Intrinsic value of Murphy Oil - MUR

Previous Close

$24.64

  Intrinsic Value

$7.26

stock screener

  Rating & Target

str. sell

-71%

  Value-price divergence*

-67%

Previous close

$24.64

 
Intrinsic value

$7.26

 
Up/down potential

-71%

 
Rating

str. sell

 
Value-price divergence*

-67%

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

We calculate the intrinsic value of MUR 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 4.2

 

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, %
  -30.58
  18.70
  17.33
  16.10
  14.99
  13.99
  13.09
  12.28
  11.55
  10.90
  10.31
  9.78
  9.30
  8.87
  8.48
  8.13
  7.82
  7.54
  7.28
  7.06
  6.85
  6.67
  6.50
  6.35
  6.21
  6.09
  5.98
  5.89
  5.80
  5.72
  5.65
Revenue, $m
  1,909
  2,266
  2,659
  3,087
  3,549
  4,046
  4,575
  5,137
  5,731
  6,355
  7,010
  7,696
  8,411
  9,157
  9,934
  10,742
  11,582
  12,455
  13,363
  14,306
  15,286
  16,304
  17,364
  18,467
  19,614
  20,809
  22,054
  23,352
  24,706
  26,118
  27,593
Variable operating expenses, $m
 
  5,108
  5,993
  6,957
  8,000
  9,119
  10,313
  11,579
  12,917
  14,325
  15,801
  17,346
  18,959
  20,641
  22,391
  24,213
  26,106
  28,074
  30,119
  32,245
  34,454
  36,750
  39,139
  41,624
  44,210
  46,904
  49,710
  52,636
  55,687
  58,871
  62,194
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
  2,219
  5,108
  5,993
  6,957
  8,000
  9,119
  10,313
  11,579
  12,917
  14,325
  15,801
  17,346
  18,959
  20,641
  22,391
  24,213
  26,106
  28,074
  30,119
  32,245
  34,454
  36,750
  39,139
  41,624
  44,210
  46,904
  49,710
  52,636
  55,687
  58,871
  62,194
Operating income, $m
  -310
  -2,842
  -3,334
  -3,871
  -4,451
  -5,073
  -5,737
  -6,442
  -7,186
  -7,969
  -8,791
  -9,650
  -10,548
  -11,483
  -12,457
  -13,471
  -14,524
  -15,619
  -16,757
  -17,939
  -19,168
  -20,446
  -21,775
  -23,157
  -24,596
  -26,095
  -27,656
  -29,284
  -30,981
  -32,752
  -34,601
EBITDA, $m
  744
  -1,765
  -2,071
  -2,404
  -2,765
  -3,152
  -3,564
  -4,002
  -4,464
  -4,951
  -5,461
  -5,995
  -6,552
  -7,134
  -7,739
  -8,368
  -9,023
  -9,703
  -10,410
  -11,144
  -11,907
  -12,701
  -13,527
  -14,385
  -15,279
  -16,210
  -17,180
  -18,191
  -19,246
  -20,346
  -21,495
Interest expense (income), $m
  128
  102
  139
  181
  226
  275
  327
  383
  443
  506
  572
  641
  713
  789
  868
  950
  1,035
  1,124
  1,217
  1,312
  1,412
  1,516
  1,623
  1,735
  1,852
  1,973
  2,100
  2,231
  2,369
  2,512
  2,661
Earnings before tax, $m
  -493
  -2,943
  -3,473
  -4,052
  -4,677
  -5,348
  -6,065
  -6,826
  -7,629
  -8,475
  -9,362
  -10,291
  -11,261
  -12,272
  -13,325
  -14,421
  -15,559
  -16,743
  -17,973
  -19,252
  -20,580
  -21,962
  -23,398
  -24,893
  -26,448
  -28,068
  -29,756
  -31,515
  -33,350
  -35,264
  -37,262
Tax expense, $m
  -219
  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
  -276
  -2,943
  -3,473
  -4,052
  -4,677
  -5,348
  -6,065
  -6,826
  -7,629
  -8,475
  -9,362
  -10,291
  -11,261
  -12,272
  -13,325
  -14,421
  -15,559
  -16,743
  -17,973
  -19,252
  -20,580
  -21,962
  -23,398
  -24,893
  -26,448
  -28,068
  -29,756
  -31,515
  -33,350
  -35,264
  -37,262

