Intrinsic value of Newpark Resources - NR

Previous Close

$9.45

  Intrinsic Value

$1.41

stock screener

  Rating & Target

str. sell

-85%

Previous close

$9.45

 
Intrinsic value

$1.41

 
Up/down potential

-85%

 
Rating

str. sell

We calculate the intrinsic value of NR 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 0.8

 

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, %
  -30.28
  59.10
  53.69
  48.82
  44.44
  40.50
  36.95
  33.75
  30.88
  28.29
  25.96
  23.86
  21.98
  20.28
  18.75
  17.38
  16.14
  15.02
  14.02
  13.12
  12.31
  11.58
  10.92
  10.33
  9.79
  9.32
  8.88
  8.50
  8.15
  7.83
  7.55
Revenue, $m
  472
  751
  1,154
  1,718
  2,481
  3,486
  4,773
  6,384
  8,355
  10,719
  13,502
  16,724
  20,399
  24,536
  29,137
  34,200
  39,719
  45,687
  52,093
  58,928
  66,181
  73,843
  81,906
  90,365
  99,216
  108,458
  118,094
  128,126
  138,563
  149,415
  160,693
Variable operating expenses, $m
 
  859
  1,320
  1,963
  2,835
  3,982
  5,452
  7,291
  9,542
  12,241
  15,418
  19,094
  23,291
  28,014
  33,267
  39,048
  45,350
  52,163
  59,478
  67,282
  75,563
  84,311
  93,517
  103,175
  113,281
  123,834
  134,835
  146,290
  158,206
  170,596
  183,473
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
  527
  859
  1,320
  1,963
  2,835
  3,982
  5,452
  7,291
  9,542
  12,241
  15,418
  19,094
  23,291
  28,014
  33,267
  39,048
  45,350
  52,163
  59,478
  67,282
  75,563
  84,311
  93,517
  103,175
  113,281
  123,834
  134,835
  146,290
  158,206
  170,596
  183,473
Operating income, $m
  -56
  -108
  -166
  -245
  -354
  -496
  -679
  -907
  -1,186
  -1,522
  -1,916
  -2,371
  -2,892
  -3,478
  -4,131
  -4,848
  -5,631
  -6,477
  -7,385
  -8,354
  -9,382
  -10,468
  -11,611
  -12,810
  -14,065
  -15,375
  -16,741
  -18,164
  -19,643
  -21,181
  -22,780
EBITDA, $m
  -18
  -50
  -76
  -114
  -164
  -230
  -315
  -422
  -552
  -708
  -892
  -1,105
  -1,348
  -1,621
  -1,925
  -2,260
  -2,625
  -3,019
  -3,442
  -3,894
  -4,373
  -4,880
  -5,412
  -5,971
  -6,556
  -7,167
  -7,804
  -8,467
  -9,156
  -9,873
  -10,619
Interest expense (income), $m
  9
  4
  11
  21
  34
  53
  78
  109
  148
  197
  254
  322
  401
  491
  592
  705
  828
  963
  1,109
  1,266
  1,433
  1,610
  1,797
  1,994
  2,201
  2,417
  2,643
  2,879
  3,124
  3,379
  3,644
Earnings before tax, $m
  -65
  -112
  -176
  -266
  -388
  -549
  -756
  -1,016
  -1,335
  -1,718
  -2,170
  -2,693
  -3,293
  -3,969
  -4,723
  -5,553
  -6,459
  -7,440
  -8,494
  -9,619
  -10,815
  -12,078
  -13,408
  -14,805
  -16,266
  -17,793
  -19,385
  -21,042
  -22,767
  -24,561
  -26,425
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
  -41
  -112
  -176
  -266
  -388
  -549
  -756
  -1,016
  -1,335
  -1,718
  -2,170
  -2,693
  -3,293
  -3,969
  -4,723
  -5,553
  -6,459
  -7,440
  -8,494
  -9,619
  -10,815
  -12,078
  -13,408
  -14,805
  -16,266
  -17,793
  -19,385
  -21,042
  -22,767
  -24,561
  -26,425

