7,847
  -8,244
  -8,661
  -9,099
  -9,558
  -10,040
  -10,546
  -11,077
  -11,635
  -12,220
  -12,835
  -13,480
  -14,157
  -14,868
  -15,615
  -16,399
  -17,222
  -18,086
  -18,993
  -19,946
  -20,946
  -21,996
Tax expense, $m
  -544
  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
  -976
  -5,274
  -5,544
  -5,828
  -6,125
  -6,437
  -6,765
  -7,108
  -7,469
  -7,847
  -8,244
  -8,661
  -9,099
  -9,558
  -10,040
  -10,546
  -11,077
  -11,635
  -12,220
  -12,835
  -13,480
  -14,157
  -14,868
  -15,615
  -16,399
  -17,222
  -18,086
  -18,993
  -19,946
  -20,946
  -21,996

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  2
  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
  4,275
  4,499
  4,728
  4,968
  5,220
  5,485
  5,762
  6,053
  6,359
  6,680
  7,016
  7,369
  7,740
  8,129
  8,538
  8,967
  9,417
  9,890
  10,386
  10,907
  11,453
  12,027
  12,630
  13,263
  13,927
  14,625
  15,357
  16,126
  16,933
  17,781
  18,670
Adjusted assets (=assets-cash), $m
  4,273
  4,499
  4,728
  4,968
  5,220
  5,485
  5,762
  6,053
  6,359
  6,680
  7,016
  7,369
  7,740
  8,129
  8,538
  8,967
  9,417
  9,890
  10,386
  10,907
  11,453
  12,027
  12,630
  13,263
  13,927
  14,625
  15,357
  16,126
  16,933
  17,781
  18,670
Revenue / Adjusted assets
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
Average production assets, $m
  4,683
  4,922
  5,172
  5,435
  5,711
  6,000
  6,304
  6,622
  6,956
  7,307
  7,675
  8,062
  8,467
  8,893
  9,340
  9,809
  10,302
  10,819
  11,361
  11,931
  12,529
  13,157
  13,817
  14,509
  15,236
  15,999
  16,800
  17,641
  18,524
  19,451
  20,424
Working capital, $m
  -253
  -181
  -190
  -199
  -209
  -220
  -231
  -243
  -255
  -268
  -282
  -296
  -311
  -326
  -343
  -360
  -378
  -397
  -417
  -438
  -460
  -483
  -507
  -532
  -559
  -587
  -616
  -647
  -679
  -713
  -749
Total debt, $m
  2,993
  3,190
  3,394
  3,608
  3,832
  4,067
  4,314
  4,573
  4,845
  5,131
  5,430
  5,745
  6,075
  6,421
  6,785
  7,166
  7,567
  7,988
  8,429
  8,893
  9,379
  9,890
  10,427
  10,990
  11,581
  12,202
  12,854
  13,538
  14,256
  15,011
  15,803
Total liabilities, $m
  3,806
  4,004
  4,208
  4,422
  4,646
  4,881
  5,128
  5,387
  5,659
  5,945
  6,244
  6,559
  6,889
  7,235
  7,599
  7,980
  8,381
  8,802
  9,243
  9,707
  10,193
  10,704
  11,241
  11,804
  12,395
  13,016
  13,668
  14,352
  15,070
  15,825
  16,617
Total equity, $m
  468
  495
  520
  547
  574
  603
  634
  666
  699
  735
  772
  811
  851
  894
  939
  986
  1,036
  1,088
  1,142
  1,200
  1,260
  1,323
  1,389
  1,459
  1,532
  1,609
  1,689
  1,774
  1,863
  1,956
  2,054
Total liabilities and equity, $m
  4,274
  4,499
  4,728
  4,969
  5,220
  5,484
  5,762
  6,053
  6,358
  6,680
  7,016
  7,370
  7,740
  8,129
  8,538
  8,966
  9,417
  9,890
  10,385
  10,907
  11,453
  12,027
  12,630
  13,263
  13,927
  14,625
  15,357
  16,126
  16,933
  17,781
  18,671
Debt-to-equity ratio
  6.395
  6.450
  6.530
  6.600
  6.670
  6.740
  6.810
  6.870
  6.930
  6.980
  7.040
  7.090
  7.130
  7.180
  7.220
  7.270
  7.310
  7.340
  7.380
  7.410
  7.440
  7.480
  7.510
  7.530
  7.560
  7.580
  7.610
  7.630
  7.650
  7.670
  7.690
Adjusted equity ratio
  0.109
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -976
  -5,274
  -5,544
  -5,828
  -6,125
  -6,437
  -6,765
  -7,108
  -7,469
  -7,847
  -8,244
  -8,661
  -9,099
  -9,558
  -10,040
  -10,546
  -11,077
  -11,635
  -12,220
  -12,835
  -13,480
  -14,157
  -14,868
  -15,615
  -16,399
  -17,222
  -18,086
  -18,993
  -19,946
