Intrinsic value of Jones Energy Cl A - JONE

Previous Close

$1.41

  Intrinsic Value

$1.37

stock screener

  Rating & Target

hold

-3%

Previous close

$1.41

 
Intrinsic value

$1.37

 
Up/down potential

-3%

 
Rating

hold

We calculate the intrinsic value of JONE stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -35.03
  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
  128
  205
  316
  473
  687
  969
  1,332
  1,788
  2,347
  3,020
  3,815
  4,737
  5,792
  6,981
  8,306
  9,766
  11,360
  13,086
  14,941
  16,921
  19,024
  21,248
  23,589
  26,046
  28,618
  31,304
  34,105
  37,023
  40,058
  43,214
  46,494
Variable operating expenses, $m
 
  317
  489
  732
  1,062
  1,499
  2,060
  2,765
  3,631
  4,672
  5,901
  7,328
  8,960
  10,799
  12,849
  15,108
  17,574
  20,244
  23,113
  26,177
  29,431
  32,870
  36,492
  40,293
  44,272
  48,428
  52,761
  57,274
  61,970
  66,852
  71,926
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
  133
  317
  489
  732
  1,062
  1,499
  2,060
  2,765
  3,631
  4,672
  5,901
  7,328
  8,960
  10,799
  12,849
  15,108
  17,574
  20,244
  23,113
  26,177
  29,431
  32,870
  36,492
  40,293
  44,272
  48,428
  52,761
  57,274
  61,970
  66,852
  71,926
Operating income, $m
  -5
  -112
  -173
  -259
  -376
  -530
  -728
  -978
  -1,284
  -1,652
  -2,087
  -2,591
  -3,168
  -3,818
  -4,543
  -5,342
  -6,214
  -7,158
  -8,173
  -9,256
  -10,406
  -11,623
  -12,903
  -14,247
  -15,654
  -17,123
  -18,656
  -20,251
  -21,912
  -23,638
  -25,432
EBITDA, $m
  149
  134
  207
  310
  450
  635
  872
  1,171
  1,538
  1,979
  2,499
  3,103
  3,794
  4,573
  5,441
  6,398
  7,442
  8,573
  9,788
  11,085
  12,463
  13,919
  15,453
  17,062
  18,747
  20,507
  22,342
  24,253
  26,242
  28,309
  30,458
Interest expense (income), $m
  54
  50
  106
  188
  303
  460
  667
  934
  1,268
  1,679
  2,173
  2,756
  3,433
  4,207
  5,080
  6,053
  7,124
  8,295
  9,561
  10,923
  12,376
  13,920
  15,552
  17,270
  19,074
  20,962
  22,933
  24,990
  27,131
  29,359
  31,675
Earnings before tax, $m
  -109
  -162
  -280
  -447
  -679
  -990
  -1,396
  -1,911
  -2,552
  -3,331
  -4,260
  -5,347
  -6,601
  -8,026
  -9,623
  -11,395
  -13,339
  -15,453
  -17,734
  -20,178
  -22,783
  -25,543
  -28,455
  -31,517
  -34,728
  -38,085
  -41,589
  -45,241
  -49,042
  -52,997
  -57,107
Tax expense, $m
  -24
  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
  -43
  -162
  -280
  -447
  -679
  -990
  -1,396
  -1,911
  -2,552
  -3,331
  -4,260
  -5,347
  -6,601
  -8,026
  -9,623
  -11,395
  -13,339
  -15,453
  -17,734
  -20,178
  -22,783
  -25,543
  -28,455
  -31,517
  -34,728
  -38,085
  -41,589
  -45,241
  -49,042
  -52,997
  -57,107

