Intrinsic value of Diamondback Energy - FANG

Previous Close

$131.15

  Intrinsic Value

$13.54

stock screener

  Rating & Target

str. sell

-90%

Previous close

$131.15

 
Intrinsic value

$13.54

 
Up/down potential

-90%

 
Rating

str. sell

We calculate the intrinsic value of FANG 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, %
  17.90
  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
  527
  1,928
  2,979
  4,455
  6,464
  9,119
  12,537
  16,828
  22,096
  28,433
  35,913
  44,595
  54,522
  65,717
  78,191
  91,938
  106,947
  123,193
  140,653
  159,297
  179,097
  200,027
  222,067
  245,198
  269,410
  294,700
  321,071
  348,534
  377,108
  406,818
  437,697
Variable operating expenses, $m
 
  436
  673
  1,007
  1,461
  2,061
  2,833
  3,803
  4,994
  6,426
  8,116
  10,079
  12,322
  14,852
  17,671
  20,778
  24,170
  27,842
  31,788
  36,001
  40,476
  45,206
  50,187
  55,415
  60,887
  66,602
  72,562
  78,769
  85,226
  91,941
  98,920
Fixed operating expenses, $m
 
  498
  509
  520
  531
  543
  555
  567
  580
  592
  605
  619
  632
  646
  660
  675
  690
  705
  721
  736
  753
  769
  786
  803
  821
  839
  858
  876
  896
  915
  936
Total operating expenses, $m
  629
  934
  1,182
  1,527
  1,992
  2,604
  3,388
  4,370
  5,574
  7,018
  8,721
  10,698
  12,954
  15,498
  18,331
  21,453
  24,860
  28,547
  32,509
  36,737
  41,229
  45,975
  50,973
  56,218
  61,708
  67,441
  73,420
  79,645
  86,122
  92,856
  99,856
Operating income, $m
  -102
  995
  1,797
  2,928
  4,472
  6,515
  9,149
  12,458
  16,523
  21,414
  27,191
  33,898
  41,568
  50,219
  59,859
  70,485
  82,087
  94,647
  108,145
  122,559
  137,868
  154,052
  171,093
  188,980
  207,702
  227,259
  247,651
  268,889
  290,986
  313,961
  337,842
EBITDA, $m
  76
  1,853
  3,124
  4,912
  7,350
  10,577
  14,732
  19,953
  26,365
  34,078
  43,186
  53,761
  65,852
  79,490
  94,685
  111,435
  129,721
  149,517
  170,792
  193,510
  217,638
  243,144
  270,002
  298,191
  327,697
  358,518
  390,656
  424,126
  458,949
  495,158
  532,793
Interest expense (income), $m
  38
  86
  167
  286
  453
  679
  979
  1,365
  1,849
  2,444
  3,159
  4,003
  4,983
  6,104
  7,368
  8,776
  10,327
  12,022
  13,855
  15,826
  17,931
  20,166
  22,528
  25,016
  27,627
  30,360
  33,215
  36,191
  39,291
  42,517
  45,870
Earnings before tax, $m
  -165
  909
  1,630
  2,642
  4,019
  5,836
  8,170
  11,093
  14,674
  18,971
  24,032
  29,895
  36,584
  44,115
  52,492
  61,710
  71,759
  82,625
  94,289
  106,733
  119,938
  133,886
  148,565
  163,964
  180,075
  196,899
  214,437
  232,698
  251,694
  271,445
  291,972
Tax expense, $m
  0
  245
  440
  713
  1,085
  1,576
  2,206
  2,995
  3,962
  5,122
  6,489
  8,072
  9,878
  11,911
  14,173
  16,662
  19,375
  22,309
  25,458
  28,818
  32,383
  36,149
  40,113
  44,270
  48,620
  53,163
  57,898
  62,828
  67,957
  73,290
  78,832
Net income, $m
  -165
  664
  1,190
  1,929
  2,934
  4,260
  5,964
  8,098
  10,712
  13,849
  17,543
  21,823
  26,707
  32,204
  38,319
  45,048
  52,384
  60,316
  68,831
  77,915
  87,555
  97,737
  108,453
  119,693
  131,455
  143,736
  156,539
  169,869
  183,737
  198,155
  213,140

