Intrinsic value of Gulfport Energy - GPOR

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$15.20

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$15.20

 
Intrinsic value

$3.08

 
Up/down potential

-80%

 
Rating

str. sell

 
Value-price divergence* premium content

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

We calculate the intrinsic value of GPOR 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 2.7

 

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, %
  -45.56
  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
  386
  618
  954
  1,427
  2,070
  2,921
  4,016
  5,391
  7,078
  9,108
  11,504
  14,285
  17,465
  21,051
  25,047
  29,451
  34,258
  39,463
  45,056
  51,028
  57,370
  64,075
  71,135
  78,545
  86,301
  94,402
  102,849
  111,647
  120,800
  130,317
  140,208
Variable operating expenses, $m
 
  1,464
  2,261
  3,382
  4,907
  6,923
  9,518
  12,776
  16,775
  21,586
  27,264
  33,856
  41,392
  49,892
  59,361
  69,798
  81,192
  93,527
  106,782
  120,936
  135,968
  151,858
  168,590
  186,151
  204,532
  223,732
  243,753
  264,602
  286,295
  308,851
  332,294
Fixed operating expenses, $m
 
  381
  391
  401
  411
  421
  431
  442
  453
  465
  476
  488
  500
  513
  526
  539
  552
  566
  580
  595
  610
  625
  640
  656
  673
  690
  707
  725
  743
  761
  780
Total operating expenses, $m
  1,278
  1,845
  2,652
  3,783
  5,318
  7,344
  9,949
  13,218
  17,228
  22,051
  27,740
  34,344
  41,892
  50,405
  59,887
  70,337
  81,744
  94,093
  107,362
  121,531
  136,578
  152,483
  169,230
  186,807
  205,205
  224,422
  244,460
  265,327
  287,038
  309,612
  333,074
Operating income, $m
  -892
  -1,227
  -1,698
  -2,356
  -3,247
  -4,423
  -5,933
  -7,827
  -10,150
  -12,942
  -16,237
  -20,059
  -24,428
  -29,353
  -34,840
  -40,886
  -47,486
  -54,630
  -62,306
  -70,503
  -79,207
  -88,408
  -98,095
  -108,263
  -118,905
  -130,020
  -141,610
  -153,680
  -166,238
  -179,295
  -192,866
EBITDA, $m
  -646
  -833
  -1,089
  -1,444
  -1,925
  -2,557
  -3,368
  -4,384
  -5,629
  -7,125
  -8,889
  -10,935
  -13,272
  -15,907
  -18,842
  -22,076
  -25,605
  -29,425
  -33,529
  -37,911
  -42,564
  -47,482
  -52,661
  -58,095
  -63,783
  -69,724
  -75,919
  -82,370
  -89,082
  -96,060
  -103,313
Interest expense (income), $m
  69
  86
  152
  248
  383
  567
  809
  1,122
  1,514
  1,995
  2,574
  3,257
  4,051
  4,958
  5,981
  7,121
  8,377
  9,748
  11,233
  12,828
  14,532
  16,341
  18,254
  20,267
  22,381
  24,593
  26,904
  29,314
  31,823
  34,434
  37,149
Earnings before tax, $m
  -983
  -1,313
  -1,850
  -2,604
  -3,630
  -4,989
  -6,742
  -8,949
  -11,664
  -14,937
  -18,811
  -23,316
  -28,478
  -34,311
  -40,821
  -48,007
  -55,863
  -64,378
  -73,539
  -83,331
  -93,739
  -104,749
  -116,349
  -128,530
  -141,286
  -154,613
  -168,515
  -182,994
  -198,061
  -213,729
  -230,015
Tax expense, $m
  -3
  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
  -980
  -1,313
  -1,850
  -2,604
  -3,630
  -4,989
  -6,742
  -8,949
  -11,664
  -14,937
  -18,811
  -23,316
  -28,478
  -34,311
  -40,821
  -48,007
  -55,863
  -64,378
  -73,539
  -83,331
  -93,739
  -104,749
  -116,349
  -128,530
  -141,286
  -154,613
  -168,515
  -182,994
  -198,061
  -213,729
  -230,015

