Intrinsic value of Murphy Oil - MUR

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$26.45

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$26.45

 
Intrinsic value

$7.04

 
Up/down potential

-73%

 
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 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 4.6

 

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
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  1,909
  1,947
  1,992
  2,043
  2,101
  2,164
  2,234
  2,310
  2,393
  2,481
  2,577
  2,678
  2,787
  2,903
  3,026
  3,156
  3,295
  3,441
  3,596
  3,760
  3,932
  4,115
  4,307
  4,510
  4,723
  4,948
  5,185
  5,434
  5,696
  5,972
  6,262
Variable operating expenses, $m
 
  4,389
  4,490
  4,605
  4,735
  4,878
  5,036
  5,207
  5,393
  5,593
  5,808
  6,037
  6,282
  6,543
  6,820
  7,115
  7,426
  7,757
  8,106
  8,474
  8,864
  9,275
  9,708
  10,165
  10,646
  11,153
  11,686
  12,248
  12,839
  13,461
  14,115
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
  4,389
  4,490
  4,605
  4,735
  4,878
  5,036
  5,207
  5,393
  5,593
  5,808
  6,037
  6,282
  6,543
  6,820
  7,115
  7,426
  7,757
  8,106
  8,474
  8,864
  9,275
  9,708
  10,165
  10,646
  11,153
  11,686
  12,248
  12,839
  13,461
  14,115
Operating income, $m
  -310
  -2,442
  -2,498
  -2,562
  -2,634
  -2,714
  -2,802
  -2,897
  -3,000
  -3,112
  -3,231
  -3,359
  -3,495
  -3,640
  -3,795
  -3,958
  -4,132
  -4,315
  -4,509
  -4,715
  -4,931
  -5,160
  -5,401
  -5,655
  -5,923
  -6,205
  -6,502
  -6,814
  -7,143
  -7,489
  -7,853
EBITDA, $m
  744
  -1,366
  -1,398
  -1,434
  -1,474
  -1,519
  -1,568
  -1,621
  -1,679
  -1,741
  -1,808
  -1,879
  -1,956
  -2,037
  -2,123
  -2,215
  -2,312
  -2,415
  -2,523
  -2,638
  -2,759
  -2,887
  -3,022
  -3,164
  -3,314
  -3,472
  -3,638
  -3,813
  -3,997
  -4,190
  -4,394
Interest expense (income), $m
  128
  102
  106
  110
  116
  122
  129
  136
  144
  153
  162
  172
  183
  194
  207
  220
  233
  248
  264
  280
  297
  316
  335
  355
  377
  399
  423
  448
  474
  502
  531
Earnings before tax, $m
  -493
  -2,544
  -2,604
  -2,672
  -2,750
  -2,836
  -2,930
  -3,033
  -3,144
  -3,264
  -3,393
  -3,531
  -3,678
  -3,835
  -4,001
  -4,178
  -4,365
  -4,563
  -4,773
  -4,995
  -5,229
  -5,475
  -5,736
  -6,010
  -6,299
  -6,604
  -6,924
  -7,262
  -7,617
  -7,991
  -8,384
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
  -2,544
  -2,604
  -2,672
  -2,750
  -2,836
  -2,930
  -3,033
  -3,144
  -3,264
  -3,393
  -3,531
  -3,678
  -3,835
  -4,001
  -4,178
  -4,365
  -4,563
  -4,773
  -4,995
  -5,229
  -5,475
  -5,736
  -6,010
  -6,299
  -6,604
  -6,924
  -7,262
  -7,617
  -7,991
  -8,384