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  35
  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
  1,887
  2,968
  4,586
  6,858
  9,951
  14,039
  19,300
  25,906
  34,017
  43,771
  55,287
  68,654
  83,936
  101,171
  120,373
  141,537
  164,642
  189,654
  216,532
  245,234
  275,716
  307,938
  341,867
  377,477
  414,751
  453,684
  494,282
  536,561
  580,549
  626,287
  673,826
Adjusted assets (=assets-cash), $m
  1,852
  2,968
  4,586
  6,858
  9,951
  14,039
  19,300
  25,906
  34,017
  43,771
  55,287
  68,654
  83,936
  101,171
  120,373
  141,537
  164,642
  189,654
  216,532
  245,234
  275,716
  307,938
  341,867
  377,477
  414,751
  453,684
  494,282
  536,561
  580,549
  626,287
  673,826
Revenue / Adjusted assets
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
Average production assets, $m
  1,693
  2,708
  4,184
  6,257
  9,079
  12,809
  17,609
  23,637
  31,036
  39,936
  50,443
  62,639
  76,582
  92,307
  109,827
  129,137
  150,217
  173,038
  197,561
  223,748
  251,560
  280,959
  311,915
  344,405
  378,413
  413,936
  450,976
  489,551
  529,686
  571,416
  614,790
Working capital, $m
  -9
  -70
  -109
  -163
  -236
  -333
  -458
  -615
  -807
  -1,039
  -1,312
  -1,630
  -1,992
  -2,401
  -2,857
  -3,360
  -3,908
  -4,502
  -5,140
  -5,821
  -6,544
  -7,309
  -8,115
  -8,960
  -9,845
  -10,769
  -11,732
  -12,736
  -13,780
  -14,866
  -15,994
Total debt, $m
  724
  1,543
  2,730
  4,398
  6,668
  9,668
  13,530
  18,379
  24,332
  31,492
  39,944
  49,756
  60,973
  73,623
  87,718
  103,252
  120,211
  138,570
  158,299
  179,366
  201,739
  225,391
  250,294
  276,432
  303,791
  332,368
  362,167
  393,200
  425,487
  459,059
  493,952
Total liabilities, $m
  1,360
  2,179
  3,366
  5,034
  7,304
  10,304
  14,166
  19,015
  24,968
  32,128
  40,580
  50,392
  61,609
  74,259
  88,354
  103,888
  120,847
  139,206
  158,935
  180,002
  202,375
  226,027
  250,930
  277,068
  304,427
  333,004
  362,803
  393,836
  426,123
  459,695
  494,588
Total equity, $m
  527
  790
  1,220
  1,824
  2,647
  3,734
  5,134
  6,891
  9,048
  11,643
  14,706
  18,262
  22,327
  26,911
  32,019
  37,649
  43,795
  50,448
  57,598
  65,232
  73,340
  81,912
  90,937
  100,409
  110,324
  120,680
  131,479
  142,725
  154,426
  166,592
  179,238
Total liabilities and equity, $m
  1,887
  2,969
  4,586
  6,858
  9,951
  14,038
  19,300
  25,906
  34,016
  43,771
  55,286
  68,654
  83,936
  101,170
  120,373
  141,537
  164,642
  189,654
  216,533
  245,234
  275,715
  307,939
  341,867
  377,477
  414,751
  453,684
  494,282
  536,561
  580,549
  626,287
  673,826
Debt-to-equity ratio
  1.374
  1.950
  2.240
  2.410
  2.520
  2.590
  2.640
  2.670
  2.690
  2.700
  2.720
  2.720
  2.730
  2.740
  2.740
  2.740
  2.740
  2.750
  2.750
  2.750
  2.750
  2.750
  2.750
  2.750
  2.750
  2.750
  2.750
  2.750
  2.760
  2.760
  2.760
Adjusted equity ratio
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -43
  -162
  -280
  -447
  -679
  -990
  -1,396
  -1,911
  -2,552
  -3,331
  -4,260
  -5,347
  -6,601
  -8,026
  -9,623
  -11,395
  -13,339
  -15,453
  -17,734
  -20,178
  -22,783
  -25,543
  -28,455
  -31,517
  -34,728
  -38,085
  -41,589
  -45,241
  -49,042
  -52,997
  -57,107
Depreciation, amort., depletion, $m
  154
  246
  380
  569
  825
  1,164
  1,601
  2,149
  2,821
  3,631
  4,586
  5,694
  6,962
  8,392
  9,984
  11,740
  13,656
  15,731
  17,960
  20,341
  22,869
  25,542
  28,356
  31,310
  34,401
  37,631
  40,998