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,276
  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
  4,223
  4,715
  7,284
  10,893
  15,805
  22,299
  30,656
  41,149
  54,032
  69,526
  87,817
  109,048
  133,322
  160,698
  191,199
  224,816
  261,514
  301,243
  343,936
  389,526
  437,942
  489,123
  543,015
  599,577
  658,783
  720,624
  785,109
  852,264
  922,134
  994,784
  1,070,294
Adjusted assets (=assets-cash), $m
  2,947
  4,715
  7,284
  10,893
  15,805
  22,299
  30,656
  41,149
  54,032
  69,526
  87,817
  109,048
  133,322
  160,698
  191,199
  224,816
  261,514
  301,243
  343,936
  389,526
  437,942
  489,123
  543,015
  599,577
  658,783
  720,624
  785,109
  852,264
  922,134
  994,784
  1,070,294
Revenue / Adjusted assets
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
Average production assets, $m
  2,490
  3,984
  6,155
  9,206
  13,357
  18,844
  25,907
  34,775
  45,661
  58,755
  74,212
  92,155
  112,668
  135,803
  161,578
  189,987
  221,001
  254,574
  290,654
  329,181
  370,097
  413,349
  458,892
  506,691
  556,725
  608,986
  663,480
  720,232
  779,278
  840,673
  904,485
Working capital, $m
  1,224
  -83
  -129
  -193
  -280
  -394
  -542
  -728
  -956
  -1,230
  -1,553
  -1,929
  -2,358
  -2,842
  -3,381
  -3,976
  -4,625
  -5,327
  -6,083
  -6,889
  -7,745
  -8,650
  -9,603
  -10,604
  -11,651
  -12,744
  -13,885
  -15,072
  -16,308
  -17,593
  -18,928
Total debt, $m
  1,594
  2,817
  4,595
  7,093
  10,492
  14,986
  20,769
  28,030
  36,945
  47,667
  60,324
  75,016
  91,814
  110,758
  131,864
  155,127
  180,523
  208,015
  237,559
  269,107
  302,611
  338,028
  375,322
  414,462
  455,433
  498,227
  542,850
  589,321
  637,672
  687,945
  740,198
Total liabilities, $m
  2,039
  3,262
  5,040
  7,538
  10,937
  15,431
  21,214
  28,475
  37,390
  48,112
  60,769
  75,461
  92,259
  111,203
  132,309
  155,572
  180,968
  208,460
  238,004
  269,552
  303,056
  338,473
  375,767
  414,907
  455,878
  498,672
  543,295
  589,766
  638,117
  688,390
  740,643
Total equity, $m
  2,184
  1,452
  2,243
  3,355
  4,868
  6,868
  9,442
  12,674
  16,642
  21,414
  27,047
  33,587
  41,063
  49,495
  58,889
  69,243
  80,546
  92,783
  105,932
  119,974
  134,886
  150,650
  167,249
  184,670
  202,905
  221,952
  241,813
  262,497
  284,017
  306,393
  329,650
Total liabilities and equity, $m
  4,223
  4,714
  7,283
  10,893
  15,805
  22,299
  30,656
  41,149
  54,032
  69,526
  87,816
  109,048
  133,322
  160,698
  191,198
  224,815
  261,514
  301,243
  343,936
  389,526
  437,942
  489,123
  543,016
  599,577
  658,783
  720,624
  785,108
  852,263
  922,134
  994,783
  1,070,293
Debt-to-equity ratio
  0.730
  1.940
  2.050
  2.110
  2.160
  2.180
  2.200
  2.210
  2.220
  2.230
  2.230
  2.230
  2.240
  2.240
  2.240
  2.240
  2.240
  2.240
  2.240
  2.240
  2.240
  2.240
  2.240
  2.240
  2.240
  2.240
  2.240
  2.250
  2.250
  2.250
  2.250
Adjusted equity ratio
  0.308
  0.308
  0.308
  0.308
  0.308
  0.308
  0.308
  0.308
  0.308
  0.308
  0.308
  0.308
  0.308
  0.308
  0.308
  0.308
  0.308
  0.308
  0.308
  0.308
  0.308
  0.308
  0.308
  0.308
  0.308
  0.308
  0.308
  0.308
  0.308
  0.308
  0.308