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,667
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  5,350
  12,439
  19,218
  28,740
  41,701
  58,834
  80,883
  108,568
  142,557
  183,436
  231,694
  287,712
  351,755
  423,984
  504,457
  593,152
  689,978
  794,796
  907,438
  1,027,721
  1,155,464
  1,290,500
  1,432,687
  1,581,920
  1,738,128
  1,901,289
  2,071,424
  2,248,606
  2,432,952
  2,624,630
  2,823,854
Adjusted assets (=assets-cash), $m
  3,683
  12,439
  19,218
  28,740
  41,701
  58,834
  80,883
  108,568
  142,557
  183,436
  231,694
  287,712
  351,755
  423,984
  504,457
  593,152
  689,978
  794,796
  907,438
  1,027,721
  1,155,464
  1,290,500
  1,432,687
  1,581,920
  1,738,128
  1,901,289
  2,071,424
  2,248,606
  2,432,952
  2,624,630
  2,823,854
Revenue / Adjusted assets
  0.143
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
  0.155
Average production assets, $m
  2,994
  8,587
  13,267
  19,841
  28,789
  40,617
  55,839
  74,952
  98,417
  126,639
  159,955
  198,628
  242,841
  292,706
  348,262
  409,494
  476,340
  548,704
  626,468
  709,508
  797,698
  890,922
  989,084
  1,092,110
  1,199,951
  1,312,593
  1,430,049
  1,552,370
  1,679,637
  1,811,966
  1,949,504
Working capital, $m
  1,583
  -247
  -381
  -570
  -827
  -1,167
  -1,605
  -2,154
  -2,828
  -3,639
  -4,597
  -5,708
  -6,979
  -8,412
  -10,008
  -11,768
  -13,689
  -15,769
  -18,004
  -20,390
  -22,924
  -25,604
  -28,425
  -31,385
  -34,484
  -37,722
  -41,097
  -44,612
  -48,270
  -52,073
  -56,025
Total debt, $m
  1,106
  3,098
  5,295
  8,380
  12,579
  18,130
  25,274
  34,244
  45,256
  58,501
  74,137
  92,287
  113,037
  136,439
  162,512
  191,249
  222,621
  256,582
  293,078
  332,050
  373,438
  417,190
  463,259
  511,610
  562,222
  615,086
  670,210
  727,616
  787,344
  849,448
  913,997
Total liabilities, $m
  1,652
  4,030
  6,227
  9,312
  13,511
  19,062
  26,206
  35,176
  46,188
  59,433
  75,069
  93,219
  113,969
  137,371
  163,444
  192,181
  223,553
  257,514
  294,010
  332,982
  374,370
  418,122
  464,191
  512,542
  563,153
  616,018
  671,142
  728,548
  788,276
  850,380
  914,929
Total equity, $m
  3,697
  8,409
  12,991
  19,428
  28,190
  39,771
  54,677
  73,392
  96,368
  124,003
  156,625
  194,493
  237,787
  286,613
  341,013
  400,970
  466,425
  537,282
  613,428
  694,740
  781,094
  872,378
  968,497
  1,069,378
  1,174,975
  1,285,271
  1,400,283
  1,520,057
  1,644,675
  1,774,250
  1,908,925
Total liabilities and equity, $m
  5,349
  12,439
  19,218
  28,740
  41,701
  58,833
  80,883
  108,568
  142,556
  183,436
  231,694
  287,712
  351,756
  423,984
  504,457
  593,151
  689,978
  794,796
  907,438
  1,027,722
  1,155,464
  1,290,500
  1,432,688
  1,581,920
  1,738,128
  1,901,289
  2,071,425
  2,248,605
  2,432,951
  2,624,630
  2,823,854
Debt-to-equity ratio
  0.299
  0.370
  0.410
  0.430
  0.450
  0.460
  0.460
  0.470
  0.470
  0.470
  0.470
  0.470
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
  0.480
Adjusted equity ratio
  0.551
  0.676
  0.676
  0.676
  0.676
  0.676
  0.676
  0.676
  0.676
  0.676
  0.676
  0.676
  0.676
  0.676
  0.676
  0.676
  0.676
  0.676
  0.676
  0.676
  0.676
  0.676
  0.676
  0.676
  0.676
  0.676
  0.676
  0.676
  0.676
  0.676
  0.676