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  88
  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
  798
  1,129
  1,736
  2,583
  3,731
  5,241
  7,178
  9,600
  12,565
  16,119
  20,303
  25,148
  30,675
  36,896
  43,815
  51,428
  59,728
  68,702
  78,336
  88,613
  99,520
  111,042
  123,167
  135,887
  149,197
  163,095
  177,584
  192,671
  208,366
  224,683
  241,643
Adjusted assets (=assets-cash), $m
  710
  1,129
  1,736
  2,583
  3,731
  5,241
  7,178
  9,600
  12,565
  16,119
  20,303
  25,148
  30,675
  36,896
  43,815
  51,428
  59,728
  68,702
  78,336
  88,613
  99,520
  111,042
  123,167
  135,887
  149,197
  163,095
  177,584
  192,671
  208,366
  224,683
  241,643
Revenue / Adjusted assets
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
Average production assets, $m
  315
  500
  769
  1,144
  1,652
  2,321
  3,179
  4,252
  5,565
  7,139
  8,992
  11,138
  13,586
  16,341
  19,405
  22,777
  26,453
  30,427
  34,694
  39,246
  44,076
  49,179
  54,549
  60,183
  66,078
  72,233
  78,650
  85,332
  92,283
  99,510
  107,021
Working capital, $m
  283
  375
  577
  859
  1,240
  1,743
  2,387
  3,192
  4,178
  5,360
  6,751
  8,362
  10,200
  12,268
  14,568
  17,100
  19,860
  22,843
  26,047
  29,464
  33,090
  36,921
  40,953
  45,182
  49,608
  54,229
  59,047
  64,063
  69,282
  74,707
  80,346
Total debt, $m
  156
  199
  381
  636
  982
  1,437
  2,020
  2,749
  3,641
  4,711
  5,970
  7,429
  9,092
  10,965
  13,047
  15,339
  17,837
  20,538
  23,438
  26,532
  29,814
  33,283
  36,932
  40,761
  44,767
  48,951
  53,312
  57,853
  62,577
  67,489
  72,594
Total liabilities, $m
  298
  340
  522
  777
  1,123
  1,578
  2,161
  2,890
  3,782
  4,852
  6,111
  7,570
  9,233
  11,106
  13,188
  15,480
  17,978
  20,679
  23,579
  26,673
  29,955
  33,424
  37,073
  40,902
  44,908
  49,092
  53,453
  57,994
  62,718
  67,630
  72,735
Total equity, $m
  501
  789
  1,213
  1,805
  2,608
  3,664
  5,017
  6,711
  8,783
  11,267
  14,192
  17,579
  21,442
  25,790
  30,626
  35,948
  41,750
  48,023
  54,757
  61,941
  69,564
  77,618
  86,094
  94,985
  104,289
  114,004
  124,131
  134,677
  145,648
  157,054
  168,908
Total liabilities and equity, $m
  799
  1,129
  1,735
  2,582
  3,731
  5,242
  7,178
  9,601
  12,565
  16,119
  20,303
  25,149
  30,675
  36,896
  43,814
  51,428
  59,728
  68,702
  78,336
  88,614
  99,519
  111,042
  123,167
  135,887
  149,197
  163,096
  177,584
  192,671
  208,366
  224,684
  241,643
Debt-to-equity ratio
  0.311
  0.250
  0.310
  0.350
  0.380
  0.390
  0.400
  0.410
  0.410
  0.420
  0.420
  0.420
  0.420
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
Adjusted equity ratio
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -41
  -112
  -176
  -266
  -388
  -549
  -756
  -1,016
  -1,335
  -1,718
  -2,170
  -2,693
  -3,293
  -3,969
  -4,723
  -5,553
  -6,459
  -7,440
  -8,494
  -9,619
  -10,815
  -12,078
  -13,408
  -14,805
  -16,266
  -17,793
  -19,385
  -21,042
  -22,767
  -24,561
  -26,425
Depreciation, amort., depletion, $m
  38
  59
  89
  132
  190
  266
  363
  485
  634
  813
  1,024
  1,266
  1,544
  1,857
  2,205
  2,588
  3,006
  3,458
  3,943
  4,460
  5,009
  5,589
  6,199
  6,839
  7,509
  8,208
  8,938
  9,697
  10,487
  11,308
  12,162
Funds from operations, $m
  -1
  -54
  -87
  -134
  -198
  -283
  -393
  -531
  -701
  -905