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
  9,498
  9,717
  9,967
  10,247
  10,558
  10,899
  11,270
  11,671
  12,104
  12,569
  13,066
  13,596
  14,161
  14,761
  15,397
  16,072
  16,786
  17,542
  18,340
  19,183
  20,072
  21,009
  21,998
  23,039
  24,136
  25,291
  26,506
  27,786
  29,131
  30,547
Adjusted assets (=assets-cash), $m
  9,312
  9,498
  9,717
  9,967
  10,247
  10,558
  10,899
  11,270
  11,671
  12,104
  12,569
  13,066
  13,596
  14,161
  14,761
  15,397
  16,072
  16,786
  17,542
  18,340
  19,183
  20,072
  21,009
  21,998
  23,039
  24,136
  25,291
  26,506
  27,786
  29,131
  30,547
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
  9,249
  9,462
  9,705
  9,978
  10,281
  10,612
  10,974
  11,365
  11,787
  12,239
  12,723
  13,239
  13,789
  14,373
  14,993
  15,650
  16,346
  17,081
  17,859
  18,679
  19,545
  20,458
  21,420
  22,435
  23,503
  24,627
  25,811
  27,056
  28,367
  29,745
Working capital, $m
  57
  -364
  -372
  -382
  -393
  -405
  -418
  -432
  -447
  -464
  -482
  -501
  -521
  -543
  -566
  -590
  -616
  -644
  -672
  -703
  -735
  -769
  -805
  -843
  -883
  -925
  -970
  -1,016
  -1,065
  -1,117
  -1,171
Total debt, $m
  2,993
  2,515
  2,628
  2,757
  2,901
  3,062
  3,238
  3,429
  3,636
  3,860
  4,100
  4,356
  4,630
  4,921
  5,231
  5,559
  5,907
  6,276
  6,666
  7,077
  7,512
  7,971
  8,455
  8,965
  9,502
  10,068
  10,664
  11,291
  11,951
  12,646
  13,376
Total liabilities, $m
  5,379
  4,901
  5,014
  5,143
  5,287
  5,448
  5,624
  5,815
  6,022
  6,246
  6,486
  6,742
  7,016
  7,307
  7,617
  7,945
  8,293
  8,662
  9,052
  9,463
  9,898
  10,357
  10,841
  11,351
  11,888
  12,454
  13,050
  13,677
  14,337
  15,032
  15,762
Total equity, $m
  4,917
  4,597
  4,703
  4,824
  4,960
  5,110
  5,275
  5,455
  5,649
  5,858
  6,083
  6,324
  6,581
  6,854
  7,144
  7,452
  7,779
  8,125
  8,490
  8,877
  9,284
  9,715
  10,169
  10,647
  11,151
  11,682
  12,241
  12,829
  13,448
  14,100
  14,785
Total liabilities and equity, $m
  10,296
  9,498
  9,717
  9,967
  10,247
  10,558
  10,899
  11,270
  11,671
  12,104
  12,569
  13,066
  13,597
  14,161
  14,761
  15,397
  16,072
  16,787
  17,542
  18,340
  19,182
  20,072
  21,010
  21,998
  23,039
  24,136
  25,291
  26,506
  27,785
  29,132
  30,547
Debt-to-equity ratio
  0.609
  0.550
  0.560
  0.570
  0.590
  0.600
  0.610
  0.630
  0.640
  0.660
  0.670
  0.690
  0.700
  0.720
  0.730
  0.750
  0.760
  0.770
  0.790
  0.800
  0.810
  0.820
  0.830
  0.840
  0.850
  0.860
  0.870
  0.880
  0.890
  0.900
  0.900
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
  -2,544
  -2,604
  -2,672
  -2,750
  -2,836
  -2,930
  -3,033
  -3,144
  -3,264
  -3,393
  -3,531
  -3,678
  -3,835
  -4,001
  -4,178
  -4,365
  -4,563
  -4,773
  -4,995
  -5,229
  -5,475
  -5,736
  -6,010
  -6,299
  -6,604
  -6,924
  -7,262
  -7,617
  -7,991
  -8,384
Depreciation, amort., depletion, $m
  1,054
  1,075
  1,100
  1,128
  1,160
  1,195
  1,234
  1,276
  1,322
  1,371
  1,423
  1,479
  1,539
  1,603
  1,671
  1,743
  1,820
  1,901
  1,986
  2,077
  2,172
  2,273
  2,379
  2,491
  2,609
  2,733
  2,864
  3,001
  3,146
  3,298
  3,459
Funds from operations, $m
  607
  -1,468
  -1,503
  -1,544
  -1,590
  -1,641
  -1,696
  -1,757
  -1,823
  -1,894
  -1,970
  -2,052
  -2,139
  -2,231
  -2,330
  -2,435
  -2,545
  -2,663
  -2,787
  -2,918
  -3,057
  -3,203
  -3,357
  -3,519
  -3,691
  -3,871
  -4,061
  -4,261
  -4,471
  -4,692
  -4,925
Change in working capital, $m
  6
  -7
  -8
  -10
  -11
  -12
  -13
  -14
  -15
  -17
  -18
  -19
  -20
  -22
  -23
  -24
  -26
  -27
  -29
  -31
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -47
  -49
  -52
  -54
Cash from operations, $m
  601