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -165
  664
  1,190
  1,929
  2,934
  4,260
  5,964
  8,098
  10,712
  13,849
  17,543
  21,823
  26,707
  32,204
  38,319
  45,048
  52,384
  60,316
  68,831
  77,915
  87,555
  97,737
  108,453
  119,693
  131,455
  143,736
  156,539
  169,869
  183,737
  198,155
  213,140
Depreciation, amort., depletion, $m
  178
  859
  1,327
  1,984
  2,879
  4,062
  5,584
  7,495
  9,842
  12,664
  15,995
  19,863
  24,284
  29,271
  34,826
  40,949
  47,634
  54,870
  62,647
  70,951
  79,770
  89,092
  98,908
  109,211
  119,995
  131,259
  143,005
  155,237
  167,964
  181,197
  194,950
Funds from operations, $m
  316
  1,522
  2,516
  3,913
  5,813
  8,322
  11,548
  15,593
  20,554
  26,512
  33,539
  41,686
  50,991
  61,475
  73,145
  85,998
  100,018
  115,187
  131,478
  148,866
  167,324
  186,829
  207,361
  228,904
  251,450
  274,995
  299,544
  325,106
  351,700
  379,351
  408,090
Change in working capital, $m
  -16
  -93
  -134
  -189
  -257
  -340
  -437
  -549
  -674
  -811
  -957
  -1,111
  -1,271
  -1,433
  -1,597
  -1,760
  -1,921
  -2,080
  -2,235
  -2,386
  -2,534
  -2,679
  -2,821
  -2,961
  -3,099
  -3,237
  -3,375
  -3,515
  -3,657
  -3,803
  -3,953
Cash from operations, $m
  332
  1,615
  2,651
  4,102
  6,070
  8,662
  11,985
  16,142
  21,228
  27,323
  34,496
  42,797
  52,261
  62,908
  74,742
  87,757
  101,939
  117,266
  133,713
  151,252
  169,859
  189,508
  210,182
  231,865
  254,549
  278,232
  302,919
  328,621
  355,358
  383,154
  412,043
Maintenance CAPEX, $m
  0
  -537
  -859
  -1,327
  -1,984
  -2,879
  -4,062
  -5,584
  -7,495
  -9,842
  -12,664
  -15,995
  -19,863
  -24,284
  -29,271
  -34,826
  -40,949
  -47,634
  -54,870
  -62,647
  -70,951
  -79,770
  -89,092
  -98,908
  -109,211
  -119,995
  -131,259
  -143,005
  -155,237
  -167,964
  -181,197
New CAPEX, $m
  -374
  -3,220
  -4,680
  -6,574
  -8,947
  -11,828
  -15,222
  -19,113
  -23,465
  -28,222
  -33,316
  -38,673
  -44,214
  -49,864
  -55,556
  -61,232
  -66,846
  -72,364
  -77,765
  -83,040
  -88,190
  -93,225
  -98,162
  -103,025
  -107,842
  -112,641
  -117,457
  -122,321
  -127,267
  -132,329
  -137,539
Cash from investing activities, $m
  -1,310
  -3,757
  -5,539
  -7,901
  -10,931
  -14,707
  -19,284
  -24,697
  -30,960
  -38,064
  -45,980
  -54,668
  -64,077
  -74,148
  -84,827
  -96,058
  -107,795
  -119,998
  -132,635
  -145,687
  -159,141
  -172,995
  -187,254
  -201,933
  -217,053
  -232,636
  -248,716
  -265,326
  -282,504
  -300,293
  -318,736
Free cash flow, $m
  -978
  -2,142
  -2,888
  -3,799
  -4,862
  -6,045
  -7,299
  -8,555
  -9,732
  -10,740
  -11,484
  -11,871
  -11,815
  -11,241
  -10,085
  -8,301
  -5,856
  -2,731
  1,078
  5,566
  10,718
  16,514
  22,928
  29,931
  37,497
  45,596
  54,203
  63,296
  72,854
  82,862
  93,308
Issuance/(repayment) of debt, $m
  625
  1,514
  2,196
  3,085
  4,199
  5,551
  7,144
  8,970
  11,012
  13,245
  15,636
  18,150
  20,750
  23,402
  26,073
  28,737
  31,372
  33,961
  36,496
  38,972
  41,389
  43,752
  46,069
  48,351
  50,612
  52,864
  55,124
  57,407
  59,728
  62,104
  64,549
Issuance/(repurchase) of shares, $m
  2,052
  2,490
  3,393
  4,508
  5,827
  7,322
  8,941
  10,618
  12,265
  13,786
  15,079
  16,045
  16,587
  16,622
  16,081
  14,910
  13,070
  10,541
  7,315
  3,396
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  2,625
  4,004
  5,589
  7,593
  10,026
  12,873
  16,085
  19,588
  23,277
  27,031
  30,715
  34,195
  37,337
  40,024
  42,154
  43,647
  44,442
  44,502
  43,811
  42,368
  41,389
  43,752
  46,069
  48,351
  50,612
  52,864
  55,124
  57,407
  59,728
  62,104
  64,549
Total cash flow (excl. dividends), $m
  1,646
  1,862
  2,702
  3,795
  5,165
  6,828
  8,787
  11,033
  13,545
  16,291
  19,231
  22,323
  25,522
  28,783
  32,069
  35,345
  38,586
  41,771
  44,889
  47,934
  52,107
  60,266
  68,996
  78,283
  88,108
  98,460
  109,327
  120,703
  132,582
  144,965
  157,856
Retained Cash Flow (-), $m
  -1,821
  -3,154
  -4,583
  -6,437
  -8,761
  -11,582
  -14,905
  -18,715
  -22,976
  -27,634
  -32,623
  -37,868
  -43,293
  -48,826
  -54,400
  -59,958
  -65,454
  -70,857
  -76,146
  -81,311
  -86,354
  -91,284
  -96,119
  -100,881
  -105,597
  -110,297
  -115,012
  -119,775
  -124,618
  -129,574
  -134,676
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
 