  -1,147
  -1,428
  -1,749
  -2,112
  -2,517
  -2,964
  -3,453
  -3,982
  -4,551
  -5,160
  -5,806
  -6,490
  -7,210
  -7,966
  -8,757
  -9,584
  -10,447
  -11,346
  -12,280
  -13,253
  -14,263
Change in working capital, $m
  -12
  139
  202
  282
  382
  502
  644
  806
  986
  1,182
  1,391
  1,611
  1,838
  2,068
  2,300
  2,531
  2,760
  2,984
  3,203
  3,417
  3,626
  3,831
  4,032
  4,229
  4,426
  4,621
  4,818
  5,016
  5,219
  5,426
  5,639
Cash from operations, $m
  11
  -193
  -289
  -416
  -580
  -786
  -1,037
  -1,336
  -1,686
  -2,087
  -2,538
  -3,039
  -3,587
  -4,181
  -4,818
  -5,496
  -6,213
  -6,966
  -7,755
  -8,577
  -9,432
  -10,321
  -11,241
  -12,195
  -13,183
  -14,206
  -15,265
  -16,362
  -17,499
  -18,678
  -19,902
Maintenance CAPEX, $m
  0
  -36
  -57
  -87
  -130
  -188
  -264
  -361
  -483
  -632
  -811
  -1,022
  -1,266
  -1,544
  -1,857
  -2,205
  -2,588
  -3,006
  -3,458
  -3,943
  -4,460
  -5,009
  -5,589
  -6,199
  -6,839
  -7,509
  -8,208
  -8,938
  -9,697
  -10,487
  -11,308
New CAPEX, $m
  -38
  -186
  -269
  -375
  -508
  -669
  -858
  -1,073
  -1,313
  -1,574
  -1,853
  -2,146
  -2,448
  -2,755
  -3,064
  -3,372
  -3,676
  -3,975
  -4,267
  -4,552
  -4,830
  -5,103
  -5,370
  -5,634
  -5,895
  -6,155
  -6,417
  -6,682
  -6,951
  -7,227
  -7,511
Cash from investing activities, $m
  -28
  -222
  -326
  -462
  -638
  -857
  -1,122
  -1,434
  -1,796
  -2,206
  -2,664
  -3,168
  -3,714
  -4,299
  -4,921
  -5,577
  -6,264
  -6,981
  -7,725
  -8,495
  -9,290
  -10,112
  -10,959
  -11,833
  -12,734
  -13,664
  -14,625
  -15,620
  -16,648
  -17,714
  -18,819
Free cash flow, $m
  -17
  -414
  -614
  -878
  -1,218
  -1,643
  -2,158
  -2,771
  -3,482
  -4,293
  -5,202
  -6,206
  -7,300
  -8,480
  -9,739
  -11,073
  -12,477
  -13,947
  -15,479
  -17,071
  -18,723
  -20,432
  -22,200
  -24,028
  -25,917
  -27,870
  -29,890
  -31,981
  -34,147
  -36,392
  -38,721
Issuance/(repayment) of debt, $m
  5
  126
  182
  255
  345
  455
  583
  729
  892
  1,070
  1,260
  1,458
  1,664
  1,872
  2,082
  2,292
  2,498
  2,701
  2,900
  3,094
  3,283
  3,468
  3,650
  3,829
  4,006
  4,183
  4,361
  4,541
  4,724
  4,912
  5,105
Issuance/(repurchase) of shares, $m
  -1
  406
  600
  858
  1,190
  1,605
  2,110
  2,709
  3,407
  4,203
  5,095
  6,080
  7,156
  8,318
  9,559
  10,875
  12,261
  13,713
  15,228
  16,804
  18,438
  20,132
  21,884
  23,696
  25,570
  27,508
  29,512
  31,588
  33,738
  35,967
  38,279
Cash from financing (excl. dividends), $m  
  -1
  532
  782
  1,113
  1,535
  2,060
  2,693
  3,438
  4,299
  5,273
  6,355
  7,538
  8,820
  10,190
  11,641
  13,167
  14,759
  16,414
  18,128
  19,898
  21,721
  23,600
  25,534
  27,525
  29,576
  31,691
  33,873
  36,129
  38,462
  40,879
  43,384
Total cash flow (excl. dividends), $m
  -19
  117
  169
  235
  318
  417
  534
  668
  817
  979
  1,152
  1,332
  1,520
  1,710
  1,902
  2,093
  2,282
  2,467
  2,649
  2,826
  2,999
  3,168
  3,334
  3,497
  3,659
  3,821
  3,984
  4,148
  4,315
  4,486
  4,663
Retained Cash Flow (-), $m
  19
  -406
  -600
  -858
  -1,190
  -1,605
  -2,110
  -2,709
  -3,407
  -4,203
  -5,095
  -6,080
  -7,156
  -8,318
  -9,559
  -10,875
  -12,261
  -13,713
  -15,228
  -16,804
  -18,438
  -20,132
  -21,884
  -23,696
  -25,570
  -27,508
  -29,512
  -31,588
  -33,738
  -35,967
  -38,279
Prev. year cash balance distribution, $m
 