  -2,212
  -1,495
  -1,534
  -1,579
  -1,629
  -1,683
  -1,743
  -1,807
  -1,877
  -1,952
  -2,033
  -2,118
  -2,210
  -2,307
  -2,410
  -2,519
  -2,635
  -2,758
  -2,887
  -3,024
  -3,169
  -3,321
  -3,481
  -3,651
  -3,829
  -4,017
  -4,214
  -4,422
  -4,641
  -4,871
Maintenance CAPEX, $m
  0
  -1,054
  -1,075
  -1,100
  -1,128
  -1,160
  -1,195
  -1,234
  -1,276
  -1,322
  -1,371
  -1,423
  -1,479
  -1,539
  -1,603
  -1,671
  -1,743
  -1,820
  -1,901
  -1,986
  -2,077
  -2,172
  -2,273
  -2,379
  -2,491
  -2,609
  -2,733
  -2,864
  -3,001
  -3,146
  -3,298
New CAPEX, $m
  -927
  -182
  -213
  -243
  -273
  -303
  -332
  -361
  -391
  -421
  -452
  -484
  -516
  -550
  -584
  -620
  -657
  -696
  -736
  -777
  -821
  -866
  -913
  -962
  -1,014
  -1,068
  -1,125
  -1,184
  -1,246
  -1,310
  -1,378
Cash from investing activities, $m
  286
  -1,236
  -1,288
  -1,343
  -1,401
  -1,463
  -1,527
  -1,595
  -1,667
  -1,743
  -1,823
  -1,907
  -1,995
  -2,089
  -2,187
  -2,291
  -2,400
  -2,516
  -2,637
  -2,763
  -2,898
  -3,038
  -3,186
  -3,341
  -3,505
  -3,677
  -3,858
  -4,048
  -4,247
  -4,456
  -4,676
Free cash flow, $m
  887
  -3,448
  -2,783
  -2,878
  -2,980
  -3,091
  -3,211
  -3,338
  -3,475
  -3,620
  -3,775
  -3,940
  -4,114
  -4,299
  -4,495
  -4,701
  -4,920
  -5,151
  -5,394
  -5,651
  -5,921
  -6,206
  -6,507
  -6,823
  -7,155
  -7,506
  -7,874
  -8,261
  -8,669
  -9,097
  -9,547
Issuance/(repayment) of debt, $m
  -69
  92
  113
  129
  145
  160
  176
  192
  207
  223
  240
  256
  274
  291
  310
  329
  348
  369
  390
  412
  435
  459
  484
  510
  537
  566
  596
  627
  660
  694
  730
Issuance/(repurchase) of shares, $m
  0
  3,036
  2,776
  2,870
  2,972
  3,081
  3,200
  3,326
  3,462
  3,606
  3,760
  3,924
  4,097
  4,281
  4,475
  4,681
  4,898
  5,128
  5,370
  5,625
  5,894
  6,178
  6,477
  6,791
  7,122
  7,470
  7,837
  8,222
  8,628
  9,054
  9,502
Cash from financing (excl. dividends), $m  
  -84
  3,128
  2,889
  2,999
  3,117
  3,241
  3,376
  3,518
  3,669
  3,829
  4,000
  4,180
  4,371
  4,572
  4,785
  5,010
  5,246
  5,497
  5,760
  6,037
  6,329
  6,637
  6,961
  7,301
  7,659
  8,036
  8,433
  8,849
  9,288
  9,748
  10,232
Total cash flow (excl. dividends), $m
  797
  -3,356
  -2,670
  -2,749
  -2,836
  -2,931
  -3,035
  -3,147
  -3,267
  -3,397
  -3,535
  -3,683
  -3,840
  -4,008
  -4,185
  -4,373
  -4,572
  -4,782
  -5,004
  -5,239
  -5,487
  -5,748
  -6,023
  -6,313
  -6,618
  -6,940
  -7,278
  -7,634
  -8,009
  -8,403
  -8,817
Retained Cash Flow (-), $m
  390
  -94
  -106
  -121
  -136
  -150
  -165
  -180
  -194
  -209
  -225
  -241
  -257
  -273
  -290
  -308
  -327
  -346
  -366
  -386
  -408
  -430
  -454
  -478
  -504
  -531
  -559
  -588
  -619
  -651
  -685
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
 
  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, %
 
  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
 
  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
  58.2
  35.4
  21.5
  13.0
  7.8
  4.7
  2.8
  1.7
  1.0
  0.6
  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

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 -16.5
Price to Sales 2.4
Price to Book 0.9
Price to Tangible Book
Price to Cash Flow 7.6
Price to Free Cash Flow -14
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 2% 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 8.6 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 -18.7%. 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 174.537 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 $4.6 billion.


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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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