  -20,946
  -21,996
Depreciation, amort., depletion, $m
  846
  895
  940
  988
  1,038
  1,091
  1,146
  1,204
  1,265
  1,329
  1,396
  1,466
  1,540
  1,617
  1,698
  1,783
  1,873
  1,967
  2,066
  2,169
  2,278
  2,392
  2,512
  2,638
  2,770
  2,909
  3,054
  3,207
  3,368
  3,537
  3,714
Funds from operations, $m
  174
  -4,379
  -4,604
  -4,840
  -5,087
  -5,346
  -5,619
  -5,904
  -6,204
  -6,519
  -6,849
  -7,195
  -7,559
  -7,941
  -8,342
  -8,762
  -9,204
  -9,668
  -10,154
  -10,665
  -11,202
  -11,765
  -12,356
  -12,977
  -13,629
  -14,313
  -15,031
  -15,786
  -16,578
  -17,409
  -18,282
Change in working capital, $m
  -45
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -31
  -32
  -34
  -36
Cash from operations, $m
  219
  -4,370
  -4,595
  -4,830
  -5,077
  -5,336
  -5,607
  -5,893
  -6,192
  -6,506
  -6,835
  -7,181
  -7,544
  -7,925
  -8,325
  -8,745
  -9,186
  -9,649
  -10,135
  -10,645
  -11,180
  -11,742
  -12,332
  -12,952
  -13,602
  -14,285
  -15,002
  -15,755
  -16,545
  -17,375
  -18,246
Maintenance CAPEX, $m
  0
  -851
  -895
  -940
  -988
  -1,038
  -1,091
  -1,146
  -1,204
  -1,265
  -1,329
  -1,396
  -1,466
  -1,540
  -1,617
  -1,698
  -1,783
  -1,873
  -1,967
  -2,066
  -2,169
  -2,278
  -2,392
  -2,512
  -2,638
  -2,770
  -2,909
  -3,054
  -3,207
  -3,368
  -3,537
New CAPEX, $m
  -253
  -239
  -251
  -263
  -276
  -289
  -304
  -319
  -334
  -351
  -368
  -386
  -406
  -426
  -447
  -469
  -492
  -517
  -543
  -570
  -598
  -628
  -659
  -692
  -727
  -763
  -801
  -841
  -883
  -927
  -973
Cash from investing activities, $m
  -205
  -1,090
  -1,146
  -1,203
  -1,264
  -1,327
  -1,395
  -1,465
  -1,538
  -1,616
  -1,697
  -1,782
  -1,872
  -1,966
  -2,064
  -2,167
  -2,275
  -2,390
  -2,510
  -2,636
  -2,767
  -2,906
  -3,051
  -3,204
  -3,365
  -3,533
  -3,710
  -3,895
  -4,090
  -4,295
  -4,510
Free cash flow, $m
  14
  -5,461
  -5,740
  -6,033
  -6,341
  -6,663
  -7,002
  -7,357
  -7,730
  -8,121
  -8,532
  -8,963
  -9,416
  -9,891
  -10,389
  -10,913
  -11,462
  -12,039
  -12,644
  -13,280
  -13,947
  -14,648
  -15,384
  -16,156
  -16,967
  -17,818
  -18,712
  -19,650
  -20,636
  -21,670
  -22,756
Issuance/(repayment) of debt, $m
  20
  199
  204
  214
  224
  235
  247
  259
  272
  285
  300
  314
  330
  346
  364
  382
  401
  421
  442
  464
  487
  511
  536
  563
  591
  621
  652
  684
  718
  754
  792
Issuance/(repurchase) of shares, $m
  0
  5,301
  5,570
  5,854
  6,153
  6,466
  6,795
  7,140
  7,502
  7,882
  8,281
  8,700
  9,139
  9,601
  10,085
  10,593
  11,127
  11,687
  12,275
  12,892
  13,540
  14,220
  14,935
  15,685
  16,472
  17,299
  18,166
  19,078
  20,034
  21,039
  22,093
Cash from financing (excl. dividends), $m  
  -15
  5,500
  5,774
  6,068
  6,377
  6,701
  7,042
  7,399
  7,774
  8,167
  8,581
  9,014
  9,469
  9,947
  10,449
  10,975
  11,528
  12,108
  12,717
  13,356
  14,027
  14,731
  15,471
  16,248
  17,063
  17,920
  18,818
  19,762
  20,752
  21,793
  22,885
Total cash flow (excl. dividends), $m
  -1
  39
  33
  35
  37
  38
  40
  42
  44
  47
  49
  51
  54
  56
  59
  62
  65
  69
  72
  76
  79
  83
  87
  92
  96
  101
  106
  112
  117
  123
  129
Retained Cash Flow (-), $m
  781
  -5,301
  -5,570
  -5,854
  -6,153
  -6,466
  -6,795
  -7,140
  -7,502
  -7,882
  -8,281
  -8,700
  -9,139
  -9,601
  -10,085
  -10,593
  -11,127
  -11,687
  -12,275
  -12,892
  -13,540
  -14,220
  -14,935
  -15,685
  -16,472
  -17,299
  -18,166
  -19,078
  -20,034
  -21,039
  -22,093
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
 