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  984
  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
  10,296
  11,054
  12,969
  15,057
  17,313
  19,735
  22,319
  25,060
  27,955
  31,001
  34,196
  37,540
  41,031
  44,670
  48,459
  52,400
  56,498
  60,758
  65,184
  69,783
  74,564
  79,534
  84,703
  90,081
  95,679
  101,508
  107,582
  113,913
  120,517
  127,407
  134,599
Adjusted assets (=assets-cash), $m
  9,312
  11,054
  12,969
  15,057
  17,313
  19,735
  22,319
  25,060
  27,955
  31,001
  34,196
  37,540
  41,031
  44,670
  48,459
  52,400
  56,498
  60,758
  65,184
  69,783
  74,564
  79,534
  84,703
  90,081
  95,679
  101,508
  107,582
  113,913
  120,517
  127,407
  134,599
Revenue / Adjusted assets
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
Average production assets, $m
  9,068
  10,763
  12,629
  14,662
  16,859
  19,217
  21,733
  24,402
  27,221
  30,187
  33,299
  36,554
  39,953
  43,497
  47,187
  51,025
  55,015
  59,163
  63,473
  67,952
  72,607
  77,446
  82,480
  87,716
  93,167
  98,844
  104,758
  110,923
  117,353
  124,062
  131,066
Working capital, $m
  57
  -227
  -266
  -309
  -355
  -405
  -458
  -514
  -573
  -636
  -701
  -770
  -841
  -916
  -993
  -1,074
  -1,158
  -1,246
  -1,336
  -1,431
  -1,529
  -1,630
  -1,736
  -1,847
  -1,961
  -2,081
  -2,205
  -2,335
  -2,471
  -2,612
  -2,759
Total debt, $m
  2,993
  3,318
  4,306
  5,383
  6,548
  7,797
  9,130
  10,545
  12,039
  13,610
  15,259
  16,984
  18,786
  20,664
  22,619
  24,653
  26,767
  28,965
  31,249
  33,622
  36,089
  38,654
  41,321
  44,096
  46,984
  49,992
  53,126
  56,393
  59,801
  63,356
  67,067
Total liabilities, $m
  5,379
  5,704
  6,692
  7,769
  8,934
  10,183
  11,516
  12,931
  14,425
  15,996
  17,645
  19,370
  21,172
  23,050
  25,005
  27,039
  29,153
  31,351
  33,635
  36,008
  38,475
  41,040
  43,707
  46,482
  49,370
  52,378
  55,512
  58,779
  62,187
  65,742
  69,453
Total equity, $m
  4,917
  5,350
  6,277
  7,287
  8,380
  9,552
  10,802
  12,129
  13,530
  15,004
  16,551
  18,169
  19,859
  21,620
  23,454
  25,362
  27,345
  29,407
  31,549
  33,775
  36,089
  38,494
  40,996
  43,599
  46,309
  49,130
  52,070
  55,134
  58,330
  61,665
  65,146
Total liabilities and equity, $m
  10,296
  11,054
  12,969
  15,056
  17,314
  19,735
  22,318
  25,060
  27,955
  31,000
  34,196
  37,539
  41,031
  44,670
  48,459
  52,401
  56,498
  60,758
  65,184
  69,783
  74,564
  79,534
  84,703
  90,081
  95,679
  101,508
  107,582
  113,913
  120,517
  127,407
  134,599
Debt-to-equity ratio
  0.609
  0.620
  0.690
  0.740
  0.780
  0.820
  0.850
  0.870
  0.890
  0.910
  0.920
  0.930
  0.950
  0.960
  0.960
  0.970
  0.980
  0.980
  0.990
  1.000
  1.000
  1.000
  1.010
  1.010
  1.010
  1.020
  1.020
  1.020
  1.030
  1.030
  1.030
Adjusted equity ratio
  0.422
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -276
  -2,943
  -3,473
  -4,052
  -4,677
  -5,348
  -6,065
  -6,826
  -7,629
  -8,475
  -9,362
  -10,291
  -11,261
  -12,272
  -13,325
  -14,421
  -15,559
  -16,743
  -17,973
  -19,252
  -20,580
  -21,962
  -23,398
  -24,893
  -26,448
  -28,068
  -29,756
  -31,515
  -33,350
  -35,264
  -37,262
Depreciation, amort., depletion, $m
  1,054
  1,076
  1,263
  1,466
  1,686
  1,922
  2,173
  2,440
  2,722
  3,019
  3,330
  3,655
  3,995
  4,350
  4,719
  5,102
  5,502
  5,916
  6,347
  6,795
  7,261
  7,745
  8,248
  8,772
  9,317
  9,884
  10,476
  11,092
  11,735
  12,406
  13,107
Funds from operations, $m
  607