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -980
  -1,313
  -1,850
  -2,604
  -3,630
  -4,989
  -6,742
  -8,949
  -11,664
  -14,937
  -18,811
  -23,316
  -28,478
  -34,311
  -40,821
  -48,007
  -55,863
  -64,378
  -73,539
  -83,331
  -93,739
  -104,749
  -116,349
  -128,530
  -141,286
  -154,613
  -168,515
  -182,994
  -198,061
  -213,729
  -230,015
Depreciation, amort., depletion, $m
  246
  394
  609
  911
  1,322
  1,866
  2,565
  3,443
  4,521
  5,817
  7,348
  9,124
  11,155
  13,446
  15,998
  18,811
  21,881
  25,205
  28,778
  32,592
  36,643
  40,926
  45,435
  50,167
  55,121
  60,296
  65,691
  71,310
  77,156
  83,235
  89,553
Funds from operations, $m
  309
  -919
  -1,241
  -1,692
  -2,308
  -3,124
  -4,177
  -5,506
  -7,143
  -9,120
  -11,463
  -14,192
  -17,323
  -20,865
  -24,823
  -29,196
  -33,982
  -39,173
  -44,762
  -50,739
  -57,096
  -63,823
  -70,914
  -78,362
  -86,164
  -94,318
  -102,823
  -111,684
  -120,905
  -130,494
  -140,462
Change in working capital, $m
  -29
  -31
  -45
  -64
  -87
  -115
  -148
  -186
  -228
  -274
  -323
  -375
  -429
  -484
  -539
  -595
  -649
  -703
  -755
  -806
  -856
  -905
  -953
  -1,000
  -1,047
  -1,094
  -1,140
  -1,188
  -1,236
  -1,285
  -1,335
Cash from operations, $m
  338
  -1,027
  -1,195
  -1,628
  -2,221
  -3,009
  -4,030
  -5,320
  -6,915
  -8,846
  -11,139
  -13,817
  -16,894
  -20,381
  -24,284
  -28,602
  -33,333
  -38,470
  -44,007
  -49,933
  -56,239
  -62,918
  -69,961
  -77,362
  -85,117
  -93,224
  -101,683
  -110,497
  -119,670
  -129,210
  -139,127
Maintenance CAPEX, $m
  0
  -247
  -394
  -609
  -911
  -1,322
  -1,866
  -2,565
  -3,443
  -4,521
  -5,817
  -7,348
  -9,124
  -11,155
  -13,446
  -15,998
  -18,811
  -21,881
  -25,205
  -28,778
  -32,592
  -36,643
  -40,926
  -45,435
  -50,167
  -55,121
  -60,296
  -65,691
  -71,310
  -77,156
  -83,235
New CAPEX, $m
  -758
  -1,494
  -2,171
  -3,050
  -4,151
  -5,488
  -7,062
  -8,868
  -10,887
  -13,094
  -15,457
  -17,942
  -20,513
  -23,135
  -25,776
  -28,409
  -31,014
  -33,574
  -36,079
  -38,527
  -40,916
  -43,252
  -45,543
  -47,799
  -50,034
  -52,261
  -54,495
  -56,751
  -59,046
  -61,395
  -63,812
Cash from investing activities, $m
  -906
  -1,741
  -2,565
  -3,659
  -5,062
  -6,810
  -8,928
  -11,433
  -14,330
  -17,615
  -21,274
  -25,290
  -29,637
  -34,290
  -39,222
  -44,407
  -49,825
  -55,455
  -61,284
  -67,305
  -73,508
  -79,895
  -86,469
  -93,234
  -100,201
  -107,382
  -114,791
  -122,442
  -130,356
  -138,551
  -147,047
Free cash flow, $m
  -568
  -2,767
  -3,761
  -5,288
  -7,284
  -9,819
  -12,958
  -16,753
  -21,245
  -26,461
  -32,414
  -39,107
  -46,531
  -54,671
  -63,505
  -73,009
  -83,157
  -93,925
  -105,291
  -117,237
  -129,748
  -142,813
  -156,430
  -170,596
  -185,319
  -200,606
  -216,473
  -232,939
  -250,026
  -267,761
  -286,173
Issuance/(repayment) of debt, $m
  645
  1,223
  1,778
  2,498
  3,399
  4,494
  5,783
  7,261
  8,915
  10,722
  12,657
  14,692
  16,797
  18,944
  21,107
  23,263
  25,396
  27,492
  29,544
  31,548
  33,504
  35,417
  37,293
  39,141
  40,971
  42,794
  44,623
  46,471
  48,350
  50,273
  52,253
Issuance/(repurchase) of shares, $m
  1,111
  812
  2,774
  3,902
  5,397
  7,325
  9,749
  12,723
  16,298
  20,511
  25,390
  30,954
  37,210
  44,159
  51,793
  60,100
  69,065
  78,670
  88,897
  99,731
  111,156
  123,160
  135,735
  148,877
  162,583
  176,859
  191,711
  207,152
  223,196
  239,863
  257,178
Cash from financing (excl. dividends), $m  
  1,731
  2,035
  4,552
  6,400
  8,796
  11,819
  15,532
  19,984
  25,213
  31,233
  38,047
  45,646
  54,007
  63,103
  72,900
  83,363
  94,461
  106,162
  118,441
  131,279
  144,660
  158,577
  173,028
  188,018
  203,554
  219,653
  236,334
  253,623
  271,546
  290,136
  309,431
Total cash flow (excl. dividends), $m
  1,163
  -1,544
  -1,983
  -2,790
  -3,884
  -5,325
  -7,175
  -9,492
  -12,330
  -15,739
  -19,757
  -24,415
  -29,734
  -35,727
  -42,399
  -49,746
  -57,761
  -66,433
  -75,748
  -85,689
  -96,243
  -107,396
  -119,136
  -131,456
  -144,348
  -157,812
  -171,850
  -186,468
  -201,676
  -217,487
  -233,921
Retained Cash Flow (-), $m
  -145
  -544
  -791
  -1,112
  -1,513
  -2,000
  -2,574
  -3,232
  -3,968
  -4,772
  -5,634
  -6,539
  -7,476
  -8,432
  -9,394
  -10,354
  -11,303
  -12,236
  -13,150
  -14,042
  -14,912
  -15,764
  -16,599
  -17,421
  -18,235
  -19,047
  -19,861
  -20,684
  -21,520
  -22,376
  -23,257
Prev. year cash balance distribution, $m
 