  -5,262
  -5,536
  -5,819
  -6,116
  -6,428
  -6,755
  -7,098
  -7,458
  -7,836
  -8,233
  -8,649
  -9,086
  -9,544
  -10,026
  -10,531
  -11,061
  -11,618
  -12,203
  -12,816
  -13,461
  -14,137
  -14,847
  -15,593
  -16,376
  -17,197
  -18,060
  -18,966
  -19,917
  -20,916
  -21,964
Discount rate, %
 
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
  21.18
  22.23
  23.35
  24.51
  25.74
  27.03
  28.38
  29.80
  31.29
  32.85
  34.49
  36.22
  38.03
  39.93
  41.93
  44.02
  46.22
  48.53
  50.96
  53.51
PV of cash for distribution, $m
 
  -4,656
  -4,286
  -3,894
  -3,491
  -3,087
  -2,689
  -2,306
  -1,945
  -1,612
  -1,311
  -1,046
  -817
  -624
  -466
  -339
  -241
  -166
  -112
  -73
  -46
  -28
  -17
  -9
  -5
  -3
  -1
  -1
  0
  0
  0
Current shareholders' claim on cash, %
  100
  15.4
  2.4
  0.4
  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

Denbury Resources Inc. is an independent oil and natural gas company. The Company's operations are focused in two operating areas: the Gulf Coast and Rocky Mountain regions. Its properties with proved and producing reserves in the Gulf Coast region are situated in Mississippi, Texas, Louisiana and Alabama, and in the Rocky Mountain region are situated in Montana, North Dakota and Wyoming. It had an estimated proved oil and natural gas reserves of 254.5 million barrels of oil equivalent (MMBOE) as of December 31, 2016. Its primary Gulf Coast carbon dioxide (CO2) source is Jackson Dome, which is located near Jackson, Mississippi. Its mature group of properties includes the initial CO2 field, Little Creek, and other fields, including Brookhaven, Cranfield, Eucutta, Lockhart Crossing, Mallalieu and Soso fields. Its LaBarge Field is located in southwestern Wyoming. Its Riley Ridge Federal Unit is located in southwestern Wyoming and produces gas from the same LaBarge Field.