  -1,867
  -2,210
  -2,585
  -2,991
  -3,427
  -3,892
  -4,385
  -4,907
  -5,456
  -6,033
  -6,636
  -7,266
  -7,923
  -8,606
  -9,318
  -10,058
  -10,827
  -11,626
  -12,456
  -13,320
  -14,217
  -15,150
  -16,121
  -17,131
  -18,184
  -19,280
  -20,423
  -21,614
  -22,858
  -24,156
Change in working capital, $m
  6
  -36
  -39
  -43
  -46
  -50
  -53
  -56
  -59
  -62
  -66
  -69
  -72
  -75
  -78
  -81
  -84
  -87
  -91
  -94
  -98
  -102
  -106
  -110
  -115
  -120
  -125
  -130
  -135
  -141
  -147
Cash from operations, $m
  601
  -1,831
  -2,171
  -2,543
  -2,945
  -3,377
  -3,839
  -4,329
  -4,848
  -5,394
  -5,967
  -6,567
  -7,194
  -7,848
  -8,529
  -9,237
  -9,974
  -10,740
  -11,535
  -12,362
  -13,222
  -14,115
  -15,044
  -16,011
  -17,017
  -18,064
  -19,155
  -20,293
  -21,479
  -22,717
  -24,008
Maintenance CAPEX, $m
  0
  -907
  -1,076
  -1,263
  -1,466
  -1,686
  -1,922
  -2,173
  -2,440
  -2,722
  -3,019
  -3,330
  -3,655
  -3,995
  -4,350
  -4,719
  -5,102
  -5,502
  -5,916
  -6,347
  -6,795
  -7,261
  -7,745
  -8,248
  -8,772
  -9,317
  -9,884
  -10,476
  -11,092
  -11,735
  -12,406
New CAPEX, $m
  -927
  -1,696
  -1,865
  -2,033
  -2,197
  -2,358
  -2,515
  -2,669
  -2,819
  -2,966
  -3,112
  -3,256
  -3,399
  -3,544
  -3,690
  -3,838
  -3,991
  -4,147
  -4,310
  -4,479
  -4,655
  -4,840
  -5,033
  -5,237
  -5,451
  -5,676
  -5,914
  -6,165
  -6,430
  -6,709
  -7,004
Cash from investing activities, $m
  286
  -2,603
  -2,941
  -3,296
  -3,663
  -4,044
  -4,437
  -4,842
  -5,259
  -5,688
  -6,131
  -6,586
  -7,054
  -7,539
  -8,040
  -8,557
  -9,093
  -9,649
  -10,226
  -10,826
  -11,450
  -12,101
  -12,778
  -13,485
  -14,223
  -14,993
  -15,798
  -16,641
  -17,522
  -18,444
  -19,410
Free cash flow, $m
  887
  -4,434
  -5,113
  -5,838
  -6,608
  -7,421
  -8,276
  -9,171
  -10,107
  -11,082
  -12,097
  -13,153
  -14,249
  -15,387
  -16,568
  -17,794
  -19,067
  -20,389
  -21,761
  -23,188
  -24,672
  -26,215
  -27,822
  -29,495
  -31,239
  -33,057
  -34,954
  -36,934
  -39,001
  -41,161
  -43,418
Issuance/(repayment) of debt, $m
  -69
  895
  988
  1,077
  1,164
  1,250
  1,333
  1,414
  1,494
  1,572
  1,649
  1,725
  1,801
  1,878
  1,955
  2,034
  2,115
  2,198
  2,284
  2,373
  2,467
  2,565
  2,667
  2,775
  2,888
  3,008
  3,134
  3,267
  3,407
  3,555
  3,711
Issuance/(repurchase) of shares, $m
  0
  3,790
  4,400
  5,062
  5,769
  6,521
  7,315
  8,152
  9,030
  9,949
  10,909
  11,909
  12,951
  14,034
  15,159
  16,328
  17,543
  18,805
  20,116
  21,478
  22,894
  24,367
  25,900
  27,495
  29,158
  30,890
  32,695
  34,579
  36,546
  38,599
  40,743
Cash from financing (excl. dividends), $m  
  -84
  4,685
  5,388
  6,139
  6,933
  7,771
  8,648
  9,566
  10,524
  11,521
  12,558
  13,634
  14,752
  15,912
  17,114
  18,362
  19,658
  21,003
  22,400
  23,851
  25,361
  26,932
  28,567
  30,270
  32,046
  33,898
  35,829
  37,846
  39,953
  42,154
  44,454
Total cash flow (excl. dividends), $m
  797
  251
  276
  301
  325
  349
  372
  395
  417
  439
  461
  482
  503
  524
  546
  568
  591
  614
  638
  663
  689
  716
  745
  775
  807
  840
  875
  913
  952
  993
  1,037
Retained Cash Flow (-), $m
  390
  -3,790
  -4,400
  -5,062
  -5,769
  -6,521
  -7,315
  -8,152
  -9,030
  -9,949
  -10,909
  -11,909
  -12,951
  -14,034
  -15,159
  -16,328
  -17,543
  -18,805
  -20,116
  -21,478
  -22,894
  -24,367
  -25,900
  -27,495
  -29,158
  -30,890
  -32,695
  -34,579
  -36,546
  -38,599
  -40,743
Prev. year cash balance distribution, $m
 