  44,505
  48,153
  51,947
  55,890
Funds from operations, $m
  41
  84
  101
  122
  146
  174
  205
  237
  269
  300
  326
  347
  361
  366
  361
  345
  318
  278
  226
  162
  86
  -1
  -99
  -208
  -327
  -454
  -591
  -736
  -889
  -1,050
  -1,217
Change in working capital, $m
  15
  -26
  -38
  -54
  -73
  -97
  -125
  -157
  -193
  -232
  -273
  -317
  -363
  -409
  -456
  -502
  -548
  -594
  -638
  -681
  -724
  -765
  -805
  -845
  -885
  -924
  -964
  -1,004
  -1,044
  -1,086
  -1,128
Cash from operations, $m
  26
  111
  139
  176
  220
  272
  330
  394
  462
  531
  599
  664
  724
  775
  817
  847
  866
  872
  864
  844
  810
  764
  706
  637
  558
  470
  372
  267
  155
  36
  -89
Maintenance CAPEX, $m
  0
  -154
  -246
  -380
  -569
  -825
  -1,164
  -1,601
  -2,149
  -2,821
  -3,631
  -4,586
  -5,694
  -6,962
  -8,392
  -9,984
  -11,740
  -13,656
  -15,731
  -17,960
  -20,341
  -22,869
  -25,542
  -28,356
  -31,310
  -34,401
  -37,631
  -40,998
  -44,505
  -48,153
  -51,947
New CAPEX, $m
  -265
  -1,016
  -1,476
  -2,073
  -2,822
  -3,730
  -4,800
  -6,027
  -7,400
  -8,900
  -10,507
  -12,196
  -13,943
  -15,725
  -17,520
  -19,310
  -21,080
  -22,820
  -24,524
  -26,187
  -27,811
  -29,399
  -30,956
  -32,490
  -34,009
  -35,522
  -37,041
  -38,575
  -40,135
  -41,731
  -43,374
Cash from investing activities, $m
  -131
  -1,170
  -1,722
  -2,453
  -3,391
  -4,555
  -5,964
  -7,628
  -9,549
  -11,721
  -14,138
  -16,782
  -19,637
  -22,687
  -25,912
  -29,294
  -32,820
  -36,476
  -40,255
  -44,147
  -48,152
  -52,268
  -56,498
  -60,846
  -65,319
  -69,923
  -74,672
  -79,573
  -84,640
  -89,884
  -95,321
Free cash flow, $m
  -105
  -1,059
  -1,583
  -2,278
  -3,171
  -4,284
  -5,635
  -7,234
  -9,087
  -11,190
  -13,538
  -16,117
  -18,914
  -21,912
  -25,095
  -28,447
  -31,954
  -35,605
  -39,390
  -43,304
  -47,342
  -51,504
  -55,792
  -60,208
  -64,760
  -69,454
  -74,299
  -79,305
  -84,484
  -89,848
  -95,410
Issuance/(repayment) of debt, $m
  -17
  819
  1,187
  1,668
  2,270
  3,001
  3,862
  4,849
  5,953
  7,160
  8,452
  9,811
  11,217
  12,651
  14,095
  15,535
  16,959
  18,359
  19,729
  21,067
  22,374
  23,651
  24,904
  26,137
  27,359
  28,577
  29,799
  31,033
  32,288
  33,572
  34,893
Issuance/(repurchase) of shares, $m
  153
  460
  710
  1,052
  1,502
  2,077
  2,795
  3,669
  4,709
  5,926
  7,323
  8,903
  10,666
  12,610
  14,731
  17,024
  19,484
  22,106
  24,884
  27,813
  30,891
  34,114
  37,480
  40,990
  44,643
  48,441
  52,388
  56,487
  60,743
  65,163
  69,753
Cash from financing (excl. dividends), $m  
  120
  1,279
  1,897
  2,720
  3,772
  5,078
  6,657
  8,518
  10,662
  13,086
  15,775
  18,714
  21,883
  25,261
  28,826
  32,559
  36,443
  40,465
  44,613
  48,880
  53,265
  57,765
  62,384
  67,127
  72,002
  77,018
  82,187
  87,520
  93,031
  98,735
  104,646
Total cash flow (excl. dividends), $m
  15
  219
  314
  441
  601
  794
  1,022
  1,284
  1,576
  1,895
  2,237
  2,597
  2,969
  3,349
  3,731
  4,112
  4,489
  4,860
  5,222
  5,577
  5,922
  6,261
  6,592
  6,919
  7,242
  7,564
  7,888
  8,214
  8,547
  8,887
  9,236
Retained Cash Flow (-), $m
  -127
  -460
  -710
  -1,052
  -1,502
  -2,077
  -2,795
  -3,669
  -4,709
  -5,926
  -7,323
  -8,903
  -10,666
  -12,610
  -14,731
  -17,024
  -19,484
  -22,106
  -24,884
  -27,813
  -30,891
  -34,114
  -37,480
  -40,990
  -44,643
  -48,441
  -52,388
  -56,487
  -60,743
  -65,163
  -69,753
Prev. year cash balance distribution, $m
 