  25
  40
  63
  94
  136
  192
  263
  353
  464
  597
  754
  937
  1,145
  1,380
  1,642
  1,931
  2,246
  2,587
  2,954
  3,345
  3,761
  4,201
  4,663
  5,149
  5,658
  6,189
  6,742
  7,319
  7,919
  8,543
Cash available for distribution, $m
 
  -1,291
  -1,881
  -2,642
  -3,596
  -4,754
  -6,118
  -7,683
  -9,432
  -11,344
  -13,391
  -15,544
  -17,772
  -20,043
  -22,331
  -24,612
  -26,869
  -29,086
  -31,257
  -33,378
  -34,247
  -31,019
  -27,122
  -22,598
  -17,489
  -11,837
  -5,684
  928
  7,964
  15,391
  23,181
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  -1,238
  -1,722
  -2,300
  -2,961
  -3,685
  -4,440
  -5,190
  -5,895
  -6,516
  -7,021
  -7,382
  -7,584
  -7,621
  -7,497
  -7,226
  -6,828
  -6,329
  -5,756
  -5,139
  -4,352
  -3,208
  -2,250
  -1,481
  -891
  -460
  -166
  20
  123
  168
  175
Current shareholders' claim on cash, %
  100
  83.6
  71.7
  62.7
  55.8
  50.4
  46.1
  42.7
  39.9
  37.7
  35.9
  34.4
  33.3
  32.3
  31.6
  31.0
  30.6
  30.3
  30.2
  30.1
  30.1
  30.1
  30.1
  30.1
  30.1
  30.1
  30.1
  30.1
  30.1
  30.1
  30.1