  5
  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
 
  -284
  -431
  -623
  -873
  -1,188
  -1,575
  -2,041
  -2,590
  -3,223
  -3,943
  -4,748
  -5,637
  -6,607
  -7,657
  -8,781
  -9,979
  -11,245
  -12,579
  -13,978
  -15,440
  -16,964
  -18,550
  -20,199
  -21,910
  -23,686
  -25,529
  -27,440
  -29,423
  -31,480
  -33,616
Discount rate, %
 
  4.80
  5.04
  5.29
  5.56
  5.83
  6.13
  6.43
  6.75
  7.09
  7.45
  7.82
  8.21
  8.62
  9.05
  9.50
  9.98
  10.48
  11.00
  11.55
  12.13
  12.74
  13.37
  14.04
  14.74
  15.48
  16.25
  17.07
  17.92
  18.82
  19.76
PV of cash for distribution, $m
 
  -271
  -391
  -534
  -703
  -895
  -1,103
  -1,320
  -1,535
  -1,740
  -1,923
  -2,074
  -2,187
  -2,255
  -2,276
  -2,250
  -2,178
  -2,067
  -1,922
  -1,751
  -1,564
  -1,368
  -1,173
  -984
  -808
  -648
  -509
  -390
  -291
  -212
  -150
Current shareholders' claim on cash, %
  100
  66.4
  45.1
  31.4
  22.3
  16.1
  11.9
  8.9
  6.8
  5.2
  4.1
  3.2
  2.6
  2.1
  1.7
  1.4
  1.1
  1.0
  0.8
  0.7
  0.6
  0.5
  0.4
  0.3
  0.3
  0.3
  0.2
  0.2
  0.2
  0.1
  0.1

Newpark Resources, Inc. is a supplier providing products and services primarily to the oil and gas exploration and production (E&P) industry. The Company's segments include Fluids Systems, and Mats and Integrated Services. The Fluids Systems segment provides drilling fluids products and technical services to customers in the North America; Europe, the Middle East and Africa; Latin America, and Asia Pacific regions. The Mats and Integrated Services segment provides composite mat rentals, as well as location construction and related site services, to customers at well, production, transportation and refinery locations in the United States. It manufactures and sells composite mats to customers outside of the United States, and to domestic customers outside of the oil and gas exploration market. The Fluids Systems segment offers customized solutions for technical drilling projects involving subsurface conditions, such as horizontal, directional, geologically deep or deep water drilling.