  35
  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
 
  -205
  -396
  -610
  -901
  -1,283
  -1,773
  -2,385
  -3,134
  -4,030
  -5,085
  -6,306
  -7,697
  -9,261
  -11,000
  -12,912
  -14,995
  -17,246
  -19,661
  -22,237
  -24,968
  -27,853
  -30,888
  -34,071
  -37,401
  -40,877
  -44,500
  -48,273
  -52,197
  -56,276
  -60,516
Discount rate, %
 
  10.20
  10.71
  11.25
  11.81
  12.40
  13.02
  13.67
  14.35
  15.07
  15.82
  16.61
  17.45
  18.32
  19.23
  20.20
  21.21
  22.27
  23.38
  24.55
  25.77
  27.06
  28.42
  29.84
  31.33
  32.90
  34.54
  36.27
  38.08
  39.99
  41.98
PV of cash for distribution, $m
 
  -186
  -323
  -443
  -576
  -715
  -851
  -973
  -1,072
  -1,139
  -1,170
  -1,163
  -1,118
  -1,040
  -937
  -818
  -691
  -566
  -448
  -343
  -254
  -182
  -126
  -84
  -54
  -33
  -20
  -11
  -6
  -3
  -2
Current shareholders' claim on cash, %
  100
  42.8
  18.8
  8.4
  3.9
  1.8
  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

Jones Energy, Inc. is an independent oil and gas company engaged in the exploration, development, production and acquisition of oil and natural gas properties. The Company's assets are located within the Anadarko and Arkoma basins of Texas and Oklahoma. It owns leasehold interests in oil and natural gas producing properties, as well as in undeveloped acreage, located in the Anadarko and Arkoma basins in Texas and Oklahoma. The Company's oil is generally sold under short-term, extendable and cancellable agreements with unaffiliated purchasers. The Company's natural gas is sold at delivery points at or near producing wells to natural gas gathering and marketing companies. Its total estimated proved reserves are approximately 101.7 million barrels of oil equivalent (MMBoe). Approximately 25% of its total estimated proved reserves consist of oil, over 32% consist of natural gas liquids (NGLs) and over 43% consist of natural gas. Its properties include over 1,020 gross producing wells.

FINANCIAL RATIOS  of  Jones Energy Cl A (JONE)

Valuation Ratios
P/E Ratio -3
Price to Sales 1
Price to Book 0.2
Price to Tangible Book
Price to Cash Flow 5
Price to Free Cash Flow -0.5
Growth Rates
Sales Growth Rate -35%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -15.1%
Cap. Spend. - 3 Yr. Gr. Rate -6.8%
Financial Strength
Quick Ratio NaN
Current Ratio 0.3
LT Debt to Equity 137.4%
Total Debt to Equity 137.4%
Interest Coverage -1
Management Effectiveness
Return On Assets -0%
Ret/ On Assets - 3 Yr. Avg. 1.9%
Return On Total Capital -3.5%
Ret/ On T. Cap. - 3 Yr. Avg. 0.2%
Return On Equity -9.3%
Return On Equity - 3 Yr. Avg. 3.7%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 68%
Gross Margin - 3 Yr. Avg. 75%
EBITDA Margin 77.3%
EBITDA Margin - 3 Yr. Avg. 108.2%
Operating Margin -3.9%
Oper. Margin - 3 Yr. Avg. -9.9%
Pre-Tax Margin -85.2%
Pre-Tax Margin - 3 Yr. Avg. -8.4%
Net Profit Margin -33.6%
Net Profit Margin - 3 Yr. Avg. -7.9%
Effective Tax Rate 22%
Eff/ Tax Rate - 3 Yr. Avg. 19.1%
Payout Ratio -4.7%