Diamondback Energy, Inc. is an independent oil and natural gas company. The Company focuses on the acquisition, development, exploration and exploitation of unconventional onshore oil and natural gas reserves in the Permian Basin in West Texas. As of December 31, 2016, the Company's total net acreage position in the Permian Basin was approximately 105,894 net acres. As of December 31, 2016, the Company, through its subsidiary, Viper Energy Partners LP (Viper), owned mineral interests underlying approximately 107,568 gross acres primarily in Midland County, Texas in the Permian Basin. The Permian Basin area covers a portion of western Texas and eastern New Mexico. The Company's reserves are located in the Permian Basin of West Texas, in particular in the Clearfork, Spraberry, Wolfcamp, Cline, Strawn and Atoka formations. The Company refers to the Clearfork, Spraberry, Wolfcamp, Strawn and Atoka formations collectively as the Wolfberry play.

FINANCIAL RATIOS  of  Diamondback Energy (FANG)

Valuation Ratios
P/E Ratio -71.6
Price to Sales 22.4
Price to Book 3.2
Price to Tangible Book
Price to Cash Flow 35.6
Price to Free Cash Flow -281.5
Growth Rates
Sales Growth Rate 17.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -11.2%
Cap. Spend. - 3 Yr. Gr. Rate 4.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 29.9%
Total Debt to Equity 29.9%
Interest Coverage -3
Management Effectiveness
Return On Assets -3.1%
Ret/ On Assets - 3 Yr. Avg. -3.9%
Return On Total Capital -4.6%
Ret/ On T. Cap. - 3 Yr. Avg. -5.7%
Return On Equity -5.9%
Return On Equity - 3 Yr. Avg. -7.1%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 75.7%
Gross Margin - 3 Yr. Avg. 76.6%
EBITDA Margin 9.7%
EBITDA Margin - 3 Yr. Avg. 0.6%
Operating Margin -19.4%
Oper. Margin - 3 Yr. Avg. -47.3%
Pre-Tax Margin -31.3%
Pre-Tax Margin - 3 Yr. Avg. -45.8%
Net Profit Margin -31.3%
Net Profit Margin - 3 Yr. Avg. -38.5%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 20.9%
Payout Ratio 0%

FANG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FANG stock intrinsic value calculation we used $1205 million for the last fiscal year's total revenue generated by Diamondback Energy. The default revenue input number comes from 2016 income statement of Diamondback Energy. 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 FANG 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 4.3%, whose default value for FANG is calculated based on our internal credit rating of Diamondback Energy, 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 Diamondback Energy.
    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 FANG stock the variable cost ratio is equal to 22.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $487 million in the base year in the intrinsic value calculation for FANG 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 5.4% for Diamondback Energy.

Corporate tax rate of 27% is the nominal tax rate for Diamondback Energy. 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 FANG stock is equal to 2.1%.

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 FANG are equal to 445.4%.

Life of production assets of 10 years is the average useful life of capital assets used in Diamondback Energy 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 FANG is equal to -12.8%. 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 - $5255 million for Diamondback Energy - 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 97 million for Diamondback Energy 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 Diamondback Energy at the current share price and the inputted number of shares is $12.7 billion.

RELATED COMPANIES Price Int.Val. Rating
AREX Approach Resou 2.43 1.83  sell
PE Parsley Energy 31.55 4.89  str.sell
CXO Concho Resourc 144.29 14.91  str.sell
RSPP RSP Permian 47.26 7.02  str.sell
EPE EP Energy Cl A 2.26 18.78  str.buy
PXD Pioneer Natura 180.95 16.18  str.sell
MTDR Matador Resour 31.98 3.08  str.sell
SM SM Energy 26.62 5.39  str.sell
XEC Cimarex Energy 96.75 5.13  str.sell
CPE Callon Petrole 11.11 2.30  str.sell