  414
  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
 
  -3,125
  -4,124
  -4,761
  -5,444
  -6,172
  -6,943
  -7,757
  -8,613
  -9,510
  -10,449
  -11,428
  -12,448
  -13,509
  -14,613
  -15,760
  -16,952
  -18,191
  -19,478
  -20,815
  -22,205
  -23,651
  -25,155
  -26,720
  -28,351
  -30,049
  -31,820
  -33,667
  -35,594
  -37,606
  -39,707
Discount rate, %
 
  5.70
  5.99
  6.28
  6.60
  6.93
  7.27
  7.64
  8.02
  8.42
  8.84
  9.28
  9.75
  10.24
  10.75
  11.29
  11.85
  12.44
  13.06
  13.72
  14.40
  15.12
  15.88
  16.67
  17.51
  18.38
  19.30
  20.27
  21.28
  22.34
  23.46
PV of cash for distribution, $m
 
  -2,957
  -3,672
  -3,965
  -4,216
  -4,415
  -4,556
  -4,634
  -4,646
  -4,594
  -4,478
  -4,303
  -4,076
  -3,805
  -3,500
  -3,169
  -2,825
  -2,478
  -2,136
  -1,810
  -1,505
  -1,229
  -983
  -770
  -590
  -442
  -323
  -231
  -160
  -108
  -71
Current shareholders' claim on cash, %
  100
  50.2
  25.5
  13.1
  6.8
  3.5
  1.9
  1.0
  0.5
  0.3
  0.2
  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

Murphy Oil Corporation operates as an oil and gas exploration and production company worldwide. It explores for and produces crude oil, natural gas, and natural gas liquids. The company was formerly known as Murphy Corporation and changed its name to Murphy Oil Corporation in 1964. Murphy Oil Corporation was founded in 1950 and is headquartered in El Dorado, Arkansas.

FINANCIAL RATIOS  of  Murphy Oil (MUR)

Valuation Ratios
P/E Ratio -15.4
Price to Sales 2.2
Price to Book 0.9
Price to Tangible Book
Price to Cash Flow 7.1
Price to Free Cash Flow -13
Growth Rates
Sales Growth Rate -30.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -63.6%
Cap. Spend. - 3 Yr. Gr. Rate -23.7%
Financial Strength
Quick Ratio 2
Current Ratio 0.1
LT Debt to Equity 49.3%
Total Debt to Equity 60.9%
Interest Coverage -3
Management Effectiveness
Return On Assets -1.9%
Ret/ On Assets - 3 Yr. Avg. -3.9%
Return On Total Capital -3.4%
Ret/ On T. Cap. - 3 Yr. Avg. -6.1%
Return On Equity -5.4%
Return On Equity - 3 Yr. Avg. -9.2%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 70.7%
Gross Margin - 3 Yr. Avg. 73.3%
EBITDA Margin 36.1%
EBITDA Margin - 3 Yr. Avg. 13.7%
Operating Margin -16.2%
Oper. Margin - 3 Yr. Avg. -39.6%
Pre-Tax Margin -25.8%
Pre-Tax Margin - 3 Yr. Avg. -40.5%
Net Profit Margin -14.5%
Net Profit Margin - 3 Yr. Avg. -26.7%
Effective Tax Rate 44.4%
Eff/ Tax Rate - 3 Yr. Avg. 31.3%
Payout Ratio -75%

MUR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MUR stock intrinsic value calculation we used $1909 million for the last fiscal year's total revenue generated by Murphy Oil. The default revenue input number comes from 2016 income statement of Murphy Oil. 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 MUR stock valuation model: a) initial revenue growth rate of 18.7% 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 5.7%, whose default value for MUR is calculated based on our internal credit rating of Murphy Oil, 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 Murphy Oil.
    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 MUR stock the variable cost ratio is equal to 225.4%.

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 MUR 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 Murphy Oil.

Corporate tax rate of 27% is the nominal tax rate for Murphy Oil. 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 MUR 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 MUR are equal to 475%.