FINANCIAL RATIOS  of  Denbury Resources (DNR)

Valuation Ratios
P/E Ratio -1
Price to Sales 1
Price to Book 2.1
Price to Tangible Book
Price to Cash Flow 4.5
Price to Free Cash Flow -28.7
Growth Rates
Sales Growth Rate -22.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -55%
Cap. Spend. - 3 Yr. Gr. Rate -27.4%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 621.8%
Total Debt to Equity 639.5%
Interest Coverage -11
Management Effectiveness
Return On Assets -17.6%
Ret/ On Assets - 3 Yr. Avg. -19.2%
Return On Total Capital -24.4%
Ret/ On T. Cap. - 3 Yr. Avg. -26.8%
Return On Equity -113.7%
Return On Equity - 3 Yr. Avg. -76.1%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 104.6%
Gross Margin - 3 Yr. Avg. 103.6%
EBITDA Margin -55.6%
EBITDA Margin - 3 Yr. Avg. -143.5%
Operating Margin -129.8%
Oper. Margin - 3 Yr. Avg. -201.7%
Pre-Tax Margin -155.7%
Pre-Tax Margin - 3 Yr. Avg. -205.5%
Net Profit Margin -100%
Net Profit Margin - 3 Yr. Avg. -140.8%
Effective Tax Rate 35.8%
Eff/ Tax Rate - 3 Yr. Avg. 34.8%
Payout Ratio 0%

DNR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DNR stock intrinsic value calculation we used $976 million for the last fiscal year's total revenue generated by Denbury Resources. The default revenue input number comes from 2016 income statement of Denbury 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 DNR stock valuation model: a) initial revenue growth rate of 5.1% 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 13%, whose default value for DNR is calculated based on our internal credit rating of Denbury 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 Denbury 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 DNR stock the variable cost ratio is equal to 601.9%.

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 DNR 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 4.2% for Denbury Resources.

Corporate tax rate of 27% is the nominal tax rate for Denbury 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 DNR 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 DNR are equal to 479.8%.

Life of production assets of 5.5 years is the average useful life of capital assets used in Denbury 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 DNR is equal to -17.6%. 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 - $468 million for Denbury 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 393.928 million for Denbury 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 Denbury Resources at the current share price and the inputted number of shares is $1.0 billion.

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COMPANY NEWS

▶ US Crude Oil Production Fell and Boosted Oil Futures   [Jan-11-18 10:35AM  Market Realist]
▶ 5 Best Stocks to Buy Ahead of Q4 Earnings Season   [Jan-10-18 01:15PM  InvestorPlace]
▶ Denbury Announces Results of Exchange Offers   [Jan-08-18 06:30AM  GlobeNewswire]
▶ Which Oil-Weighted Stocks Could Outperform Oil?   [Jan-04-18 10:04AM  Market Realist]
▶ Which Energy Stocks Were Top Gainers Last Week?   [Dec-26-17 03:20PM  Market Realist]
▶ Are Oil-Weighted Stocks Underperforming Oil?   [Dec-14-17 10:56AM  Market Realist]
▶ The Fourth-Worst-Performing Upstream Stock Year-to-Date   [Dec-08-17 07:30AM  Market Realist]
▶ Denbury Closes Private Note Exchanges   [Dec-06-17 08:00PM  GlobeNewswire]
▶ Denbury Announces Entry Into Note Exchange Agreements   [Nov-30-17 12:03PM  GlobeNewswire]
▶ Oil-Weighted Stocks to Watch if Oils Rally Cools   [Nov-28-17 01:01PM  Market Realist]
▶ US Crude Oil Exports and Drilling Activity Impact OPEC   [Nov-22-17 09:14AM  Market Realist]
▶ What Could Drive US Crude Oil Futures This Week?   [Nov-20-17 09:31AM  Market Realist]
▶ Oil Prices: Is Another Tumble in the Forecast?   [Nov-19-17 09:09AM  Motley Fool]
▶ Will Russia and OPEC Help Crude Oil Bears?   [Nov-16-17 10:25AM  Market Realist]
▶ Heres Why Denbury Resources Stock is Deflating Today   [Nov-15-17 12:24PM  Motley Fool]
▶ Upstream Gainers this Week: California Resources Leads   [Nov-08-17 04:15PM  Market Realist]
▶ What Could Drive Crude Oil Prices Higher?   [10:26AM  Market Realist]
▶ Denbury Resources beats Street 3Q forecasts   [06:37AM  Associated Press]
▶ Saudi Shake-Up Sent Oil Stocks Soaring Today   [Nov-06-17 04:37PM  Motley Fool]
▶ 4 Energy Stocks Set to Beat Q3 Earnings   [Nov-02-17 11:05AM  Zacks]
▶ Are Oil-Weighted Stocks Rising More Than Oil?   [Oct-31-17 12:45PM  Market Realist]
Financial statements of DNR
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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