  1,276
  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
 
  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
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
 
  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
Current shareholders' claim on cash, %
  100
  58.0
  22.8
  9.5
  4.1
  1.9
  0.9
  0.4
  0.2
  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

Gulfport Energy Corporation engages in the acquisition, exploration, exploitation, and production of natural gas, natural gas liquids (NGLs), and crude oil in the United States. Its principal properties are located in the Utica Shale primarily in Eastern Ohio, along the Louisiana Gulf Coast in the West Cote Blanche Bay, and Hackberry fields. The company also has interests in the Niobrara Formation of Northwestern Colorado; Bakken Formation; Alberta oil sands in Canada; and Phu Horm gas field in Thailand. As of December 31, 2016, it had 2.3 Tcfe of proved reserves; and proved undeveloped reserves of 664 thousand barrels of oil, 1,422,271 million cubic feet of natural gas, and 5,828 thousand barrels of NGLs. The company is headquartered in Oklahoma City, Oklahoma.

FINANCIAL RATIOS  of  Gulfport Energy (GPOR)

Valuation Ratios
P/E Ratio -2.5
Price to Sales 6.3
Price to Book 1.1
Price to Tangible Book
Price to Cash Flow 7.1
Price to Free Cash Flow -5.7
Growth Rates
Sales Growth Rate -45.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -52.4%
Cap. Spend. - 3 Yr. Gr. Rate -1.3%
Financial Strength
Quick Ratio NaN
Current Ratio 0.5
LT Debt to Equity 73%
Total Debt to Equity 73%
Interest Coverage -13
Management Effectiveness
Return On Assets -24.1%
Ret/ On Assets - 3 Yr. Avg. -16.5%
Return On Total Capital -29%
Ret/ On T. Cap. - 3 Yr. Avg. -20.2%
Return On Equity -46.4%
Return On Equity - 3 Yr. Avg. -30.5%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 78.8%
Gross Margin - 3 Yr. Avg. 85.2%
EBITDA Margin -173.1%
EBITDA Margin - 3 Yr. Avg. -74.1%
Operating Margin -231.1%
Oper. Margin - 3 Yr. Avg. -129.9%
Pre-Tax Margin -254.7%
Pre-Tax Margin - 3 Yr. Avg. -134.6%
Net Profit Margin -253.9%
Net Profit Margin - 3 Yr. Avg. -130%
Effective Tax Rate 0.3%
Eff/ Tax Rate - 3 Yr. Avg. 18.7%
Payout Ratio 0%

GPOR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GPOR stock intrinsic value calculation we used $386 million for the last fiscal year's total revenue generated by Gulfport Energy. The default revenue input number comes from 2016 income statement of Gulfport 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 GPOR 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 GPOR is calculated based on our internal credit rating of Gulfport 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 Gulfport 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 GPOR stock the variable cost ratio is equal to 237%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $372 million in the base year in the intrinsic value calculation for GPOR 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 Gulfport Energy.

Corporate tax rate of 27% is the nominal tax rate for Gulfport 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 GPOR 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 GPOR are equal to 645.1%.

Life of production assets of 10.1 years is the average useful life of capital assets used in Gulfport 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 GPOR is equal to -13.5%. 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 - $2184 million for Gulfport 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 177.483 million for Gulfport 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 Gulfport Energy at the current share price and the inputted number of shares is $2.7 billion.


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Stock chart of GPOR Financial statements of GPOR Annual reports of GPOR
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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