JONE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the JONE stock intrinsic value calculation we used $128 million for the last fiscal year's total revenue generated by Jones Energy Cl A. The default revenue input number comes from 2016 income statement of Jones Energy Cl A. 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 JONE 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 10.2%, whose default value for JONE is calculated based on our internal credit rating of Jones Energy Cl A, 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 Jones Energy Cl A.
    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 JONE stock the variable cost ratio is equal to 154.7%.

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 JONE 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 6.9% for Jones Energy Cl A.

Corporate tax rate of 27% is the nominal tax rate for Jones Energy Cl A. 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 JONE 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 JONE are equal to 1322.3%.

Life of production assets of 11 years is the average useful life of capital assets used in Jones Energy Cl A 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 JONE is equal to -34.4%. 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 - $527 million for Jones Energy Cl A - 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 96.475 million for Jones Energy Cl A 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 Jones Energy Cl A at the current share price and the inputted number of shares is $0.1 billion.

RELATED COMPANIES Price Int.Val. Rating
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PHX Panhandle Oil& 23.60 1.73  str.sell
PAA Plains All Ame 20.39 4.40  str.sell
NGL NGL Energy Par 11.35 753.29  str.buy

COMPANY NEWS

▶ Upstream Losers: JONE, TELL, KOS, LPI, and ERF   [Oct-04-17 01:35PM  Market Realist]
▶ Upstream Gainers this Week: Jones Energy Leads   [Sep-28-17 05:41PM  Market Realist]
▶ Upstream Gainers This Week: Jones Energy Leads the Pack   [Sep-21-17 12:24PM  Market Realist]
▶ Analysts Recommendations for Energy Stocks: September 815   [Sep-19-17 01:18PM  Market Realist]
▶ 30-Day Trading Ranges for JONE, HES, SN, DNR, and AREX   [Sep-15-17 09:11AM  Market Realist]
▶ E&P Midcap Earnings: The Good, The Bad & The Not So Ugly   [Aug-08-17 02:38PM  Barrons.com]
▶ ETFs with exposure to Jones Energy, Inc. : May 22, 2017   [May-22-17 01:49PM  Capital Cube]
▶ ETFs with exposure to Jones Energy, Inc. : May 11, 2017   [May-11-17 04:58PM  Capital Cube]
▶ Jones Energy reports 1Q loss   [May-04-17 05:03AM  Associated Press]
▶ ETFs with exposure to Jones Energy, Inc. : April 25, 2017   [Apr-25-17 03:37PM  Capital Cube]
▶ ETFs with exposure to Jones Energy, Inc. : April 12, 2017   [Apr-12-17 01:12PM  Capital Cube]
▶ ETFs with exposure to Jones Energy, Inc. : March 30, 2017   [Mar-29-17 08:32PM  Capital Cube]
▶ Jones Energy reports 4Q loss   [Mar-08-17 07:34PM  Associated Press]
▶ Continental Resources to Sell Oklahoma Oil and Gas Assets   [Feb-23-17 08:36AM  TheStreet.com]
▶ Oil and Gas Stock Roundup: Not Everyone Is Optimistic   [Feb-18-17 10:00AM  Motley Fool]
▶ Heres What Smart Money Think about Jones Energy Inc (JONE)   [Dec-12-16 05:45PM  at Insider Monkey]
▶ Why Jones Energy Inc's Shares Popped As Much As 17% Today   [Oct-05-16 01:13PM  at Motley Fool]
Financial statements of JONE
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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