COMPANY NEWS

▶ 3 High-Octane Growth Stocks to Put on Your Watchlist   [Jul-18-18 05:10PM  Motley Fool]
▶ How EOG Uses Data To Stay Ahead Of The Crowd In Shale   [Jul-12-18 09:00AM  Investor's Business Daily]
▶ 7 bargain stocks for safety and 15%-plus upside   [Jul-05-18 08:57AM  MarketWatch]
▶ Crude Moves Past its Headwinds   [12:54PM  InvestorPlace]
▶ Diamondback Energy Inc (NASDAQ:FANG): The Best Of Both Worlds   [Jun-15-18 06:53AM  Simply Wall St.]
▶ OPEC Still Holds Lots of Sway in the Oil Market   [Jun-05-18 03:05PM  Motley Fool]
▶ This Oil Stock Sees More Mergers in Its Future   [May-30-18 04:09PM  Motley Fool]
▶ Top Oil Stocks: Diamondback Energy Pressured Despite Robust Fundamentals   [May-25-18 12:15PM  Investor's Business Daily]
▶ Energy Stocks And Industry News: Oil, Gas, Solar, Coal   [08:39AM  Investor's Business Daily]
▶ High Growth NasdaqCM Stocks For The Day   [May-18-18 12:02PM  Simply Wall St.]
▶ Modelling Diamondback Energy Incs (NASDAQ:FANG) True Value   [May-17-18 03:15PM  Simply Wall St.]
▶ Waymo Makes Alphabet One of the Best Tech Stocks to Buy   [May-15-18 09:30PM  TheStreet.com]
▶ 2 Oil Stocks That Could Heat Up Your Portfolio   [May-14-18 09:51AM  TheStreet.com]
▶ Diamondback: 1Q Earnings Snapshot   [May-08-18 04:51PM  Associated Press]
▶ Disney, Match, Etsy, Planet Fitness To Report: Investing Action Plan   [May-07-18 04:16PM  Investor's Business Daily]
▶ Just Don't Do It: These 6 Top Stocks Teach Key Lesson In Market Correction   [Apr-03-18 07:35AM  Investor's Business Daily]
▶ Best Growth Stocks To Buy Now   [Mar-29-18 12:02PM  Simply Wall St.]
▶ Can the tech wreck turn around?   [06:42AM  CNBC Videos]
▶ Oil Prices Slip On Profit Taking   [Mar-27-18 04:00PM  Oilprice.com]
▶ This Top Oil Stock And IBD 50 Member Pumps Up New Breakout   [Mar-26-18 04:23PM  Investor's Business Daily]
▶ Small Caps Cheer Dovish Fed, But Nasdaq Turns Volatile   [Mar-21-18 03:19PM  Investor's Business Daily]
▶ Brazil ETF (EWZ), Microsoft, Winnebago & Energy   [Mar-20-18 01:41PM  CNBC Videos]
▶ ConocoPhillips: We 'Didn't Drill Our Brains Out' Like Shale Rivals Did   [Mar-06-18 04:21PM  Investor's Business Daily]
▶ Nvidia, Intel, Textron, Diamondback Energy & Target   [Mar-05-18 01:17PM  CNBC Videos]
▶ 'Apple Of Oil' Joins Other Shale Firms With Measured Tone On Drilling   [Feb-28-18 04:59PM  Investor's Business Daily]
▶ Financially Sounds Stocks Poised For High Growth   [Feb-24-18 11:02AM  Simply Wall St.]
▶ This Shale Producer Won't 'Drill Baby Drill' But Still Sees Output Boost   [Feb-14-18 04:05PM  Investor's Business Daily]
▶ Nasdaq Reclaims 50-Day Moving Average As Stocks Shrug Off CPI   [11:44AM  Investor's Business Daily]
▶ Diamondback beats Street 4Q forecasts   [04:29PM  Associated Press]
▶ OPEC Sees U.S. Crude Output Rising Faster; Oil Finds Resistance At $60   [Feb-12-18 04:09PM  Investor's Business Daily]
▶ These 2 Energy Stocks Are Ridiculously Cheap   [Feb-11-18 02:50PM  Motley Fool]
▶ Diamondback Energy: Cramer's Top Takeaways   [Jan-27-18 06:52AM  TheStreet.com]
Financial statements of FANG
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

ASSET ALLOCATION

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

Copyright © X-FIN.com 2005-2018. All rigths reserved.