Life of production assets of 10 years is the average useful life of capital assets used in Murphy Oil 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 MUR is equal to -10%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $4917 million for Murphy Oil - 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 169.226 million for Murphy Oil 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 Murphy Oil at the current share price and the inputted number of shares is $4.2 billion.

RELATED COMPANIES Price Int.Val. Rating
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XOM Exxon Mobil 77.47 102.38  buy
MRO Marathon Oil 11.19 5.09  str.sell
MPC Marathon Petro 51.06 684.21  str.buy
TSO Tesoro 99.53 2,071.29  str.buy
HES Hess Corp. 39.29 11.46  str.sell

COMPANY NEWS

▶ How These Oil-Weighted Stocks Correlate with Oil   [Aug-16-17 07:37AM  Market Realist]
▶ Murphy Oil reports 2Q loss   [Aug-02-17 11:13PM  Associated Press]
▶ Murphy Oil Corporation Announces Dividend   [10:19AM  Business Wire]
▶ US Crude Oil Is above $50: Analyzing Oil Stocks   [Aug-01-17 01:14PM  Market Realist]
▶ ETFs with exposure to Murphy Oil Corp. : July 24, 2017   [Jul-24-17 05:29PM  Capital Cube]
▶ The Highs and Lows for Fallen S&P 500 Stocks   [Jul-20-17 03:05PM  The Wall Street Journal]
▶ Pause in Oils Gain: Which Oil-Weighted Stocks to Reshuffle   [Jul-18-17 01:17PM  Market Realist]
▶ ETFs with exposure to Murphy Oil Corp. : July 14, 2017   [Jul-14-17 03:45PM  Capital Cube]
▶ How Marathon Oil Could Benefit from Hedging Activities   [Jul-05-17 07:37AM  Market Realist]
▶ Marathon Oil: Looking at Disposition-Adjusted Production   [Jul-03-17 09:10AM  Market Realist]
▶ How Crude Oil Prices Moved Marathon Oils Stock Price   [Jun-30-17 05:27PM  Market Realist]
▶ Key Offshore Drilling Updates from Noble   [Jun-21-17 11:36AM  Market Realist]
▶ Oils Fall Hurt Oil-Weighted Stocks Returns   [Jun-20-17 01:25PM  Market Realist]
▶ What Happened to ConocoPhillips Stock Last Week?   [Jun-05-17 05:42PM  Market Realist]
▶ Denbury Resources: A Crude OilWeighted Upstream Company   [Jun-01-17 09:08AM  Market Realist]
▶ Chart in Focus: Devon Energys Lifting Costs   [May-24-17 09:06AM  Market Realist]
▶ ETFs with exposure to Murphy Oil Corp. : May 23, 2017   [May-23-17 12:59PM  Capital Cube]
▶ Devon Energys Crude Oil Production Increased in 1Q17   [May-22-17 09:08AM  Market Realist]
▶ ETFs with exposure to Murphy Oil Corp. : May 11, 2017   [May-11-17 05:11PM  Capital Cube]
▶ IIROC Trade Resumption - MUR   [11:03AM  PR Newswire]
▶ IIROC Trade Resumption - MUR   [11:03AM  CNW Group]
▶ IIROC Trading Halt - MUR   [May-08-17 10:40AM  PR Newswire]
▶ Murphy Oil misses 1Q profit forecasts   [May-03-17 05:28PM  Associated Press]
▶ Encanas Plans for Its Montney Assets   [Apr-27-17 07:37AM  Market Realist]
▶ Chart in Focus: Marathon Oils Lifting Costs   [Apr-20-17 09:05AM  Market Realist]
▶ ETFs with exposure to Murphy Oil Corp. : April 17, 2017   [Apr-17-17 01:00PM  Capital Cube]
▶ US Oil Rose 11% from 2017 Lows: Oil-Weighted Stocks to Track   [Apr-11-17 12:57PM  Market Realist]
▶ MURPHY OIL CORPORATION ANNOUNCES DIVIDEND   [Apr-05-17 09:25AM  GlobeNewswire]
▶ ETFs with exposure to Murphy Oil Corp. : March 27, 2017   [Mar-27-17 04:00PM  Capital Cube]
▶ Chart in Focus: Encanas Lifting Costs   [Mar-20-17 09:06AM  Market Realist]
▶ Oils Downward Journey: Oil-Weighted Stocks to Avoid   [Mar-14-17 09:08AM  Market Realist]
▶ Short Interest: Where to Look in the Upstream Energy Sector   [Mar-06-17 10:37AM  Market Realist]
▶ Rig count continues to climb as optimism soars in the Eagle Ford   [Mar-03-17 03:40PM  at bizjournals.com]
Stock chart of MUR Financial statements of MUR
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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