FINANCIAL RATIOS  of  Newpark Resources (NR)

Valuation Ratios
P/E Ratio -19.5
Price to Sales 1.7
Price to Book 1.6
Price to Tangible Book
Price to Cash Flow 72.7
Price to Free Cash Flow -29.6
Growth Rates
Sales Growth Rate -30.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -44.9%
Cap. Spend. - 3 Yr. Gr. Rate -11%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 14.6%
Total Debt to Equity 31.1%
Interest Coverage -6
Management Effectiveness
Return On Assets -4.3%
Ret/ On Assets - 3 Yr. Avg. -0.8%
Return On Total Capital -6%
Ret/ On T. Cap. - 3 Yr. Avg. -1.7%
Return On Equity -8%
Return On Equity - 3 Yr. Avg. -2.3%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 7.2%
Gross Margin - 3 Yr. Avg. 13.4%
EBITDA Margin -3.8%
EBITDA Margin - 3 Yr. Avg. 0.9%
Operating Margin -11.7%
Oper. Margin - 3 Yr. Avg. -4.9%
Pre-Tax Margin -13.8%
Pre-Tax Margin - 3 Yr. Avg. -6.5%
Net Profit Margin -8.7%
Net Profit Margin - 3 Yr. Avg. -4.3%
Effective Tax Rate 36.9%
Eff/ Tax Rate - 3 Yr. Avg. 29.9%
Payout Ratio 0%

NR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NR stock intrinsic value calculation we used $472 million for the last fiscal year's total revenue generated by Newpark Resources. The default revenue input number comes from 2016 income statement of Newpark Resources. 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 NR stock valuation model: a) initial revenue growth rate of 59.1% 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 4.8%, whose default value for NR is calculated based on our internal credit rating of Newpark Resources, 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 Newpark Resources.
    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 NR stock the variable cost ratio is equal to 114.6%.

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 NR 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 Newpark Resources.

Corporate tax rate of 27% is the nominal tax rate for Newpark Resources. 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 NR 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 NR are equal to 66.6%.

Life of production assets of 8.8 years is the average useful life of capital assets used in Newpark Resources 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 NR is equal to 50%. 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 - $501 million for Newpark Resources - 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 85.608 million for Newpark Resources 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 Newpark Resources at the current share price and the inputted number of shares is $0.8 billion.

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COMPANY NEWS

▶ Newpark Resources Announces Credit Facility Amendment   [Oct-18-17 04:15PM  PR Newswire]
▶ Newpark beats 2Q profit forecasts   [12:27AM  Associated Press]
▶ Newpark Resources Reports Second Quarter 2017 Results   [Jul-27-17 04:15PM  PR Newswire]
▶ Newpark reports 1Q loss   [Apr-27-17 06:52PM  Associated Press]
▶ Newpark beats Street 4Q forecasts   [Feb-09-17 06:59PM  Associated Press]
▶ Newpark Resources Sets 2017 Annual Meeting Date   [Jan-24-17 06:00AM  PR Newswire]
▶ Is Newpark Resources Inc (NR) a Good Stock To Buy?   [Dec-12-16 01:24PM  at Insider Monkey]
▶ Broadcom Rising: Outlook Rebuts iPhone Worries   [Dec-09-16 03:08PM  at Barrons.com]
▶ Intel Drops 5%: Silver Lining in the Cloud?   [Oct-19-16 10:43AM  at Barrons.com]
Financial statements of NR
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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